3 Apr 2008 07:01
PV Crystalox Solar PLC03 April 2008 PV Crystalox Solar PLC Preliminary Results For the year ended 31st December 2007 PV Crystalox Solar PLC, a highly specialised supplier to the world's leading solar cell manufacturers producing multicrystalline silicon wafers for use in solar electricity generation systems, today announce preliminary results for the year to 31st December 2007. Financial highlights • Revenue of the Group's core business of silicon products up 14.9% to €212.9 million • Group revenue up 8.7% to €263.4 million • Group Operating margin up from 19.9% to 28.0% • Adjusted EBIT (before non-recurring expenses; IPO costs (€3.4m) and employee share costs (€3.0m) up 52.8% to €73.9 million • Adjusted PBT (before non-recurring expenses; IPO costs and employee share costs) up 57.3% to €77.1 million • Net profit up 48.7% to €47.0 million • Free cash flow up 195.3% to €36.1 million • Basic Earnings per share up 42.9% to 12.0 Euro cents • Final dividend 2.5 Euro cents (payable in sterling) Maarten Henderson, Chairman, commented"Our results show a substantial improvement in operating margins from 19.9% to 28.0% and an increase in earnings before taxation of 44.4% to €70.8 million. Our successful IPO in June has strengthened our equity base and is enabling us to invest in the future growth of the business. Our strategy is to drive growth through a secured silicon feedstock supply and to expand our production capacity at a flexible and controlled rate to ensure a sustainable business." Iain Dorrity, Chief Executive Officer, commented"The Group's strong profitability, strong balance sheet and strong operational cash flow give the Directors a firm basis to be confident about the year ahead. The Board believes that PV Crystalox is well positioned both operationally and financially to play a significant role in the market for solar electricity generation and looks forward to the future with confidence." Enquires: PV Crystalox Solar PLC +44 (0) 20 7554 1400Peter Finnegan, Chief Financial Officer JPMorgan Cazenove +44 (0) 20 7588 2828Patrick MageeAlex Yule-Smith Gavin Anderson +44 (0) 20 7554 1400Kate HillRobert Speed Notes to Editors PV Crystalox was one of the first to develop multicrystalline technology on an industrial scale, setting the industry standard for ingot production. The Group manufactures silicon ingots in Oxfordshire, United Kingdom, and carries out wafer production for European customers at its facilities in Erfurt, Germany. Wafers for customers in Asia are produced in Japan. PV Crystalox Solar was admitted to the main market of the London Stock Exchange on 11 June 2007. The Group's production output of silicon wafers during 2007, was sufficient for production of solar modules (or solar electricity generation systems) with total peak output of 190MW. Chairman's Statement I am pleased to present our first full year results as a public company and to report that Group sales totalled €263.4 million (up 8.7%) while underlying growth in our core silicon products business was up 14.9% to €212.9 million. Our results show a substantial improvement in operating margins from 19.9% to 28.0% and an increase in earnings before taxation of 44.4% to €70.8 million. Our successful IPO in June has strengthened our equity base and is enabling us to invest in the future growth of the business. While the turmoil on global financial markets meant that our share price fluctuated during the year, it finished the year strongly. On 12 September our shares entered the FTSE250 index and outperformed the index by 28% in the period to 31 December. Basic earnings per share grew by 42.9% to €0.12 reflecting the strong growth from our products and our careful management of costs. The Board recognises the importance of dividends to shareholders and in line with the expectations set at the time of the IPO, the Board has recommended a final dividend of 2.5 Euro cents per share will be paid on 11 June to shareholders on the register on 2 May 2008. This dividend is payable in sterling and will be converted from euros into sterling at the forward exchange quoted by The Royal Bank of Scotland Group at 11.00 am on 2 June 2008. The market for our products continues to grow due to surging worldwide demand for energy coupled with increasing commitment of governments to arrest and reduce carbon dioxide emissions. The International Energy Agency (IEA) forecasts an annual worldwide increase of over 55% in energy demand by 2030 and thus the potential for solar electricity is considerable. In 2007 solar energy generated only 0.06% of the world's electricity and even with continuing annual growth of 35% solar electricity would still only represent 5% of world demand in 2020. During the year we have successfully completed the transition from our former position as predominantly a supplier of multicrystalline ingots to become a leading wafer supplier thus enabling the broadening of our customer base. We continue to enjoy long established relationships with PV companies in our major markets Japan and Germany. Our strategic focus remains on the major solar cell producers with 74% of silicon product sales being made to the top ten global companies. Furthermore, we have strengthened partnerships with two of these companies through the signing of long term agreements. Our strategy is to drive growth through a secured silicon feedstock supply and to expand our production capacity at a flexible and controlled rate to ensure a sustainable business. We believe that the availability of economically priced silicon and continual incremental cost reduction will be imperative to ensure the growth of the global PV market during the coming years. We continue on this path of solid controlled expansion and have now strengthened our position by further diversifying the source of our silicon supply. We have continued to develop and strengthen our organisation and have employed a number of key personnel at our new polysilicon plant in Bitterfeld. In addition we have appointed Kazumasa Akiyama as the new President at our subsidiary in Japan and he will bring extensive financial and commercial expertise to our operations there. Commitment and motivation of our staff has been enhanced by the granting of shares from our Employee Benefit Trust to long serving managers across the Group. We recognise that the quality of our employees is one of the Group's key attributes and on behalf of the Board I would like to record our thanks to all of them for their outstanding contribution over the past year. Even the most pessimistic forecast of the European Photovoltaic Industries Association envisages that the global PV market will more than double over the next three years and that crystalline silicon technology will continue to dominate. The Board shares this positive view and believes the Group is well positioned for future growth with our own internal silicon production in 2009 complementing our contracted polysilicon supplies and enabling us to strengthen our position as one of the PV industry's lowest cost wafer producers. Maarten Henderson - Non-executive Chairman2nd April 2008 Business Review Introduction The financial year of 2007 has been one of solid progress with full year revenue of €263.4, an increase of 8.7%. This represents a very strong second half performance with wafer output increasing as we took delivery of additional polysilicon under existing contractual arrangements and with sales prices firming due to the strong market demand. Indeed the underlying performance of the Group's core silicon production business grew by 14.9% to €212.9million. This positive momentum demonstrates the Group's continuing position as one of the PV industry's leading wafer producers and builds on our unrivalled experience gained through our pioneering development of directional solidification technology for production of multicrystalline silicon. Our production output was equivalent to 190MW and while this represented a reduction on the 215MW achieved in the previous year, our earnings before interest, taxation and IPO costs actually grew by 46.8% to €70.9m. Operations 2007 saw the completion of our transition from an ingot supplier to become first and foremost a supplier of wafers such that in the second half of the year only wafers were supplied to our PV customers. The limited availability of silicon raw material continued to restrict growth in the PV industry and led to significant increases in spot silicon prices. However the Group's strong position with polysilicon contracts with two of the major producers ensured deliveries in 2007 and enabled us to effectively control our raw material costs. Our future visibility was recently further enhanced when we reached agreement with one of our current longstanding suppliers in March 2008 to maintain existing volumes and extend contracted supply through to 2014. We improved our effective silicon utilisation through our continuing work with our customers on the move to thinner wafers such that > 20% of wafers shipped in 2007 were supplied at industry leading 180(micro)m thickness and all customers had adapted to maximum 200(micro)m thickness during the second half of the year. In addition we adopted new technology for ingot cutting which will enable very significant reduction in silicon losses during block production. The new ingot wire saws will effectively reduce kerf loss by > 90% in comparison with the sawing equipment used previously. In May we announced our plans to set up our own 1800MT polysilicon production facility in order to complement our external contracted supply. This internal production will provide access to cost effective silicon and will be a key driver of our future growth and profitability. The facility is based in Bitterfeld, Germany in one of the largest chemical parks in Europe and located next to an existing production facility operated by our supplier Evonik (formerly Degussa) who is the world's largest producer of high purity chlorosilanes. The raw material will be piped to our plant and will be decomposed to produce silicon using a modified Siemens process. The production will operate with a closed-loop chlorine cycle in order to maximise production efficiency and to eliminate environmental hazards. Construction of the plant started immediately after the ground breaking ceremony which was held on 19 September and attended by the Saxony-Anhalt Minister for Economic Affairs and Employment. With orders placed for all the major equipment we remain on schedule for commercial production to start in 2009 with projected output of 900MT in the first year of operation and increasing to 1800MT in 2011. However, the increased demand for raw materials and global engineering and construction services has resulted in materially higher prices. These price increases, together with some productivity enhancements to the planned plant, have led to projected overall capital investment being increased from the original €80m to approximately €100m, of which €21 million will be receivable in grants and subsidies. The Group's strong free cash flow which was up by 195% to €36.1 million in 2007 is more than adequate to cover this additional cost. Strategy PV Crystalox Solar is committed to systematically enhancing its leadership in the PV industry as an independent producer of multicrystalline silicon wafers. By focusing on the wafer and not competing with our customers in cell production we are able to develop strong relationships with solar cell producers. We continue to strengthen partnerships with major PV companies in Japan and Germany where we have long established relationships. In 2007, 81.4% of our sales were made to these geographic markets which represent two of the world's three leading PV manufacturing centres. Our strategy of cost leadership and flexibility is underpinned by carrying out wafer production in both of these two key countries. This proximity of production to customers not only facilitates closer cooperation but also enables us to rapidly address changes in customer needs. Furthermore our dual geographic wafer production locations help offset the influence of euro/yen exchange rate variations. We also recognise the growing importance of China as a manufacturing location and our developing relationships there meant that sales in this region accounted for 6.3% of our revenues. Although the PV industry sees an ever increasing number of new entrants to solar cell production, the top 10 producers continue to dominate and accounted for 66.6% of total world production in 2006. Our focus remains on the top 10 producers and these accounted for more than 74% of our core silicon product sales in 2007 and partnerships were further consolidated with two of these companies through signing of long term agreements for the sale of 355 MW of wafers over the next 5/7 years. At the same time we are developing relationships with those smaller companies which we identify as having the potential to grow to become significant players in the market. Our new polysilicon production facility in Bitterfeld will provide further flexibility and enhance our position as one of the PV industry's low cost producers. Financial Review Key financial data is set out below: PV Crystalox plcGroup Consolidated Income Statement 2007 2006 •'000 •'000 Change ------------------------------------ Revenues - Silicon Products 212,939 185,266 14.9%Revenues - Equipment, Parts & Trading 50,505 57,100 -11.5% Total revenues 263,444 242,366 8.7% EBIT before IPO costs 70,937 48,327 46.8% IPO costs -3,438 EBIT 67,499 48,327 39.7% Net interest income 3,265 686 375.9% Earnings before taxation (EBT) 70,764 49,013 44.4% Taxation -23,793 -17,419 36.6% Earnings 46,971 31,594 48.7% Earnings Per Share (Euro cents) 12.0 8.4 42.9% In the period under review the Group generated underlying earnings before interest and taxation (EBIT before IPO costs) of €70.9million (2006 €48.3million) benefiting from robust second half performance. The continuing improvement in underlying profitability was driven primarily by higher market prices, although volumes increased in the second half of the year following higher quantities of raw materials being available from existing suppliers. The relatively weak Japanese yen had a negative impact on Group sales turnover in the period although there was some improvement in this respect in the second half of 2007. However, the Group's natural hedging position in terms of Japanese yen meant that there was a limited impact on profitability in the year. The Group's EBIT, after IPO costs of €3.4million, was €67.5million (2006 €48.3million). Net interest income at €3.3million (2006 €0.7million) is significantly higher than last year due to interest arising from depositing the proceeds from our IPO and the funds generated by our strong operational cash flow. The main part of the IPO proceeds will be expended during 2008 on our new polysilicon plant at Bitterfeld and on capital expenditure to expand our existing production operation. Earnings increased to €47.0million (2006 €31.6million) and unadjusted earnings per share increased by 42.9% to €0.120 (2006 €0.084). These strong financial results generated operating cash flows of €63.3million (2006 €16.3million) and net cash inflows of €97.1million (2006 €29.6million). The net cash inflows obviously include our IPO proceeds of €76.8million although €26.1million had already been expended on capital expenditure in 2007 (2006 €3.7million). The Group's strong profitability, strong balance sheet and strong operational cash flow give the directors a firm basis to be confident about the year ahead. Outlook The market drivers for the business remain positive and although there is diversity in the various forecasts for growth of PV installations, even the relatively conservative view of the European Photovoltaic Industries Association (EPIA) envisages doubling of the market by 2010, with the European countries and USA expected to be the major markets. We anticipate further tightening in the supply of scrap silicon during 2008 but this will be partially offset by our continuing efforts in improving silicon utilisation through increased levels of recycling, thinner wafers and new ingot cutting methods. Deliveries of polysilicon will increase under existing contractual arrangements to 1540MT and thus the Group anticipates that 2008 wafer shipments will be in the range 210-225MW. Strong market demand during the start of 2008 has meant that wafer prices, which firmed during the second half of 2007, have been maintained and this trend is expected to continue. Thus, with more than 80% of our expected wafer output in 2008 now secured through existing long term or framework agreements our prospects for 2008 remain very positive. Furthermore, the Group expects to announce additional long term wafer supply agreements with both new and existing customers during the next few months and these will provide greater visibility for future years. Consequently the Board believes that the Group is well positioned both operationally and financially to play a significant role in the PV industry and looks forward to the future with confidence. Iain DorrityChief Executive2nd April 2008 PV Crystalox Solar PLCConsolidated income statementfor the year ended 31 December 2007 Note 2007 2006 •'000 •'000 ---------------------------------------Revenues 1 263,444 242,366Other income 2 1,765 1,380 Cost of material and servicesCost of material 3 (163,703) (167,204)Cost of services 3 (6,198) (7,136) Personnel expensesWages and salaries 4 (8,151) (6,932)Social security costs 4 (1,103) (907)Pension costs 4 (391) (384)Employee share schemes 4 (2,913) - Depreciation on fixed and intangible assets (4,670) (5,467) Other expenses 5 (8,382) (6,568)Costs of initial public offering (3,438) - Currency gains and losses 1,239 (821) Earnings before interest and taxes (EBIT) 67,499 48,327 Interest income 4,626 1,625Interest expense 6 (1,361) (939) Earnings before taxes (EBT) 70,764 49,013 Income taxes 7 (23,793) (17,419) PROFIT attributable to equity holders of the parent 46,971 31,594 EARNINGS PER SHARE ON CONTINUINGACTIVITIESBasic in Euro cents 9 12.0 8.4Diluted in Euro cents 9 11.9 8.4 All of the activities of the Group are classed as continuing. The accompanying notes form an integral part of these financial statements. PV Crystalox Solar PLCConsolidated balance sheetas at 31 December 2007 Note 2007 2006 •'000 •'000 ------------------------------- Cash and cash equivalents 147,892 61,527 Accounts receivable 11 61,748 74,874Inventories 12 20,653 13,833Prepaid expenses and other assets 13 13,564 4,618Current tax assets 18 2,240Total Current Assets 243,875 157,092 Intangible assets 14 378 176Property, plant and equipment 15 35,115 13,967Other long term assets 16 4,597 1,926Deferred tax asset 17 2,329 1,022Total Non-current Assets 42,419 17,091TOTAL ASSETS 286,294 174,183 Loans payable short-term 18 39,619 53,342Accounts payable trade 19 21,747 15,745Advance payments received - 722Accrued expenses 20 3,632 3,208Deferred income current portion 21 860 817Income tax payable 22 10,855 9,310Other current liabilities 23 931 1,116Total Current Liabilities 77,644 84,260 Loans payable long-term 7 1,735Advance payments received 24 10,000 -Accrued Expenses 128 272Pension benefit obligation 25 476 631Deferred income less current portion 21 5,196 2,861Deferred tax liability 280 267Other long term liabilities 1,088 44Total Non-current Liabilities 17,175 5,810TOTAL LIABILITIES 94,819 90,070 Share capital 26 12,332 7,500Share premium 75,607 -Investment in own shares -5,642 -Reverse acquisition reserve -3,601 -Retained earnings 124,559 77,588Currency translation adjustment -11,780 -976TOTAL SHAREHOLDERS' EQUITY 191,475 84,113 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 286,294 174,183 The accompanying notes form an integral part ofthese statements Approved by the board of directors and signedon its behalf by:- Dr Iain Dorrity2nd April 2008 PV Crystalox Solar PLCConsolidated cash flow statementfor the year ended 31 December 2007 2007 2006 •'000 •'000Earnings before taxes 70,764 49,013Adjustments for: Interest -3,265 -686 Depreciation and amortisation 4,670 5,398 Change in pension accruals -155 -119 Change in other provisions 281 592 Profit /loss from the disposal of property, plant & equipment 15 -24 Unrealised gain/losses in foreign 81 1,929 currency exchange Deferred income -975 -868 71,416 55,235 Changes in working capital: Change in inventories -6,820 5,606 Decrease/(Increase) in trade receivables 10,457 -27,746 Increase in trade payables and advance payments 15,800 2,317 Increase in other assets -11,617 -4,058 Decrease/(Increase) in other liabilities 859 -371 80,095 30,983 Income taxes paid -21,375 -16,334 Interest received 4,626 1,625Net Cash from operating activities 63,346 16,274 Cash flow from investing activities Proceeds from sale of property, plant & equipment 36 30 Proceeds from investment grants and subsidies 3,353 1,211 Payments to acquire property, plant & equipment -26,070 -3,653Cash used in investing activities -22,681 -2,412 Cash flow from financing activities Short term borrowings received 0 16,977 Repayment of bank and other borrowings -11,764 -305 Repayment Microventure -1,620 0 Proceeds from IPO 76,838 0 Interest paid -1,361 -939 Investment in own shares -5,642 0 Net cash flows from financing activities 56,451 15,733 Net Change in cash and cash equivalents available 97,116 29,595 Effects of foreign exchange rate changes on cash and cash equivalents (10,751) 81Cash and equivalents at beginning of period 61,527 31,851Cash and equivalents at end of period 147,892 61,527 The accompanying notes form an integral part of these financial statements. PV Crystalox Solar PLCStatement of changes in equityfor the year ended 31 December 2007 Share Share Investment Reverse Retained Currency Total capital Premium in own acquisition Profit translation equity shares reserve adjustment (EBT) •'000 •'000 •'000 •'000 •'000 •'000 •'000 As of 1 January 2007 7,500 - - - 77,588 (975) 84,113Currency Translation Adjustment (10,805) (10,805)Net income recognised directlyin equity 7,500 0 0 0 77,588 (11,780) 73,308 Net Profit 46,971 46,971 Total recognised income and expensefor the period 7,500 0 0 0 124,559 (11,780) 120,279 Investment in own shares (5,642) (5,642) Reverse Acquisiton Reserve (3,601) (3,601) Share Issue 4,832 75,607 80,439 As at 31 December 2007 12,332 75,607 (5,642) (3,601) 124,559 (11,780) 191,475 As of 1 January 2006 7,500 - - - 45,994 (1,503) 51,991Currency Translation Adjustment 528 528Net income recognised directlyin equity 7,500 0 0 0 45,994 (975) 52,519 Net Profit 31,594 31,594 Total recognised income and expensefor the period 7,500 0 0 0 77,588 (975) 84,113 As at 31 December 2007 7,500 0 0 0 77,588 (975) 84,113 Further information on equity is presented in Note 26. The accompanying notes form an integral part of these financial statements. Notes to the PV Crystalox Solar PLC consolidated financial statementsfor the year ended 31 December 2007 1. Group Accounting Policies Basis of Preparation The consolidated financial statements of the Group have been prepared inaccordance with International Financial Reporting Standards (IFRS) as adopted bythe European Union. The financial information has also been prepared under thehistorical cost convention except that it has been modified to include financialassets and liabilities (including derivatives) at their fair value through theincome statement. PV Crystalox Solar PLC is incorporated and domiciled in the United Kingdom. The financial statements for the year ended 31 December 2007 were approved bythe Board of Directors on 2 April 2008. Functional and presentational currency The financial information has been presented in euros, which is the functionalcurrency. All financial information presented has been rounded to the nearestthousand. Use of estimates and judgements The preparation of financial statements in conformity with adopted IFRS requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets, liabilities, income,expenses and contingent liabilities. Estimates and assumptions mainly relate tothe useful life of non-current assets, the discounted cash flows used inimpairment testing and the establishing of provisions for litigation, pensionsand other benefits, taxes, inventory valuations, and guarantees. Estimates arebased on historical experience and other assumptions that are consideredreasonable under the circumstances. Actual values may vary from the estimates.The estimates and the assumptions are under continuous review. Critical accounting and valuation policies and methods are those that are bothmost important to the depiction of the Group's financial position, results ofoperations and cash flows, and that require the application of subjective andcomplex judgments, often as a result of the need to make estimates about theeffects of matters that are inherently uncertain and may change in subsequentperiods. The critical accounting policies that we disclose, will not necessarilyresult in material changes to our financial statements in any given period butrather contain a potential for material change. The main accounting andvaluation policies used by the Group are outlined in the following notes. Whilenot all of the significant accounting policies require subjective or complexjudgments, the Group considers that the following accounting policies should beconsidered critical accounting policies. Property, plant and equipment are amortised over their estimated useful lives.The estimated useful lives are based on estimates of the period during which theassets will generate revenue. Property, plant and equipment are tested forimpairment whenever events or changes in circumstances indicate that thecarrying amount of these assets may no longer be recoverable Although we believe that our estimates of the relevant expected useful lives,our assumptions concerning the business environment and developments in ourindustry, and our estimations of the discounted future cash flows, areappropriate, changes in assumptions or circumstances could require changes inthe analysis. This could lead to additional impairment charges or allowances inthe future or to valuation write-backs should the expected trends reverse. To compute provisions for taxes, estimates have to be applied. These estimatesinvolve assessing the probability that deferred tax assets resulting fromdeductible temporary differences and tax losses can be utilised to offsettaxable income. The defined benefit plans are partly unfunded and partly funded through pensioninsurance contracts. Statistical and actuarial methods are used to anticipatefuture events in calculating the expenses and liabilities related to the plans.These calculations include assumptions about the discount rate, expected returnon plan assets and rate of future pension increases. Statistical informationsuch as withdrawal and mortality rates is also used in estimating the expensesand liabilities under the plans. Because of changing market and economicconditions, the expenses and liabilities actually arising from these plans inthe future may differ materially from the estimates made on the basis of theseactuarial assumptions. Basis of Consolidation The Group financial statements consolidate those of the Group and its subsidiaryundertakings drawn up to 31 December 2007. Subsidiaries are entities over whichthe Group has the power to control the financial and operating policies so as toobtain benefits from its activities. The Group obtains and exercises controlthrough voting rights. The results of any subsidiary sold or acquired are included in the Group incomestatement up to, or from, the date control passes. Unrealised gains onintra-group transactions are eliminated fully on consolidation. Consolidation is conducted by eliminating the investment in the subsidiary withthe parent's share of the net equity of the subsidiary. The Group owns 100% of the voting rights in Crystalox Japan Kabushiki Kaisha.Minority interests in equity of • 43,400 are related to non-redeemable preferredstock, subject to a guaranteed annual dividend payment of • 2,000. As the fairvalue of the resulting dividend liabilities reduces the equity portion tomarginal amounts, all minority interest has been reclassified as liabilities.The Group intends to withdraw the preferred stock in the near future. On acquisition of a subsidiary, all of the subsidiary's separable, identifiableassets and liabilities existing at the date of acquisition are recorded at theirfair value reflecting their condition at that date. Goodwill arises where thefair value of the consideration given for a business exceeds the fair value ofsuch net assets. So far no acquisitions have takenplace since inception of thegroup. Amounts reported in the financial statements of subsidiaries have been adjustedwhere necessary to ensure consistency with the accounting policies adopted bythe group. All inter-group transactions, balances, income and expenses areeliminated upon consolidation. On 5 January 2007, PV Crystalox Solar PLC became the legal parent group of PVCrystalox Solar AG (and its subsidiary companies) in a share for sharetransaction. The former PV Crystalox Solar AG shareholders became theshareholders of PV Crystalox Solar PLC. Following the transaction the group'scontinuing operations and executive management were those of PV Crystalox SolarAG. Accordingly, the substance of the combination was that PV Crystalox Solar AGacquired PV Crystalox Solar PLC in a reverse acquisition. The Companies Act 1985 and IFRS would normally require the Group's consolidatedaccounts to follow the legal form of the business combination. In that case thepre-acquisition results would be those of PV Crystalox Solar PLC and itssubsidiary undertakings, which would exclude PV Crystalox Solar AG. The resultsof PV Crystalox Solar AG would then be included in the Group from 5 January2007. However, this would portray the combination as an acquisition of PVCrystalox Solar AG by PV Crystalox Solar PLC and would, in the opinion of thedirectors, fail to give a true and fair view of the substance of the businesscombination. Accordingly, the directors have adopted reverse acquisitionaccounting as the basis of consolidation in order to give a true and fair view.The reverse acquisition was accounted for using the equity accounting method. As a consequence of applying reverse acquisition accounting, the comparativeresults for the Group for the period ended 31 December 2006 comprise the resultsof PV Crystalox Solar AG and its subsidiary undertakings, which were preparedunder IFRS in the previous year. Effects of new accounting pronouncements Accounting standards applied for the first time in 2007 In August 2005, the IASB issued the standard IFRS 7 (Financial Instruments:Disclosures), which has been applied for the first time in the current year.This standard specifies the information on financial instruments that is to beprovided in the notes to the financial statements. IFRS 7 provides for financialinstruments to be grouped into certain categories and specific disclosures to bemade for each category, including the significance of the instruments and thenature and extent of the risks associated with them. The new standard hasaffected the nature and modality of financial instrument disclosures in thefinancial statements of the Group, but not the recognition or measurement of theinstruments. In particular, the consolidated financial statements now feature: • an explanation of the Group's market risk exposure in regards to its financial instruments, and • a maturity analysis that shows the remaining contractual maturities of financial liabilities, and • an analysis of trade receivables showing those past due or considered to be impaired. In January 2006, the IFRIC issued IFRIC 8 (Scope of IFRS 2). The issue addressedin the Interpretation is whether IFRS 2 applies to transactions in which theentity cannot identify specifically some or all of the goods or servicesreceived. The application of this interpretation has not had a material impacton the Group's financial position, results of operations or cash flows. In March 2006, the IFRIC issued IFRIC 9 (Reassessment of embedded derivatives).This Interpretation addresses the requirements of IAS 39 (Financial Instruments:Recognition and Measurement) and considers whether the assessment of whether acontract has embedded derivatives should be reassessed throughout the life ofthe contract. The IFRIC concluded that subsequent reassessment is prohibitedunless there is a change in the terms of the contract that significantlymodifies the cash flows that otherwise would be required under the contract, inwhich case reassessment is required. The application of this interpretation hasnot had a material impact on the Group's financial position, results ofoperations or cash flows. In July 2006, the IFRIC issued IFRIC 10 (Interim Financial Reporting andImpairment). This interpretation addresses the interaction between therequirements of IAS 34 (Interim Financial Reporting) and the recognition ofimpairment losses on goodwill under IAS 36 (Impairment of Assets) andinvestments in equity instruments as well as financial assets carried at costunder IAS 39 (Financial Instruments: Recognition and Measurement). The IFRICconcluded that an entity, which has recognised an impairment loss in an interimperiod in respect of goodwill or an investment in either an equity instrument ora financial asset carried at cost, that impairment must not be reversed insubsequent interim financial statements or in annual financial statements. IFRIC10 has to be applied for annual periods beginning on or after 1 November 2006.The application of this interpretation has not had a material impact on theGroup's financial position, results of operations or cash flows. Newly issued accounting standards A number of new standards, amendments to standards and interpretations are notyet effective for the year ended 31 December 2007, and have not yet been appliedin preparing these financial statements. IFRS 8 Operating Segments is mandatory for annual periods beginning on or after1 January 2009 and supersedes the current standard, IAS 14 Segment Reporting.Early application of IFRS 8 has been adopted. In November 2006, the IFRIC issued IFRIC 11 (IFRS 2 Group and Treasury ShareTransactions). The interpretation addresses how to apply IFRS 2 (Share-basedPayment) to accounting for share-based payment arrangements involving anentity's own equity instruments. It also provides guidance on whethershare-based payment arrangements, in which suppliers of goods or services of anentity are provided with equity instruments of the entity's parent should beaccounted for as cash-settled or equity-settled in the entity's financialstatements. IFRIC 11 has to be applied for annual periods beginning on or after1 March 2007. The Group is currently evaluating the impact that the applicationof the interpretation may have on the Group's financial position, results ofoperation or cash flows. In November 2006, the IFRIC issued IFRIC 12 (Service Concession Arrangements).Service concessions are arrangements whereby a government or other public-sectorentity grants contracts for the supply of public services - such as roads,airports, prisons and energy and water supply and distribution facilities - toprivate-sector operators. IFRIC 12 has to be applied for annual periodsbeginning on or after January 1 2008. The Group does not believe that theapplication of this interpretation will have a material impact on the Group'sfinancial position, results of operations or cash flows. In June 2007, the IFRIC issued IFRIC 13 (Customer Loyalty Programmes). Customerloyalty programmes are used by entities to provide customers with incentives tobuy their goods or services. If a customer buys goods or services, the entitygrants the customer award credits (often described as 'points'). The customercan redeem the award credits for awards such as free or discounted goods orservices. IFRIC 13 has to be applied for annual periods beginning on or after 1July 2008. Earlier application is permitted. The Group does not believe that theapplication of this interpretation will have a material impact on the Group'sfinancial position, results of operations or cash flows. IFRIC 14, IAS19 - The limit on a defined benefit asset, minimum fundingrequirements and their interaction, is effective from January 2008. The groupwill apply IFRIC 14 from January 2008, but it is not expected to have any impacton the group or company's accounts. IFRS 3 'Business Combinations' has been revised. The revised standard has to beapplied to accounting periods beginning on or after 1 July 2009. Earlyapplication is permitted provided that IAS 27 as amended in 2008 (see below) isapplied at the same time. The Group does not believe that the application ofthis interpretation will have a material impact on the Group's financialposition, results of operations or cash flows. IAS 1 'Presentation of Financial Statements' has been revised to clarify theclassification of balance sheet items between current and non-current, and anentity's compliance with IFRS. The revised standard has to be applied toaccounting periods beginning on or after 1 January 2009. Earlier application ispermitted. The Group does not believe that the application of thisinterpretation will have a material impact on the Group's financial position,results of operations or cash flows. IAS 23 'Borrowing costs' has been revised so that guidance on effective interestrates is consistent with IAS 39 'Financial Instruments: Recognition andMeasurement'. The revised standard has to be applied to accounting periodsbeginning on or after 1 January 2009. Earlier application is permitted. TheGroup does not believe that the application of this interpretation will have amaterial impact on the Group's financial position, results of operations or cashflows. IAS 27 'Consolidated and Separate Financial Statements has been revised toextend the application of IAS 39 'Financial Instruments: Recognition andMeasurement' to investments in subsidiaries which are classified as held sale inthe parent's separate financial statements. The revised standard has to beapplied to accounting periods beginning on or after 1 July 2009. The Group doesnot believe that the application of this interpretation will have a materialimpact on the Group's financial position, results of operations or cash flows. IAS 32 'Financial Instruments: Presentation' has been amended to provide detailsof the disclosure required when investments in associates and jointly controlledentities are accounted for at fair value through profit or loss. The amendedstandard has to be applied to accounting periods beginning on or after 1 January2009. The Group does not believe that the application of this interpretationwill have a material impact on the Group's financial position, results ofoperations or cash flows. Financing Strategy and Capital Structure IFRS7, 'Financial instruments: Disclosures' and the complementary amendment toIAS1, 'Presentation of financial statements - Capital disclosures', introducesnew disclosures relating to financial instruments. This does not have any impacton the classification and valuation of the group financial instruments, or thedisclosures relating to taxation and trade and other payables. We define capital as equity plus cash and our financial strategy in the mediumterm is to manage a level of debt that balances the risks of the business withoptimising the return on equity by the use of gearing. The Group is currentlycash positive following our IPO in June 2007, although these funds will bemainly utilised for capital investment in the planned polysilicon plant and inthe expansion of our existing business. The only significant borrowings in theGroup are in Japan and we take advantage of the relatively low Japanese yeninterest rate to finance our business in Japan. These borrowings have attachedcovenants and are secured against our Japanese yen receivables book. The termsof the covenants have been and will continue to be adhered to. The Japanese receivables book and our ongoing sales in Japanese yen willcontinue to generate a strong forward cash inflow and accordingly we are notcarrying exchange rate risk in respect of these borrowings. The weighted average rate of interest in 2007 was 1.5% (2006 1.5%) and ourgearing ratio was 9% (2006 7%). Intangible assets Intangible assets are capitalised at cost and amortised over a useful life ofthree to five years. Amortisation of intangible assets is recorded under"Depreciation and amortisation" in the income statement. Acquired computer software licences are capitalised at the costs that werenecessary to purchase the licences and make the software usable. The capitalised costs are written down using the straight-line method over theexpected economic life of the patents (five years) or software (three to fiveyears). Internally-generated intangible assets - research and development expenditure Expenditure on research activities undertaken with the prospect of gaining newscientific or technical knowledge and understanding is recognised in the incomestatement as an expense when incurred. Internal development expenditure is charged to income in the year in which it isincurred unless it meets the recognition criteria of IAS 38 'Intangible Assets'.Technical and other uncertainties generally have the effect that such criteriaare not met. However, expenditure on development activities, whereby researchfindings are applied to a plan or design for the production of new orsubstantially improved products or processes, is capitalised if the product orprocess is technically and commercially feasible and the group has sufficientresources to complete development. The expenditure capitalised includes the costof services and materials, direct labour and an appropriate proportion ofoverheads. Otherwise, development expenditure is recognised in the incomestatement as an expense as occurred. Capitalised development expenditure isstated at cost less accumulated amortisation and impairment losses. Intangible assets relating to products in development (both internally andexternally acquired) are subject to impairment testing upon indication ofimpairment. Any impairment losses are written off immediately to the incomestatement. Subsequent expenditure on capitalised intangible assets is capitalised only whenit increases the future economic benefit of the specific asset to which itrelates. All other expenditure is expensed as it occurs. Only patents have been capitalised as development costs to date, as the futureutilisation of other developments is not sufficiently determinable or certain. Property, plant and equipment Property, plant and equipment are stated at acquisition or construction cost,net of depreciation and any provision for impairment. No interest ordepreciation is charged during the period of construction. The cost of own workcapitalised is comprised of direct costs of material and manufacturing anddirectly attributable costs of manufacturing overheads. The capitalised costsare written down using the straight-line method. The Group's policy is to write off the difference between the cost of eachtangible fixed asset and its residual value systematically over its estimateduseful life. Reviews of the estimated remaining lives and residual values ofindividual productive assets are made annually, taking commercial andtechnological obsolescence as well as normal wear and tear into account. The total useful lives range from approximately 25 years for buildings, five toten years for plant and equipment, up to ten years for fixtures and fittings andfour years for motor vehicles. No depreciation is provided on freehold land. Alltangible fixed assets are reviewed for impairment at each balance sheet date orupon existence of indications that the carrying value may not be recoverable. The gain or loss arising on disposal of an asset is determined as the differencebetween the disposal proceeds and the carrying amount of the asset and isrecognised in the income statement. Impairment The carrying amount of the Group's assets, other than inventories and deferredtax assets, are subject to impairment testing upon indication of impairment andare reviewed annually. If any such indication exists, the asset's recoverable amount is estimated. Animpairment loss is recognised for the amount by which the asset's carryingamount exceeds its recoverable amount. The recoverable amount is the higher offair value, reflecting market conditions less costs of disposal, and value inuse based on an internal discounted cash flow evaluation. Leased assets The economic ownership of a leased asset is transferred to the lessee if thelessee bears all the risks and rewards related to the ownership of the leasedasset in a material fashion. Rentals under operating leases are charged to the income statement on a straightline basis over the lease term. Lease incentives are spread over the totalperiod of the lease. The obligations from lease contracts are disclosed among financial obligations.For the reporting period, no assets were recorded under finance leases. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits withmaturities of less than three months. Cash and cash equivalents are valued attheir nominal value. Financial instruments Financial assets and financial liabilities are recognised on the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Financial instruments are recorded initially at fair value net of transactioncosts, if changes in value are not charged directly to the income statement.Subsequent measurement depends on the designation of the instrument, as follows: • Fixed deposits, generally funds held with banks and short-term borrowings and overdrafts are classified as receivables and loans and held at amortised cost. • Derivatives, if any, comprising interest rate swaps and foreign exchange contracts, are classified as held for trading. They are included at fair value, upon the advice of the local bank. • Long-term loans are held at amortised cost. • Non-interest bearing trade receivables are initially recorded at fair value and subsequently valued at amortised cost, less provisions for impairment. Any change in their value through impairment or reversal of impairment is recognised in the income statement. • Trade payables are not interest bearing and are recognised initially at fair value and thereafter at amortised cost under the effective interest method. Changes in the fair value relating to all these financial instruments aretreated as follows: • Exchange rate losses and impairments are recognised in the income statement. All other changes in fair value are taken to reserves. On disposal of the related asset, the accumulated changes in fair value recorded in reserves are included in the gain or loss recorded in the income statement. Interest and other income resulting from financial assets are recognised in theincome statement when receivable, regardless of how the related carrying amountof the financial assets is measured. Trade receivables Trade receivables are initially recorded at fair value and subsequently valuedat amortised cost in compliance with the effective interest method, lessimpairment. Impairment of trade receivables is recorded if there are objectiveindicators that suggest that the debts are not fully recoverable, or that thefair value of the receivable is impaired at the balance sheet date. Inventories Inventories are stated at the lower of cost or net realisable value. Acquisition costs for raw materials usually are determined by the weightedaverage method. For finished goods and work in progress, cost of productionincludes directly attributable costs for material and manufacturing and anattributable proportion of manufacturing overhead expenses (includingdepreciation) based on normal levels of activity. Selling expenses and otheroverhead expenses are excluded. Interest expenses are expensed as incurred andtherefore not included. Net realisable value is determined as estimated sellingprice less all estimated costs of completion and costs to be incurred inmarketing, selling and distribution. Due to the current market situation, no significant valuation allowances werenecessary. Financial liabilities Financial liabilities are valued at their first inclusion in the financialstatements at their fair value, less transaction costs. In subsequent periods,they are measured at amortised cost. The transaction costs are carried as anexpense using the effective interest method over the term of the respectivefinancial liability. Non-current financial liabilities are charged with avariable interest rate in accordance with the terms of the relevant agreements.Due to the variable interest rate charged on financial liabilities, theamortised cost corresponds to the fair value. Loans payable are classified ascurrent liabilities, provided the Group does not have the unconditional right topostpone paying off the liability until a date at least 12 months after thebalance sheet date. Income taxes The charge for taxation is based on the profits for the year and takes intoaccount taxation deferred because of temporary differences between the treatmentof certain items for taxation and for accounting purposes. In accordance withIFRS, the expected future tax credits from the utilisation of tax losses carryforwards are also recognised on the basis that there are considered to besufficient future profits. Deferred tax assets and liabilities are calculated at local tax rates that areexpected to apply to their respective period of realisation, provided that theyare enacted or substantively enacted by the balance sheet date. Public grants and subsidies As the German operations are located in a region designated for economicdevelopment, the group receives both investment subsidies and investment grants.Government grants and subsidies relating to capital expenditure are credited tothe "Deferred income" account and are released to the income statement by equalannual instalments over the expected useful lives of the relevant assets under"Other income". Government grants of a revenue nature, mainly for research and developmentpurposes, are credited to the income statement in the same period as the relatedexpenditure. All required conditions of these grants have been and will continueto be met. Provisions Provisions are formed where a third-party obligation exists, which will lead toa probable future outflow of resources and where this outflow can be reliablyestimated. Provisions are measured at the best estimate of the expenditurerequired to settle the obligation. If a provision is not considered necessary because a future outflow of resourcesis only considered possible (and not probable), the corresponding obligationsare reported as contingent liabilities. Contingent liabilities are determined atthe present value of the expected outflow of resources. Provisions include bothprovisions and accruals. Contingent liabilities Provisions are made for legal disputes where there is an obligation at thebalance sheet date, an adverse outcome is probable and associated costs can beestimated reliably. Where no obligation is present at the balance sheet date noprovision is made, although the contingent liability will be disclosed in anote. Revenue recognition Revenue is recognised when the significant risks and rewards of ownership havebeen transferred to a third party. Revenues exclude inter-group sales andvalue-added taxes and represent net invoice value less estimated rebates,returns and settlement discounts. The net invoice value is measured by referenceto the fair value of consideration received or receivable by the Group for goodssupplied. The Group has outsourced some elements of production to external companies. Incases in which the Group retains power of disposal over the product or productelement, a sale is only recognised under IFRS when the final product is sold.The final product is deemed to have been sold when the risks and rewards ofownership have been transferred to a third party. The Group has two sales segments; Silicon Products and Trading & Equipment.These are defined as follows: The Silicon Products segment consists of silicon ingots and wafers produced byGroup companies and sold to solar cell manufacturers. This segment is the corebusiness of the Group. The Trading & Equipment segment is mainly the sourcing of silicon ingots from akey supplier to the Group and the onwards supply of these ingots to a majorcustomer. This is done to facilitate these two key relationships and is not along-term activity of the Group. In addition, the Trading & Equipment segmentincludes a relatively small amount of spare parts manufactured by the Group.These sales of spare parts are made to customers that operate equipment that hadbeen built by the Group in the past. The group no longer supplies crystal growthequipment and accordingly the sale of spare parts is expected to fall over thecoming years. Foreign currency translation The consolidated financial statements are prepared in Euros, which is thepresentational currency of the Group. Assets and liabilities of foreignoperations are translated to Euros at foreign exchange rates ruling at thebalance sheet date. The revenues and expenses of foreign operations aretranslated into Euros at the average foreign exchange rates of the year that thetransactions occurred in. Transactions of the included entities in foreign currencies are translated intothe functional currency of the respective entity at the foreign exchange rateruling at the date of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies at the balance sheet date are translated toEuros at the foreign exchange rate ruling at that date. Foreign exchange ratedifferences arising on transactions are recognised in the income statement. Nonmonetary assets and liabilities that are measured in terms of historical cost ina foreign currency are translated using the exchange rate at the date of thetransaction. Non-monetary assets and liabilities that are stated at fair valueare translated to Euros at foreign exchange rates ruling at the date the fairvalue was determined. Exchange gains and losses on short term foreign currency borrowings and depositsare shown as such and taken to operating profit. In the consolidated financialstatements exchange rate differences arising on consolidation of the netinvestments in subsidiaries together with those on relevant foreign currencyloans are taken directly to the "Currency translation adjustment" in equity. Interest income and expenses Net financing costs are comprised interest payable on borrowings calculatedusing the effective interest rate method, interest receivable on funds invested,dividend income and gains, and any gains and losses on hedging instruments arerecognised in the income statement. Interest income is recognised in the income statement as it accrues, using theeffective interest method. Dividend income is recognised in the income statement on the date is has beenreceived. The interest expense component of finance lease payments is recognised in theincome statement using the effective interest rate method. Segment reporting A business segment is a group of assets and operating activities that providesproducts or services, which differ in terms of their risks and opportunitiesfrom those of other areas of business. A geographical segment provides productsor services within a certain economic environment with risks and opportunitiesdifferent from those in other economic environments. Employee benefits The Group operate a number of pension schemes. The schemes are generally fundedthrough payments to insurance companies. The Group has both defined benefit anddefined contribution plans. A defined benefit plan is a pension plan that defines an amount of pensionbenefit that an employee will receive on retirement, usually dependent on one ormore factors such as age, years of service and compensation. A definedcontribution plan is a pension plan under which the Group pays fixedcontributions to a separate entity. The Group therefore has no legal or constructive obligations to pay furthercontributions if the fund does not hold sufficient assets to pay all employeesthe benefits relating to employee service in current and prior periods. The liability recognised in the balance sheet in respect of defined benefitpension plans is the present value of the defined benefit obligation at thebalance sheet date less the fair value of plan assets. The defined benefitobligation is calculated annually by independent actuaries using the projectedunit credit method. The present value of the defined benefit obligation isdetermined by discounting the estimated future cash outflows using interestrates of government bonds at the balance sheet date with a ten year maturity,adjusted for additional term to maturity of the related pension liability. Actuarial gains and losses arising from experience adjustments and changes inactuarial assumptions are charged or credited directly to the income statementin the period in which they arise. Past-service costs are recognised immediately in income, unless the changes tothe pension plan are conditional to the employees remaining in service for aspecified period of time (the vesting period). In this case, the past-servicecosts are amortised on a straight line basis over the vesting period. For defined contribution plans, the Group pays contributions to pensioninsurance plans on a contractual basis. The Group has no further paymentobligations once the contributions have been paid. The contributions arerecognised as employee benefit expenses when they are due. Prepaid contributionsare recognised as an asset to the extent that a cash refund or a reduction inthe future payments is available. Share based payments The Group has applied the requirements of IFRS2 Share-based payments. The Groupissues equity-settled equity-based payments to certain employees. These aremeasured at their fair value at the date of the grant and are expensed over thevesting period, based, where necessary, on the Group's estimate of the number ofshares that will eventually vest, and adjusted for any market based conditions.Grants of shares made during 2007 are not subject to performance criteria andwere valued at the date of the grant at market value. Valuations were confirmedby using the Blacks-Scholes Option Pricing Model. Charges made to the income statement in respect of share-based payments arecredited to retained earnings. 2. Other income 2007 2006 •'000 •'000 -----------------------Recognition of accrued grants and subsidies for investments 975 796Research and development grants 147 117Release of accruals and provisions 8 38Other Income 635 429 1,765 1,380 The Group has received public subsidies for certain assets that will berecognised over the useful life of the subsidised assets. The Group has receivedgrants for research and development activities. 3. Cost of material and services The cost of materials is attributable to the consumption of silicon, ingots,wafers, chemicals and other consumables as well as the purchase of merchandise.Purchased services are allocated to cost of services. For the year ended 31 December 2007 2006 •'000 •'000 ------------------------------Cost of raw materials, supplies and purchased merchandise 171,247 165,110Cost of purchased services 6,198 7,136Change in unfinished goods -7,544 2,248Own work capitalised 0 -154 169,901 174,340 Own work capitalised relates to the construction of production equipmentincluding in particular crystallisation systems and outer diameter saws. The cost of materials ratio (cost of materials including changes in inventoriesand own work capitalised as a percentage of the aggregate operating performance)is 64% (2006: 72%). 4. Personnel expenses For the year ended 31 December 2007 2006 •'000 •'000 ------------------------------Wages and salaries 8,151 6,932Social Securities 1,103 907Appropriation to pension accruals 85 112Early retirement settlements and pay 12 10Contributions to pension plans 294 262Employee Share Schemes 2,913 0 12,558 8,223 The Group employed an average of 215 employees during the year ended 31 December2007 (2006: 203). For the year ended 31 December 2007 2006 Number Number ------------------------------Germany 126 115United Kingdom 85 84Japan 4 4 215 203 5. Other expenses For the year ended 31 December 2007 2006 •'000 •'000 ------------------------------Property rental and rates 2,151 1,855Repairs and maintenance 867 798Contribution to supply costs 382 0Selling expenses 478 670Technical consulting, research and development 611 662Outside professional services 1,276 540Insurance premiums 545 394Travel and advertising expenses 518 371Other 1,554 1,278 8,382 6,568 Most of the land and buildings used by the group are rented. The contracts havedurations of up to ten years. In some cases there are options to extend therental period. However, in readiness for the construction of the polysiliconplant, the Group purchased, in 2007, land with an area of approximately 31,000m2in the Chemical Park at Bitterfeld in Germany. Selling expenses mainly include delivery costs and warranty provisions. Technical consulting and research and development costs relate to theexpenditure in connection with silicon wafers and Ingots. Also included arepreliminary costs relating to plans for a plant to produce solar siliconfeedstock. In addition to those disclosed above, the group undertakes considerable researchand development in the field of continuous production process optimisation andimprovement and adaptation of products to market requirements. These costs arean integral part of a highly technical production process. The directors have estimated on the basis of directly attributable costs and ageneral proportion of production costs that the cost of research and developmentis approximately €4,350,000 for the year ended 31 December 2007 (2006:€4,100,000). Included within other expenses are the following amounts which were paid to theGroup's auditor: For the year ended 31 December 2007 2006 •'000 •'000 ------------------------------Fees payable to the company's auditor for the audit of the company's annual accounts 88 65Plc audit costs 18 0Other services pursuant to legislation 96 143The audit of the company's subsidiaries pursuant to legislation 102 65Tax services 24 26 328 299 6. Interest expenses Interest expenses mainly include interest payments on short term borrowings andworking capital. 7. Income taxes Tax expenses can be broken down as follows: For the year ended 31 December 2007 2006 •'000 •'000 ------------------------------Income taxes in the United Kingdom 15,900 8,121Income taxes in Germany 6,784 6,893Income taxes in Japan 2,458 2,176Income taxes total 25,142 17,190Deferred taxes in the United Kingdom -330 297Deferred taxes in Germany -92 466Deferred taxes in Japan -927 60Deferred taxes total -1,349 229Total taxes 23,793 17,419 Income taxes include taxes on income paid or due in the individual countries aswell as deferred taxes. Deferred taxes are calculated on the basis of temporarydifferences between the carrying amounts of assets and liabilities in the IFRSfinancial statements and those carried in the tax accounts, affected byconsolidation transactions and realisable tax loss carry forwards. The German corporation tax rate in 2007 and 2006 was 25% plus the solidaritysurcharge of 5.5% of corporation tax. This resulted in an effective corporationtax rate of 26.375%. The effective trade income tax amounted to 16.67%. Takinginto account the deductibility of trade income tax from corporation tax, thetotal tax rate for the German companies was 38.65%. The total tax rate ofCrystalox Limited in the UK was 30%, and the total tax rate in Japan was 42.05%.These rates are always based on the legal regulations applicable or adopted atthe balance sheet date. The following table shows the tax reconciliation account of the tax expenseexpected in the respective financial year and the actual tax expense reported. For the year ended 31 December 2007 2006 •'000 •'000 -------------------------------Profit before tax 70,764 49,013Expected income tax expense 23,505 16,749Taxation for inter-company dividends 0 696Tax reduction due to non-taxable income -202 -190Tax on non-deductible expenses 2,243 433Use of losses brought forward 0 -465Adjustments to tax charge in respect of prior periods -382 -43Other tax effects -22 10Total tax expense 25,142 17,190Effective tax rate 35.53% 35.07% 8. Segment reporting The segments are defined on the basis of the internal organisational andmanagement structure and on the internal reporting to the Board. The primaryreporting format has defined two business segments since 1 January 2004. Adistinction is made between Silicon products and Trading & Equipment (forcrystallisation). The secondary reporting format is geared towards geographical aspects. Thesereflect country-specific risks and opportunities. Segment information 2007: Silicon Trading & products equipment Consolidation Group •'000 •'000 •'000 •'000 ------------------------------------------------------Revenue External 212,939 50,505 - 263,444 revenues Intercompany - 1,486 -1,486 0 revenues Segment results Operating result 65,353 907 - 66,260 Net finance cost 4,795 -291 - 4,504 70,148 616 70,764 Other information Assets 267,614 18,680 - 286,294Liabilities 78,219 16,600 - 94,819Property, plant and equipment additions 26,282 - - 26,282Depreciation charged 4,670 - - 4,670 The rest The rest Japan of Asia Germany of Europe USA Group •'000 •'000 •'000 •'000 •'000 •'000 -------------------------------------------------------------------------------- External 163,520 40,093 51,397 4,297 4,137 263,444revenues Assets 63,021 - 80,818 142,454 - 286,293 Liabilities 53,876 - 26,688 14,254 - 94,819 OtherinformationProperty, plant and equipmentadditions 11 - 24,587 1,684 - 26,282 Depreciation charged 10 - 2,460 2,200 - 4,670 Three customers accounted for more than 10% of 2007 Group revenue each and thesecustomers had sales in the year as follows (figures in •'000):- 1. Sales 127,018 (Japan 127,018) (Silicon Products 76,513; Trading, Parts & Equipment 50,505) 2. Sales 28,850 (Japan 28,850) (Silicon Products 28,850) 3. Sales 27,614 (Germany 27,614) (Silicon Products 27,614). Segment information 2006: Silicon Trading & products equipment Consolidation Group •'000 •'000 •'000 •'000 Revenue External 185,266 57,100 - 242,366 revenues Intercompany - 1,954 (1,954) - revenues Segment results Operating result 47,699 1,448 - 49,147 Net finance cost 51 (185) - (134) 47,750 1,263 - 49,013 Other information Assets 149,454 22,489 - 171,943Liabilities 60,430 20,287 - 80,717Property, plant and equipment additions 4,162 - - 4,162Depreciation charged 5,467 - - 5,467 The rest The rest Japan of Asia Germany of Europe USA Group •'000 •'000 •'000 •'000 •'000 •'000 External 161,370 18,261 51,862 2,393 8,480 242,366revenues Assets 75,097 - 40,639 56,207 - 171,943 Liabilities (64,654) - (11,643) (4,420) - (80,717) OtherinformationProperty, plant and equipmentadditions 19 - 3,953 189 - 4,161Depreciation charged 20 - 2,164 3,283 - 5,467 Three customers accounted for more than 10% of 2006 Group revenue each and thesecustomers had sales in the year as follows (figures in •'000):- 1. Sales 122,097 (Japan 122,097) (Silicon Products 64,997; Trading, Parts & Equipment 57,100) 2. Sales 28,886 (Germany 28,886) (Silicon Products 28,886) 3. Sales 25,260 (Japan 25,260) (Silicon Products 25,260). The geographical segments are reflecting the presence of the Group in the mostrelevant markets of the PV industry. 9. Earnings per share Earnings per share are calculated by dividing the net profit for the year (asper the income statement) by the weighted average number of shares outstandingduring the financial year. Basic shares (average) 392,118,454 375,000,100Basic earnings per share (Euro cents) 12.0 8.4 Diluted shares (average) 394,186,193 375,000,100Diluted earnings per share (Euro cents) 11.9 8.4 Basic shares and diluted shares for this calculation can be reconciled to thenumber of issued shares, as per note 26, as follows:- Shares in issue (as per note 26) 416,725,33541,725,335 New shares not held for 156 days -17,833,2517,125,000 EBT shares held for 347 days -6,773,630Weighted average number of shares for basic eps calculation 392,118,4542,175,000 EBT shares, held for 347 days granted but not vested 2,067,740Weighted average number of shares for fully diluted eps calculation 394,186,193 10. Cash and cash equivalents All short term deposits are interest bearing at the various rates applicable inthe business locations of the Group. 11. Accounts receivables As at 31 December 2007 2006 •'000 •'000 ---------------------Japan 51,065 68,933Germany 6,291 4,434United Kingdom 4,392 1,507 61,748 74,874 All receivables have short term maturity. No significant bad debt allowanceswere necessary during the reporting period. Some of the unimpaired trade receivables are past due at the reporting date. Theage of financial assets past due but not impaired is as follows: As at 31 December 2007 2006 •'000 •'000 --------------------Not more than 3 months 3,391 1,612Total 3,391 1,612 12. Inventories Inventories include finished goods and work in progress (ingots and blocks), aswell as production supplies. The change in inventories reported in the incomestatement includes the additions and disposals under the items "finished goods"and "work in progress". As at 31 December 2007 2006 •'000 •'000 ---------------------Finished products 2,618 1,655Work in progress 9,635 4,112Raw materials 8,400 8,066 20,653 13,833 No significant write downs were necessary on inventories in the period underreview. 13. Prepaid expenses and other assets As at 31 December 2007 2006 •'000 •'000 --------------------Subsidy claims 3,805 497VAT 3,418 1,690Prepaid expenses 6,341 2,431 13,564 4,618 14. Intangible assets Patents & Software under Total Licenses Development •'000 •'000 •'000 -------------------------------------------- CostAt 1 January 2007 304 7 311Additions 128 157 285Disposals -6 -7 -13At 31 December 2007 426 157 583 DepreciationAt 1 January 2007 135 - 135Charge for the year 76 - 76On disposals -6 - -6At 31 December 2007 205 - 205 Net book valueAt 31 December 2007 221 157 378At 31 December 2006 169 7 176 15. Property, plant and equipment Freehold Plant & Other Assets under Total land & machinery furniture construction buildings & equipment •'000 •'000 •'000 •'000 •'000 ------------------------------------------------------------------ Cost At 1 January 2007 372 35,884 2,087 2,140 40,483Additions 423 3,228 526 21,827 26,004Reclassification - 1,198 - -1,198 -Disposals - -1 -155 0 -156Net effect of foreign currency movements -32 -1,949 -33 -4 -2,018At 31 December 2007 763 38,360 2,425 22,765 64,313 Depreciation At 1 January 2007 130 25,229 1,157 - 26,516Charge for the year 10 4,250 333 - 4,593On disposals -109 - -109Net effect of foreign currency movements -12 -1,762 -28 - -1,802At 31 December 2007 128 27,717 1,353 - 29,198 Net book valueAt 31 December 2007 635 10,643 1,072 22,765 35,115At 31 December 2006 242 10,655 930 2,140 13,967 Asset under construction relate to the polysilicon facility in Bitterfeld Capital commitments at year end relating to the above amounted to Eur 30.65m Freehold Plant & Other Assets under Total land & machinery furniture construction buildings & equipment •'000 •'000 •'000 •'000 •'000 -------------------------------------------------------------------- Cost At 1 January 2006 364 33,331 1,816 627 36,138Additions 2,086 357 1,582 4,025Reclassification - 47 13 -69 -9Disposals - -47 -99 0 -146Net effect of foreign currency movements 8 467 0 0 475At 31 December 2006 372 35,884 2,087 2,140 40,483 Depreciation At 1 January 2006 117 19,872 966 - 20,955Charge for the year 11 5,042 287 - 5,340On disposals -42 -97 - -139Net effect of foreign currency movements 2 357 1 - 360At 31 December 2006 130 25,229 1,157 - 26,516 Net book valueAt 31 December 2006 242 10,655 930 2,140 13,967At 31 December 2005 247 13,459 850 627 15,183 16. Other long term assets As at 31 December 2007 2006 •'000 •'000 --------------------Other assets 246 150Prepaid expenses 4,351 1,776 4,597 1,926 17. Deferred taxes Deferred taxes are calculated at the local rates in accordance with IAS 12(Income Taxes). Deferred tax assets and liabilities are attributable to the following accountingand valuation differences of the book value of assets and liabilities betweenthe IFRS-balance sheet and the tax balance sheet and tax losses carried forward. As at 31 December 2007 2006 •'000 •'000 ---------------------Elimination of inter-company profit in stock 1,337 219Fixed assets 632 538Enterprise tax 166 143Pension plans 75 108Other 119 14 Deferred tax asset 2,329 1,022 General allowance on accounts receivables -233 (267)Fixed Assets -47 0Deferred tax liability -280 (267) Total deferred taxes 2,049 755 18. Non-current and current financial liabilities As at 31 December 2007 2006 •'000 •'000 ---------------------Syndicated loans 39,537 53,091MicroVenture loans 0 1,620Other loans 89 366 39,626 55,077 Current portion 39,619 53,342Non-current portion 7 1,735 39,626 55,077 Loans payable and conditions: 2007 2006Underwriter •'000 •'000 Maturity Interest rate Assets pledged -------------------------------------------------------------------------------- The Bank of Tokyo Mitsubishi UFJ 8,742 13,741 variable 1,47583 - 1,49917% Accounts receivableOther syndicated loans 30,191 33,015 variable 1,47583 - 1,49917% Accounts receivableThe Bank of Mitsubishi Tokyo UFJ 605 6,335 variable 1.96% Accounts receivableMicroVenture GmbH & Co. KGaA 0 1,020 01/02 - 12/08 10.000% none MicroVenture GmbH & Co. KGaA 0 600 01/02 - 12/09 10.000% none Other loans 88 366 07/02 - 01/09 0,00% - 7,057% Machinery and equipment 39,626 55,077 The "Other syndicated loans" have been issued by a syndicate including thefollowing banks: Yokohama bank, Shizuoka bank, Syokoukumiaityuou bank, Hiroshimabank, Ooita bank, Kouginri-su, Sinwa bank, Toukyoutomin bank, Tougin ri-su,Yamanasityuou bank, Risona bank, Gihu bank, Daiyamondori-su, Keiyou bank,Tyukyou bank, Jyuuroku bank, Kouti bank, Daisan bank and Musashino bank. 19. Accounts payable Accounts payable are obligations arising from normal business transactions. As at 31 December 2007 2006 •'000 •'000 ---------------------Japan 11,647 10,491United Kingdom 3,774 2,745Germany 6,326 2,509 21,747 15,745 20. Provisions and Accruals The provisions and accruals of the Group are as follows: As at 31 December 2007 2006 •'000 •'000 --------------------Rents and ancillary rent costs 592 694Outstanding invoices 1,281 782Bonuses 524 592Warranty provisions 396 371Other payroll accruals 260 424Year end costs 265 213Supervisory board remuneration 38 58Other 276 74Current accruals and provisons 3,632 3,208 Rents and ancillary rent costs 0 127Stamp duty 100 100Other 28 45Non-current accruals and provisons 128 272 Total accruals and provisons 3,760 3,480 21. Deferred income The grants from governmental institutions are bound to specific terms andconditions. The group is obliged to observe retention periods of five years forthe respective assets in case of investment subsidies as well as of five yearsfor assets under investment grants, and to retain a certain number of jobscreated in conjunction with the underlying assets. In cases of violations of theterms, the grants received must be repaid. In the past, the grants received weresubject to periodic audits, which were concluded without significant findings oradjustments. The deferred subsidies in the period under review consist of the following: As at 31 December 2007 2006 •'000 •'000 --------------------Investment subsidies 2,246 2,266Investment grants 3,809 1,405Other grants and subsidies 1 7 6,056 3,678 Current portion 860 817Non-current portion 5,196 2,861 6,056 3,678 22. Income tax payable As at 31 December 2007 2006 •'000 •'000 ---------------------United Kingdom 8,516 3,611Germany 532 3,635Japan 1,807 2,064 10,855 9,310 Income tax liabilities comprise both corporation and trade tax liabilities,calculated or estimated by the group companies as well as corresponding taxespayable abroad due to local tax laws, including probable amounts arising oncompleted or current tax audits. 23. Other current liabilities As at 31 December 2007 2006 •'000 •'000 --------------------VAT liability 85 303Payroll liabilities 344 237Other liabilities 502 576 931 1,116 24. Advance payments received As is the industry norm, where possible and suitable the group enters into longterm contracts with its customers and may request payment deposits from themahead of the supply of goods. At 31 December 2007, such deposits amounted to€10m, from 1 customer. (2006,€722,000 from 2 customers classified as currentliabilities). 25. Pension benefit obligation The obligation relates to fixed post retirement payments for two employees andincludes benefits for surviving spouses granted in 2005. The plan will be fullyfunded upon retirement of the employees by insurance contracts held and paid inby the Group. In case of insolvency the benefits have been ceded to theemployees directly. Therefore the fair value of the insurance contracts has beentreated as plan asset. The liability recognised in the balance sheet in respect of defined benefitpension plans is the present value of the defined benefit obligation at thebalance sheet date less the fair value of plan assets. The defined benefitobligation is calculated annually by independent actuaries using the projectedunit credit method. The present value of the defined benefit obligation isdetermined by discounting the estimated future cash outflows using interestrates of government bonds at the balance sheet date with a ten year maturity,adjusted for additional term to maturity of the related pension liability. Actuarial gains and losses arising from experience adjustments and changes inactuarial assumptions are charged or credited directly to the income statementin the period in which they arise. Past-service costs are recognised immediately in income, unless the changes tothe pension plan are conditional to the employees remaining in service for aspecified period of time (the vesting period). In this case, the past-servicecosts are amortised on a straight line basis over the vesting period. The Group contributions are paid directly to the asset holding insurancecompany, thereby guaranteeing the value of the scheme which is deemed whollyfunded. As at 31 December 2007 2006 •'000 •'000 --------------------Pension benefitsPresent value of defined benefit obligations -1,241 -1,144Fair value of of plan assets 765 513---------------------------------------------------------------------------Total employee benefits -476 -631--------------------------------------------------------------------------- Movements in the balance sheet:---------------------------------------------------------------------------Present value of defined benefit obligations 1st January -1,145 -1,015Expense recognised -118 -121Interest cost -50 -38Actuarial gains 72 30Present value of defined benefit obligations 31st December -1,241 -1,144------------------------------------------------------------------------------------------------------------------------------------------------------Fair value of of plan assets 1st January 512 265Contribution 256 256Expected return of plan assets 32 13Actuarial losses -35 -21Fair value of of plan assets 31st December 765 513--------------------------------------------------------------------------- Amounts recognised in the income statement:Interest cost -50 -38Expected return of plan assets 32 13Current service cost -119 -121Actuarial gains / losses 37 9--------------------------------------------------------------------------- -100 -137--------------------------------------------------------------------------- The principal acturial assumptions used were asfollows:Discount rate: 5.00% 4.40%Expected return of plan assests 4.50% 5.00%Future salary increases 0.00% 0.00%Future pension increases 2.00% 1.75% The expected service expenses for 2008 are €138,325, the contributions to planassets are estimated at €255,717. 26. Equity 2007 •'000 -------Authorised share capital600,000,000 ordinary shares of 2 pence each 17,756 Allotted, called up and fully paid416,725,335 ordinary shares of 2 pence ecah 12,332 On 6 June 2007 the Company issued 41,725,235 new ordinary shares of 2 pence eachrepresenting 10% of the enlarged share capital at a price of 130 pence per shareraising £54,242,806 before expenses in this respect. PV Crystalox Solar PLC was incorporated on 5 December 2006 with an authorisedshare capital of £50,000. The authorised share capital was increased by SpecialResolution on 20 December 2006 to £7,950,002 and further in-creased by SpecialResolution on 21 May 2007 to £8,000,000. In December 2006, the Company made an offer to each of the shareholders of PVCrystalox Solar AG to purchase all of their shares in PV Crystalox Solar AG in exchange for theissue to them of an equivalent number of shares in the Company. On 5 January2007, the Company issued 5,625,000 ordinary shares of £1.00 each to the UK basedshareholders in exchange for an equivalent number of shares in PV CrystaloxSolar AG held by them. On 10 May 2007, the Company issued a further 1,875,000ordinary shares of £1.00 each to the remaining shareholders in PV CrystaloxSolar AG, again, in consideration for an equivalent number of shares in PVCrystalox Solar AG held by them. Except for the two ordinary shares of £1.00each issued for cash at incorporation, the remaining 7,500,000 issued ordinaryshares of £1.00 each in the Company were issued in exchange for shares in PVCrystalox Solar AG. By resolutions passed at the extraordinary general meeting of the Company heldon 21 May 2007 each ordinary share of £1.00 in the capital of the Company (bothissued and un-issued) was sub-divided into 50 ordinary shares of 2p each. The company established an Employee Benefit Trust, a Jersey based employeebenefit Trust, on 18 January 2007, which has acquired, and may in the futureacquire, the company's ordinary shares for the benefit of the group's employees.A number of share grants were made to key employees on 17 December 2007. The "Currency translation adjustment" represents the differences arising fromthe currency translation of investments in subsidiaries. Summary of rights of share capital The ordinary shares are entitled to receipt of dividends. On winding up theirrights are restricted to a repayment of the amount paid up and to share in anysurplus assets arising. The ordinary shares have full voting rights. 27. Share options On 19 January 2007 75,000 ordinary shares of £1 were granted by the EBT at themarket price on that date of £25 per share. These shares were exercisedimmediately at an exercise price of nil pence. The total value of the grant wastherefore £1,950,000 or €2,281,017. On 21 May 2007 each ordinary share of £1 inthe Capital of the company was sub-divided into 50 ordinary shares of 2p each. On 17 December 2007 2,175,000 ordinary shares of 2 pence were granted by the EBTat the market price at that date of 130 pence per share. These shares vest inthree years on the condition that staff remain in the Group's employment forthat period. These options have an exercise price of nil pence. None of theseshares were forfeited or cancelled during the year. 28. Cash flow statement The composition of cash positions, the general presentation of the cash flowstatement and the accounting option remain unchanged from the previous period. The cash flow statement was prepared in compliance with IAS 7. The cash flowfrom operating activities is presented according to the indirect method. Cash is defined as the balance of cash and cash equivalents. All liabilities to banks are considered to be financial liabilities for purposesof the cash flow statement. Interest income is disclosed under cash flow from operating activities, whileinterest and dividend payments are recognised under cash flow from financingactivities. Tax payments are reported with their full amounts under operating activities,since it is practically impossible to allocate these payments to individualbusiness segments. 29. Risk management and hedging strategies The main risks arising from the Group's financial instruments are credit risks,interest rate risks, procurement risks, and exchange rate fluctuation risks. TheBoard reviews and determines policies for managing each of these risks and areas such summarised below. These policies have been consistently appliedthroughout the period. Credit risk The Group's principal financial assets are cash deposits and trade receivables.The credit risk associated with cash is limited as the financial institutionsinvolved have high credit ratings assigned by international credit-ratingagencies. The main credit risk therefore arises from trade receivables. All trade receivables are of a short term nature, with maximum payment terms of150 days. In order to manage credit risk, local management defines limits forcustomers based on a combination of payment history and customer reputation.Credit limits are reviewed by local management on a regular basis. As a supplierto some of the leading manufacturers of solar cells, the group has a limited butincreasing number of customers. In 2007 48% of the sales are related to thelargest customer (2006: 50%), who received a rating of A by Standard & Poor'sand A1 by Moody's. The number of customers accounting for approximately 95% ofthe annual revenue increased from fifteen in 2006 to sixteen in 2007. Whereappropriate, the group requests payment or part-payment in advance of shipment,which generally covers the cost of the goods. Different forms of retention oftitle are used as securing means depending on local restrictions prevalent onthe respective markets. Exchange rate fluctuation risks A large portion of sales revenue is invoiced in foreign currency, potentiallyexposing the Group to exchange rate risks. In the financial year 2007, about€163.5 million (2006: €162.4 million) of the Group's sales was generated in JPY.Expenses of €125.2 million (2006: €126.3 million) invoiced in JPY were allocatedto cost of materials. Significant cash funds are denominated in currencies other than thepresentational currency of the Group. Excess cash funds not needed for localsourcing are exposed to exchange rate and associated interest fluctuation risks,particularly so in the UK The group sells its products in a number of currencies (mainly Japanese Yen andEuros and to a lesser extent US Dollars) and also purchases in a number ofcurrencies (mainly Japanese Yen, Euros, Pounds Sterling and US Dollars). The group is largely naturally hedged because it buys a significant proportionof its raw materials in Japanese Yen and Euros, operates its wafering factorywithin the Euro-zone and pays for the sub-contracting of wafer production inJapan in Japanese yen. However, the ingot manufacturing operation is within theUK and therefore part of group costs are in Pounds Sterling. The exchange rate risk is predominantly in the UK in respect of balances held ineuros and yen. However, in addition to its natural hedging position, the Groupis able to further mitigate currency risk by utilising surplus yen to repaygroup loans held in Japan and to allocate surplus euros to capital investment inthe new polysilicon project at Bitterfeld in Germany. After careful consideration and due to the satisfactory natural hedgingposition, the directors have adopted a long-term policy of setting-off anydownside risks of currency fluctuation against the associated up-side risks. During 2007 the Japanese yen/Euro exchange rate declined 5.22% (2006: 12.82%).The impact of this decline on the income statement was to reduce sales revenuesby approximately 4% (2006: 8.97%) and to reduce operating profit (EBIT) byapproximately 0.8% (2006: 1.99%). During 2007 the net gain on foreign currencyadjustments was a gain of €1.9 million (2006: loss of €1.6 million). Interest fluctuation risks The Group is exposed to interest rate fluctuation risks, since the Group's loanagreements largely are subject to variable interest rates. In Japan swaps havebeen used to a small extent to hedge against these risks. All variable interestrate loans are of a short-term nature with a maturity of less than twelve monthsand part of credit lines that expire at the latest in September 2008. The vastmajority of borrowings €39,536,683 (99.8%) at the end of 2007 are in Japaneseyen (2006: 96.4%). Accordingly, there is a downside risk that Japanese yeninterest rates may increase substantially from the current low levels. However,the group has a regular strong Japanese yen income, sufficient to repay theloans (if group management wished to do so) within a twelve month time scale. On 31 December 2007 the group had borrowings in Japanese yen of €39.5 million(2006: €53.1) at an average interest rate of approximately 1.5% (2006: 1.5%). .For each 1% rise in the Japanese yen interest rates group interest costs wouldincrease by approximately €400,000 (2006: €530,000) and for each 1% fall in theJapanese yen interest rates interest costs would fall by approximately €400,000(2006: €530,000). Accordingly, Group profits and equity would fall or rise(after corporation tax in Japan) by approximately €200,000 (2006: €265,000). Further sensitivity analysis of the accruals and loans outstanding at year endhas not been dislcosed as they are virtually all current and paid in line withstandard payment termsThe group's borrowings in Japanese yen are also current and have no setrepayment plan being secured on the Japanese receivables book. The interests onthis loan is paid monthly in arrears. Designated Available Loans Amortised Total Fair Book at fair for and costs carrying valueTotal financial Value value sale receivables Valueassets andliabilities: €000s €000s €000s €000s €000s €000s €000s -------------------------------------------------------------------------------------Cash and cash equivalent 147,892 147,892 147,892 147,892 Accounts receivable 61,748 61,748 61,748 61,748Prepaid expenses 7,636 7,636 7,636 7,636Advance payments to suppliers 10,525 10,525 10,525 10,525Advance payments from customers (10,000) (10,000) (10,000) (10,000)Accounts payable (21,748) (21,748) (21,748) (21,748)Accrued expenses (3,760) (3,760) (3,760) (3,760)Borrowings due within one year (39,619) (39,619) (39,619) (39,619)Borrowings due after one year (7) (7) (7) (7)Deferred income (6,056) (6,056) (6,056) (6,056)Derivative assets (107) (107) (107) (107)Other liabilities (823) (823) (823) (823) ------------------------------------------------------------------------------------- 145,681 (107) 147,892 3,952 (6,056) 145,681 145,681 30. Calculation of fair value There are no publicly traded financial instruments (e.g. publicly tradederivatives and securities held for trading and available-for-sale securities)nor such other financial instruments that are traded in the standard way held bythe Group. 31. Contingent liabilities The Group did not assume any contingent liabilities for third parties. Nomaterial litigation or risks from violation of third parties rights or laws thatcould materialise in 2007 are pending at the current time. 32. Other financial obligations Lease agreements (operating leases) The leases primarily relate to rented buildings and have terms of no more thaneight years. Financial obligations resulting from operating leases become due asfollows: As at 31 December 2007 2006 •'000 •'000 --------------------Less than one year 1,326 1,2192 - 5 years 5,009 3,651Longer than five years 2,172 1,378 8,507 6,248 Equipment purchase commitments Orders to the amount of €31.0m had been made on 31 December, of which themajority relate to advance payments made in order to further the investmentsregarding the expansion of production. 33. Related party disclosures The Group basically defines related parties as the senior executives of theGroup and also companies that these persons could have a material influence onas related parties. During the reporting period, none of the shareholders hadcontrol over or a material influence in the parent group. All futuretransactions with such related parties will be conducted under normal marketconditions. 34. Post balance sheet events There are no significant post balance sheet events. 35. Publication of non-statutory accounts The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The consolidated balance sheet at 31 December 2007 and the consolidated incomestatement, consolidated statement of changes in equity, consolidated cash flowstatement and associated notes for the year then ended have been extracted fromthe Group's 2007 statutory financial statements upon which the auditor's opinionis unqualified and does not include any statement under section 237 of theCompanies Act 1985. Those financial statements have not yet been delivered to the Registrar ofCompanies. This information is provided by RNS The company news service from the London Stock Exchange
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| Date | Source | Headline | |
|---|---|---|---|
| 23rd Sep 2020 | 7:07 am | RNS | Second Price Monitoring Extn |
| 23rd Sep 2020 | 7:03 am | RNS | Price Monitoring Extension |
| 22nd Sep 2020 | 4:41 pm | RNS | Second Price Monitoring Extn |
| 22nd Sep 2020 | 4:35 pm | RNS | Price Monitoring Extension |
| 22nd Sep 2020 | 2:15 pm | RNS | Holding(s) in Company |
| 22nd Sep 2020 | 12:15 pm | RNS | Director/PDMR Shareholding |
| 18th Sep 2020 | 2:45 pm | RNS | Holding(s) in Company |
| 11th Sep 2020 | 7:00 am | RNS | Result of Tender Offer |
| 9th Sep 2020 | 12:05 pm | RNS | Result of Meeting |
| 27th Aug 2020 | 7:00 am | RNS | Half-year Report |
| 16th Jul 2020 | 7:00 am | RNS | Tender Offer, Notice of GM and Cancellation |
| 1st Jul 2020 | 7:00 am | RNS | Change of CFO and Group Secretary |
| 29th Jun 2020 | 7:00 am | RNS | Settlement payment received and tender offer |
| 23rd Jun 2020 | 2:00 pm | RNS | Result of AGM |
| 19th Mar 2020 | 4:43 pm | RNS | Second Price Monitoring Extn |
| 19th Mar 2020 | 4:38 pm | RNS | Price Monitoring Extension |
| 19th Mar 2020 | 7:00 am | RNS | Final Results |
| 2nd Jan 2020 | 3:29 pm | RNS | Director/PDMR Shareholding |
| 26th Sep 2019 | 7:00 am | RNS | Half-year Report |
| 1st Jul 2019 | 9:36 am | RNS | Result of AGM |
| 14th Jun 2019 | 4:40 pm | RNS | Second Price Monitoring Extn |
| 14th Jun 2019 | 4:35 pm | RNS | Price Monitoring Extension |
| 6th Jun 2019 | 11:24 am | RNS | Share Capital Consolidation |
| 5th Jun 2019 | 2:25 pm | RNS | Share Capital Consolidation & Amended Timetable |
| 16th May 2019 | 9:09 am | RNS | Holding(s) in Company |
| 15th May 2019 | 12:18 pm | RNS | Result of General Meeting |
| 18th Apr 2019 | 7:00 am | RNS | Notice of GM |
| 12th Apr 2019 | 7:00 am | RNS | Holding(s) in Company |
| 10th Apr 2019 | 7:00 am | RNS | Holding(s) in Company |
| 22nd Mar 2019 | 4:09 pm | RNS | Holding(s) in Company |
| 21st Mar 2019 | 7:00 am | RNS | Final Results |
| 14th Mar 2019 | 4:33 pm | RNS | Holding(s) in Company |
| 1st Feb 2019 | 10:50 am | RNS | Update on Group Strategy |
| 4th Dec 2018 | 3:26 pm | RNS | Holding(s) in Company |
| 30th Nov 2018 | 9:51 am | RNS | Receipt of Final Payment |
| 14th Sep 2018 | 7:00 am | RNS | Half-year Report |
| 17th Aug 2018 | 7:00 am | RNS | Settlement Agreement |
| 18th May 2018 | 11:03 am | RNS | AGM Results |
| 9th May 2018 | 7:00 am | RNS | Receipt of part payment of arbitration award |
| 15th Mar 2018 | 7:00 am | RNS | Preliminary Results |
| 13th Mar 2018 | 11:19 am | RNS | Notice of Results |
| 8th Nov 2017 | 10:58 am | RNS | Arbitration Award |
| 21st Sep 2017 | 10:17 am | RNS | Holding(s) in Company |
| 7th Sep 2017 | 7:00 am | RNS | Delay on arbitration judgement |
| 24th Aug 2017 | 7:00 am | RNS | Half-year Report |
| 13th Jul 2017 | 12:01 pm | RNS | Closure of UK manufacturing operations |
| 19th May 2017 | 9:51 am | RNS | Holding(s) in Company |
| 19th May 2017 | 9:44 am | RNS | AGM Results |
| 23rd Mar 2017 | 7:00 am | RNS | Preliminary Results 2017 |
| 26th Oct 2016 | 7:00 am | RNS | Update on arbitration |
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