21 Aug 2008 07:00
PV Crystalox Solar PLC
("PV Crystalox Solar" the "Company" or the "Group")
PV Crystalox Solar PLC, one of the world's leading independent suppliers of solar-grade silicon wafers for solar electricity generation systems, is pleased to announce its half year results for the period ended 30 June 2008.
Group Highlights
| PV Crystalox Solar PLC | |||||
| Group Income Statement | |||||
| 6 Mths Ended | 6 Mths Ended | 12 Mths Ended | |||
| 30-Jun-2008 | 30-Jun-2007 | 31-Dec-2007 | |||
| €'000 | €'000 | €'000 | |||
| Sales of silicon products | 126,061 | 92,796 | 212,939 | ||
| Trading and equipment | 225 | 30,762 | 50,505 | ||
| Total Revenues | 126,286 | 123,558 | 263,444 | ||
| Earnings Before Interest & Tax | 50,506 | 22,607 | 67,499 | ||
| Earnings before tax | 52,832 | 22,922 | 70,764 | ||
| NET INCOME | 36,932 | 13,576 | 46,971 | ||
| Basic earnings per share (euro cents) | 9.0 | 3.6 | 12.0 | ||
| Diluted earnings per share (euro cents) | 9.0 | 3.6 | 11.9 | ||
Sales revenues in core silicon products business increased by 36% to €126.1m (2007: €92.8m)
Net income increased by 172% to €36.9m (2007:€13.6m)
Wafer shipment volume increased by 24% to 110MW in the period (2007:89MW)
Total sales revenues growth limited to 2% as the Group's low-margin trading activity has not resumed in 2008
Construction of the 1800MT capacity solar grade silicon production facility in Bitterfeld Germany is progressing satisfactorily with first output expected in early 2009
Good progress in wafer thickness reduction with 40% of output in H1 supplied as 180µm wafers
Six new long term wafer supply agreements finalised with customers in H1
Interim dividend to shareholders of 2.0 euro cents per share (2007:nil)
Iain Dorrity, Chief Executive of PV Crystalox Solar PLC said: "We have delivered a strong set of first half results which demonstrate that we have continued to achieve the goals set out at the time of our IPO in 2007. We aim to capitalise on this growth through our strategic move into the production of polysilicon in 2009, and strengthen our position as one of the PV industry's leading wafer producers."
Enquires:
PV Crystalox Solar PLC (0)1235 437160
Iain Dorrity Peter Finnegan
Gavin Anderson & Company (0)207 554 1400
Kate Hill Robert Speed
CHAIRMAN AND CHIEF EXECUTIVE'S JOINT STATEMENT
Overview and Strategic Update
We produced a strong operational performance during the first half of 2008 with improved silicon utilisation, an increase in contracted silicon deliveries and firmer wafer pricing enabling us to deliver considerable improvements in our financial results. Sales of our core silicon products increased to €126.1m (H1 2007 €92.8m) while earnings rose from €13.6m to €36.9m an increase of 172%. Wafer shipment volumes increased by 24% to 110MW in comparison with 89MW achieved in the same period last year reflecting the additional contracted polysilicon deliveries which started in H2 2007 together with improved silicon utilisation.
As expected and at the request of our partners, our trading activity stopped during Q4 last year and has not resumed during the year to date but since the business was carried out primarily to facilitate relationships and at low margins the impact on our overall profits has been minimal.
We continue to make progress in our medium and long-term aim of reducing further the cost of wafer production to enhance the Group's position as a low cost producer. It is the Board's intention for the Group to be the PV industry's cost leader enabling it to supply quality wafers at competitive prices without sacrificing margins.
Our effective silicon utilisation has been improved as our customers move to thinner wafers and 40% of wafers shipped in the first half of the year were supplied at industry leading 180µm thickness. This trend is expected to continue and all customers are expected to move to this thickness during the second half of the year. Our adoption of new technology for ingot cutting has also enabled a very significant reduction in silicon losses during block production. The new ingot wire saws will effectively reduce silicon kerf losses during cutting by >90% in comparison with the sawing equipment used previously.
During the year to date we have made significant progress in consolidating our relationships with leading PV companies in Europe, Asia and USA and have concluded six new wafer supply agreements with predetermined prices. Customers include Q Cells, Suntech, Schott Solar and the Intel spin off, SpectraWatt. The newly contracted wafer volume is equivalent to 640MW over the period 2009-2011 and complements wafer supply agreements signed last year.
The construction of our polysilicon manufacturing facility in Bitterfeld is proceeding on schedule and we remain on track to achieve mechanical completion and to start the commissioning phase at end of November this year. Production is expected to start in early 2009 with output of 900MT in the first year of operation and increasing to 1800MT in 2011. We remain confident that the construction will be completed within the revised capital expenditure budget of €100m.
Results
Sales of the Group's core silicon products increased by 36% to €126.1 million. However, as there was no resumption of our trading activity total sales revenue in the six months period under review increased by only 2% to €126.3 million against €123.6 million in the first half of last year. This trading activity business was conducted at very low margins and accordingly there is only a minimal effect on profits.
EBIT was €50.5 million (2007 €22.6 million) an increase of 123% over the same period last year.
We have a net positive cash position on 30 June 2008 of approximately €95.2 million compared with €93.7 million at the end of June last year. The Group continues to generate cash from operations and has invested approximately €53 million in capital equipment in the period since June 2007. The main part of this capital equipment relates to the building of the polysilicon production facility in Bitterfeld, Germany. A dividend of €10.2 million was paid in June 2008. Our current net cash balance is to finance ongoing business development including ongoing capital equipment for both our existing operations and our solar grade polysilicon plant. The Group has a relatively small amount of borrowings (mainly in Japanese yen) which totaled approximately €13 million at the end of June 2008.
Dividend
The Directors have declared an interim dividend of 2 euro cents per share (2007: nil) payable on 22 October 2008 to shareholders on the Register on 8 October 2008. The dividend is payable in cash 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 a.m. on 13 October 2008.
Outlook
The market drivers for the PV industry 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 Europe and the USA expected to be the major markets.
Wafer sales volumes and pricing for the second half of 2008 are expected to be broadly similar to H1 and thus total output for the year is expected to be in the range 220-225MW. Accordingly, we are confident about the outlook for the full year 2008.
Additional polysilicon from our new Bitterfeld production facility will become available in 2009 and enable corresponding increase in our wafer production. Installation of the first stage of associated ingot production systems and wire saws for blocking and wafering is underway and will be completed in Q1 2009. Currently we anticipate that 500-650MT of the total Bitterfeld output will be processed into wafers during 2009 and thus we expect total wafer shipments in 2009 to be in the range 280-300MW.
During the second half of 2008 we expect to strengthen further our position through the finalising of two additional wafer supply agreements such that sales of more than 95% of currently planned wafer output will be contracted until end-2010. Consequently, we believe that the Group is well placed to continue to play a significant role in the PV industry and look forward to the future with confidence.
| 6 Months | 6 Months | ||
| ended 30 June | ended 30 June | ||
| 2008 | 2007 | ||
| Note | €'000 | €'000 | |
| Revenues | 126,286 | 123,558 | |
| Other income | 653 | 1,045 | |
| Cost of material and services |
|
|
|
| Cost of material | (64,449) | (80,989) | |
| Cost of services | (2,259) | (2,961) | |
| Personnel expenses |
|
|
|
| Wages and salaries | (5,437) | (3,836) | |
| Social security costs | (552) | (473) | |
| Pension costs | (202) | (197) | |
| Employee share schemes | (622) | (2,891) | |
| Depreciation on fixed and intangible assets | (2,378) | (2,151) | |
| Other expenses | (4,280) | (3,761) | |
| Costs of initial public offering |
| - | (3,486) |
| Currency gains and losses |
| 3,746 | (1,251) |
| EARNINGS BEFORE INTEREST AND TAXES (EBIT) |
| 50,506 | 22,607 |
| Interest income |
| 2,713 | 865 |
| Interest expense | (387) | (550) | |
| EARNINGS BEFORE TAXES (EBT) |
| 52,832 | 22,922 |
| Income taxes | (15,900) | (9,346) | |
| PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT |
| 36,932 | 13,576 |
|
|
|
|
|
| EARNINGS PER SHARE ON CONTINUING ACTIVITIES | |||
| Basic in euro cents | [6] | 9.0 | 3.6 |
| Diluted in euro cents | [6] | 9.0 | 3.6 |
All of the activities of the Group are classed as continuing.
| 6 Months | 6 Months | 12 Months | ||
| ended 30 June | ended 30 June | ended 31 December | ||
| 2008 | 2007 | 2007 | ||
| Note | €'000 | €'000 | €'000 | |
| Cash and cash equivalents |
| 108,522 | 148,048 | 147,892 |
| Accounts receivable | 63,410 | 76,380 | 61,748 | |
| Inventories | 17,910 | 13,068 | 20,653 | |
| Prepaid expenses and other assets | 11,604 | 7,272 | 13,564 | |
| Current tax assets | 4,865 | 2,240 | 18 | |
| TOTAL CURRENT ASSETS |
| 206,311 | 247,007 | 243,875 |
| Intangible assets |
| 443 | 170 | 378 |
| Property, plant and equipment | 62,402 | 14,580 | 35,115 | |
| Other long term assets | 14,350 | 7,669 | 4,597 | |
| Deferred tax asset | 3,628 | 958 | 2,329 | |
| TOTAL NON CURRENT ASSETS |
| 80,823 | 23,377 | 42,418 |
| TOTAL ASSETS |
| 287,134 | 270,384 | 286,294 |
| Loans payable short term | [8] | 13,348 | 54,284 | 39,619 |
| Accounts payable trade | 22,847 | 14,452 | 21,747 | |
| Advance payments received | 442 | - | - | |
| Accrued expenses | 3,586 | 7,014 | 3,632 | |
| Deferred income current portion | 944 | 864 | 860 | |
| Income tax payable | 15,492 | 9,458 | 10,855 | |
| Other current liabilities | 1,001 | 1,406 | 930 | |
| TOTAL CURRENT LIABILITIES |
| 57,660 | 87,477 | 77,644 |
| Loans payable long term | [8] | - | 71 | 7 |
| Advance payments received | 14,558 | 10,000 | 10,000 | |
| Accrued expenses | 28 | 145 | 128 | |
| Pension benefit obligation | 417 | 540 | 476 | |
| Deferred income less current portion | 4,608 | 2,411 | 5,196 | |
| Deferred tax liability | 295 | 256 | 280 | |
| Other long term liabilities | 1,393 | 43 | 1,088 | |
| TOTAL NON CURRENT LIABILITIES |
| 21,298 | 13,466 | 17,174 |
| TOTAL LIABILITIES |
| 78,958 | 100,943 | 94,819 |
| Share capital |
| 12,332 | 12,332 | 12,332 |
| Share premium | 75,606 | 75,606 | 75,606 | |
| Investment in own shares | (5,642) | (5,508) | (5,642) | |
| Reverse acquisition reserve | (3,601) | (3,601) | (3,601) | |
| Retained earnings | 151,251 | 91,164 | 124,560 | |
| Currency translation adjustment | (21,771) | (553) | (11,780) | |
| TOTAL SHAREHOLDERS' EQUITY |
| 208,176 | 169,440 | 191,475 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
| 287,134 | 270,384 | 286,294 |
| Investment in | Reverse | Currency | |||||
| Share | Share | own shares | acquisition | Retained | translation | Total | |
| capital | premium | (EBT) | reserve | profit | adjustment | equity | |
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
| AS OF 1 JANUARY 2008 | 12,332 | 75,607 | (5,642) | (3,601) | 124,559 | (11,780) | 191,475 |
| Currency translation adjustment | (9,991) | (9,991) | |||||
| NET INCOME RECOGNISED DIRECTLY IN EQUITY | 12,332 | 75,607 | (5,642) | (3,601) | 124,559 | (21,771) | 181,484 |
| Net profit |
|
|
|
| 36,932 |
| 36,932 |
| Total recognised income and expense for the period | 12,332 | 75,607 | (5,642) | (3,601) | 161,491 | (21,771) | 218,416 |
| Investment in own shares | 0 | ||||||
| Reverse acquisition | 0 | ||||||
| Reserve | 0 | ||||||
| Dividends paid in period | (10,241) | (10,241) | |||||
| AS AT 30 JUNE 2008 | 12,332 | 75,607 | (5,642) | (3,601) | 151,250 | (21,771) | 208,175 |
| AS OF 1 JANUARY 2007 | 7,500 |
|
|
| 77,588 | (975) | 84,113 |
| Currency translation adjustment | 422 | 422 | |||||
| NET INCOME RECOGNISED DIRECTLY IN EQUITY | 7,500 | 0 | 0 | 0 | 77,588 | (553) | 84,535 |
| Net profit |
|
|
|
| 13,576 |
| 13,576 |
| Total recognised income and expense for the period | 7,500 | 0 | 0 | 0 | 91,164 | (553) | 98,111 |
| Investment in own shares | (5,508) | (5,508) | |||||
| Reverse acquisition | (3,601) | (3,601) | |||||
| Reserve | 0 | ||||||
| Share issue | 4,832 | 75.607 | 80,439 | ||||
| AS AT 30 JUNE 2007 | 12,332 | 75.607 | (5,508) | (3,601) | 91,164 | (553) | 169,440 |
| 6 Months | 6 Months | |
| ended 30 June | ended 30 June | |
| 2008 | 2007 | |
| €'000 | €'000 | |
| EARNINGS BEFORE TAXES | 52,832 | 22,922 |
| ADJUSTMENTS FOR: |
|
|
| Interest | (2,326) | (315) |
| Depreciation and amortisation | 2,378 | 2,151 |
| Change in pension accruals | (59) | (91) |
| Change in other provisions | (146) | 3,679 |
| Profit/(loss) from the disposal of property, plant and equipment | (1) | 0 |
| Unrealised gain/(losses) in foreign currency exchange | 107 | 849 |
| Deferred income | (402) | (464) |
|
| 52,384 | 28,731 |
| CHANGES IN WORKING CAPITAL: |
|
|
| Change in inventories | 2,743 | 765 |
| Decrease/(increase) in trade receivables | (2,329) | (5,222) |
| Increase in trade payables and advance payments | 6,238 | 7,984 |
| Increase in other assets | (7,792) | (8,397) |
| Decrease/(increase) in other liabilities | 376 | 290 |
|
| 51,618 | 24,151 |
| Income taxes paid | (17,438) | (9,142) |
| Interest received | 2,713 | 865 |
| NET CASH FROM OPERATING ACTIVITIES | 36,893 | 15,874 |
| CASH FLOW FROM INVESTING ACTIVITIES |
|
|
| Proceeds from sale of property, plant and equipment | 3 | 0 |
| Proceeds from investment grants and subsidies | (103) | 60 |
| Payments to acquire property, plant and equipment | (29,732) | (2,758) |
| Cash used in investing activities | (29,832) | (2,698) |
| CASH FLOW FROM FINANCING ACTIVITIES |
|
|
| Short term borrowings received | 0 | 2,271 |
| Repayment of bank and other borrowings | (25,856) | (125) |
| Dividends | (10,241) | 0 |
| Proceeds from IPO | 0 | 76,838 |
| Interest paid | (387) | (550) |
| Investment in own shares | 0 | (5,508) |
| NET CASH FLOWS FROM FINANCING ACTIVITIES | (36,485) | 72,925 |
| Net change in cash and cash equivalents available | (29,424) | 86,101 |
| Effects of foreign exchange rate changes on cash and cash equivalents | (9,946) | 420 |
| CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 147,892 | 61,527 |
| CASH AND EQUIVALENTS AT END OF PERIOD | 108,522 | 148,048 |
The accompanying notes form an integral part of these financial statements.
1. BASIS OF PREPARATION
This interim financial information has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and in accordance with International Accounting Standard (IAS) 34 - Interim Financial Reporting. The financial information has also been prepared applying the accounting policies and presentation that were applied in the preparation of the 2007 financial statements.
2. BASIS OF CONSOLIDATION
The Group financial statements consolidate those of the Group and its subsidiary undertakings drawn up to 30 June 2008. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights. Consolidation is conducted by eliminating the investment in the subsidiary with the parent's share of the net equity of the subsidiary.
3. FUNCTIONAL AND PRESENTATIONAL CURRENCY
The financial information has been presented in euros, which is the functional currency. All financial information presented has been rounded to the nearest thousand.
4. SEGMENT REPORTING
The segments are defined on the basis of the internal organisational and management structure and on the internal reporting to the Board. The primary reporting format has defined two business segments since 1 January 2004. A distinction is made between Silicon Products and Trading and Equipment (for crystallisation), however in the 6 months to June 2008 there is minimal Trading and Equipment revenue (see Chairman's statement)
The secondary reporting format is geared towards geographical aspects. These reflect country specific risks and opportunities.
SEGMENT INFORMATION 6 MONTHS to JUNE 2008
| Silicon | Trading and | |||||||||||||
| products | equipment | Consolidation | Group | |||||||||||
| €'000 | €'000 | €'000 | €'000 | |||||||||||
| Revenue | ||||||||||||||
| External revenues | 126,061 | 225 | - | 126,286 | ||||||||||
| Intercompany revenues | - | 996 | (996) | 0 | ||||||||||
| Segment results | ||||||||||||||
| Operating result | 46,680 | 80 | - | 46,760 | ||||||||||
| Net finance cost | 6,061 | 11 | - | 6,072 | ||||||||||
| 52,741 | 91 | - | 52,832 | |||||||||||
| Other information | ||||||||||||||
| Assets | 286,790 | 344 | - | 287,134 | ||||||||||
| Liabilities | 78,881 | 78 | - | 78,959 | ||||||||||
| Property, plant and equipment additions | 29,730 | - | - | 29,730 | ||||||||||
| Depreciation charged | 2,378 | - | - | 2,378 | ||||||||||
| The rest | The rest | |||||||||||||
| Japan | of Asia | Germany | of Europe | USA | Group | |||||||||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |||||||||
| External revenues | 67,476 | 8,858 | 39,822 | 2,923 | 7,207 | 126,286 | ||||||||
| Assets | 58,220 | - | 93,801 | 135,113 | - | 287,134 | ||||||||
| Liabilities | 26,247 | - | 35,145 | 17,242 | - | 78,634 | ||||||||
| Other information | ||||||||||||||
| Property, plant and equipment additions | 186 | - | 28,373 | 1,171 | - | 29,730 | ||||||||
| Depreciation charged | 18 | - | 1,120 | 1,240 | - | 2,378 | ||||||||
Three customers accounted for more than 10% of Group revenue each and sales to these customers are as follows (figures in €'000):
1. Sales 44,584 (Japan 44,584) (Silicon Products 44,561; Trading, Parts and Equipment 23);
2. Sales 22,693 (Japan 22,693) (Silicon Products 22,693); and
3. Sales 16,402 (Germany 16,402) (Silicon Products 16,402).
4. SEGMENT REPORTING CONTINUED
SEGMENT INFORMATION 6 MONTHS to JUNE 2007
| Silicon | Trading and | |||||||||||||
| products | equipment | Consolidation | Group | |||||||||||
| €'000 | €'000 | €'000 | €'000 | |||||||||||
| Revenue | ||||||||||||||
| External revenues | 92,796 | 30,762 | - | 123,558 | ||||||||||
| Intercompany revenues | - | 651 | (651) | 0 | ||||||||||
| Segment results | ||||||||||||||
| Operating result | 27,484 | 1,499 | - | 28,983 | ||||||||||
| Net finance cost | 299 | 17 | - | 316 | ||||||||||
| 27,783 | 1,515 | - | 29,299 | |||||||||||
| Other information | ||||||||||||||
| Assets | 244,757 | 25,225 | - | 269,982 | ||||||||||
| Liabilities | 78,202 | 22,339 | - | 100,541 | ||||||||||
| Property, plant and equipment additions | 2,764 | - | - | 2,764 | ||||||||||
| Depreciation charged | 2,151 | - | - | 2,151 | ||||||||||
| The rest | The rest | |||||||||||||
| Japan | of Asia | Germany | of Europe | USA | Group | |||||||||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |||||||||
| External revenues | 80,074 | 14,149 | 26,012 | 1,060 | 2,263 | 123,558 | ||||||||
| Assets | 74,517 | - | 58,095 | 137,371 | - | 269,982 | ||||||||
| Liabilities | 64,812 | - | 24,284 | 11,445 | - | 100,541 | ||||||||
| Other information | ||||||||||||||
| Property, plant and equipment additions | 3 | - | 2,514 | 247 | - | 2,764 | ||||||||
| Depreciation charged | 8 | - | 1,181 | 962 | - | 2,151 | ||||||||
The geographical segments are reflecting the presence of the Group in the most relevant markets of the PV industry.
5. EMPLOYEE BENEFIT TRUST
The employee benefit trust currently holds 7,125,000 shares (1.7 per cent of the issued share capital) in the company that it holds in trust for the benefit of the employees.
6. EARNINGS PER SHARE
The calculation of earnings per share is based on a profit after tax for the period of €37.2m (2007 half year €13.6m) and the number of shares as set out below:
| 6 Months | 6 Months | |
| ended 30 June | ended 30 June | |
| 2008 | 2007 | |
| Number of shares | 375,000,100 | 375,000,100 |
| New shares (41,725,235) issued on 6th June 2007 | 41,725,235 | 2,857,893 |
| Average number of shares held by the Employee Benefit Trust in the period | -7,099,385 | -3,181,849 |
| Weighted average number of shares for basic earnings per share calculation | 409,625,950 | 374,676,144 |
| Shares granted but not vested | 2,223,462 | 0 |
| Weighted average number of shares for fully diluted earnings per share calculation | 411,849,412 | 374,676,144 |
7. DIVIDENDS PAID IN THE PERIOD
As agreed at the AGM held on 23 May 2008, the group paid a dividend of 2.5 euro cents per ordinary share as shown below:
| Ordinary Shares | 416,725,335 |
| Shares held by the Employee Benefit Trust waiving dividend | (7,088,000) |
| Shares attracting dividend | 409,637,335 |
| Total dividend paid @ 2.5 euro cents per share | € 10,240,933 |
8. ISSUE, REPURCHASE AND REPAYMENT OF DEBT AND EQUITY
The Group's cash reserves were used to reduce group loans by approx €26m in the 6 months to June 2008.
10. CHANGES IN CONTINGENT ASSETS AND LIABILITIES
There were no changes in either contingent assets or liabilities.
11. MATERIAL POST BALANCE SHEET EVENTS
There were no material post balance sheet events.
12. APPROVAL OF INTERIM FINANCIAL STATEMENTS
The unaudited interim financial statements were approved by the Board of Directors on 20 August 2008.