TIDMPVCS
RNS Number : 1231K
PV Crystalox Solar PLC
16 August 2012
PV Crystalox Solar PLC
Interim Results
Thursday 16(th) August 2012
PV Crystalox Solar PLC and its subsidiaries (the "Group"), one
of the world's leading providers of photovoltaic ('PV') silicon
wafers, today announces interim results for the year ended 30 June
2012.
Market overview
-- Industry oversupply primarily from China leading to intense pressure on pricing
-- Wafer spot pricing down 70% during twelve months to April 2012, and are continuing to fall
-- Formal antidumping investigations in USA and Europe into
unfair trade practices from Chinese PV companies
Overview of results
-- Wafer shipments 61MW (H1 2011: 204MW)
-- Revenues EUR32.6m (H1 2011: EUR129.6m)
-- EBIT loss of EUR12.2m (H1 2011: profit of EUR24.3m)
-- Cash settlement on termination of long term contract of c.
EUR90m leading to net cash of EUR122.4m at the period end (end
2011: EUR22.6m)
Summary Group income statement
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2012 2011 2011
EUR'000 EUR'000 EUR'000
Revenues 32,632 129,593 210,400
------------------------------ ----------- ----------- --------------
EBIT excluding currency gain
/ (loss) (13,018) 20,343 (68,536)
Currency gain / (loss) 850 3,719 1,438
Earnings before interest and
tax (12,168) 24,343 (67,536)
Earnings before tax (11,913) 24,605 (67,085)
------------------------------ ----------- ----------- --------------
Net income (27,944) 18,405 (60,893)
------------------------------ ----------- ----------- --------------
Iain Dorrity, Chief Executive Officer commented;
"Trading conditions during the first half of 2012 have been
extremely challenging and this has had a significant impact on our
trading performance. However, the settlement that we reached in May
for early termination of a long term contract has resulted in a
strong net cash position at the period end.
Looking forward, the intensely competitive market conditions are
not expected to improve in the short term and so we continue with
our cash conservation strategy. The Board will make the necessary
decisions during the remainder of the year to serve the best
interests of shareholders."
Enquiries:
PV Crystalox Solar PLC +44 (0) 1235 437188
Iain Dorrity, Chief Executive Officer
Peter Finnegan, Chief Financial Officer
Matthew Wethey, Group Secretary
FTI Consulting
James Melville-Ross / Sophie McMillan
/ Tracey Bowditch +44 (0) 20 7831 3113
About PV Crystalox Solar PLC
PV Crystalox Solar is a highly specialised supplier to the
world's major photovoltaic companies, producing multicrystalline
silicon wafers for use in solar electricity generation systems.
Our customers process these wafers into solar modules to harness
the clean, silent and renewable power from the sun. Together with
our customers we seek to make solar power competitive with
conventional fossil fuel electricity generation, by continuing to
drive down production costs and increasing solar cell
efficiency.
We focus on the first stages of the solar value chain and
utilise our extensive expertise and experience in silicon
processing technology. The Group's own polysilicon plant is in
Bitterfeld, Germany. We manufacture silicon ingots in Oxfordshire,
United Kingdom, and carry out wafer production for European
customers at our facility in Erfurt, Germany. Wafers for customers
in Asia are produced in Japan.
Chairman and Chief Executive's joint statement
Overview and Strategic Update
Trading conditions during the first half of 2012 have been
extremely challenging due to vast overcapacity in the PV industry.
The oversupply, which primarily originates in China, has maintained
the intense pressure on prices that has developed across the value
chain during the last twelve months. Spot wafer prices, which fell
by 70% during the twelve months from April 2011, have continued to
fall albeit at a slower rate and continue to remain below industry
production costs.
In light of these continuing difficult market conditions the
Board remains committed to the cash conservation strategy which was
announced in October 2011. Accordingly, the Group continues to
operate at significantly reduced wafer production levels and to
focus on sales to long-term contract customers where it is possible
to negotiate prices at a premium to spot prices.
We have not been able to reach agreement on acceptable wafer
prices and volumes with all our long-term contract customers.
Consequently, shipment volumes during the first half of the year
were 61MW, in line with the range of 55-70MW indicated in our IMS
of 19 May 2012 but below our earlier expectation of 80-100MW and
significantly less than the 204MW achieved in the same period last
year.
The combined impact of lower volumes and lower prices resulted
in markedly lower revenues of EUR32.6 million (H1 2011: EUR129.6
million).
As previously disclosed, the Group had been negotiating
compensation from a former customer for the termination of a
long-term wafer supply contract. A satisfactory agreement was
reached in May 2012 and this resulted in a cash settlement of
approximately EUR90 million. This payment together with the
successful implementation of our cash conservation strategy has
considerably strengthened the Group's net cash position which was
EUR122.4 million at the end of H1 2012 (31 December 2011: EUR22.6
million).
We have been unable to reach a satisfactory agreement with two
long-term contract customers who have been amongst the industry
leaders in recent years and we are seeking resolution under the
jurisdiction of the International Court of Arbitration. While
successful judgements in the Group's favour are anticipated there
is increasing uncertainty as to whether one of these companies will
have the financial resources to fully settle its claim.
Operational update
On account of the depressed market prices and our cash
conservation strategy, production output is currently running at a
significantly reduced level, equivalent to 20-25% of our maximum
750MW capacity.
Polysilicon production remains suspended at the Group's facility
at Bitterfeld. Any decision to restart will require either an
improvement in polysilicon market pricing or a significant increase
in the Group's internal polysilicon requirements. The Group's
management continues to review all possible options in connection
with the polysilicon plant at Bitterfeld and will make a decision
in this respect in H2 2012.
The Group has long-term contractual commitments for the purchase
of polysilicon but has been successful in negotiating significantly
reduced pricing for deliveries in 2012. As a consequence of the
reduced wafer production levels the Group has needed to trade
excess polysilicon during the first half of the year in order to
avoid excess inventory levels.
Price reductions have been negotiated also with other suppliers,
including wafer subcontractors, and overall we expect direct wafer
costs to be reduced by more than 20% in 2012.
Financial Review and Position
The Group suffered an EBIT loss of EUR12.2 million on reduced
revenues of EUR32.6 million (H1 2011: EUR129.6 million); a
significant fall from the EBIT profit for H1 2011 of EUR24.3
million. Although the Group recognised customer settlements of
EUR98.7 million (inclusive of advance payments), management wrote
down inventories by EUR14.2 million (to equate inventory valuations
with market price expectation for Q3 2012), increased the onerous
contract provision in respect of contracts with external suppliers
of polysilicon by EUR37.1 million and further impaired the Group's
polysilicon plant by EUR44.7 million.
This further impairment of Bitterfeld followed the Board's
assessment of the carrying values of the Group's property, plant
and equipment as at 30 June 2012. As a result of this assessment,
an impairment charge has been recognised to write down the carrying
value of its polysilicon plant at Bitterfeld by EUR44.7 million.
The estimated recoverable value of the plant is based on its value
in use and is derived from a forecast of potential future cash
flows from the plant. The main change to the cash flow model is
that management has revised downwards its expectations for
polysilicon prices in the short to medium-term as a result of
further reductions in market prices in H1 2012. This is consistent
with the methodology used for the impairment test as at 31 December
2011 which is described on pages 14 and 15 in the 2011 Annual
Report.
The Group had a net positive cash balance of EUR122.4 million
which was a significant increase on the EUR22.6 million at the end
of 2011. The main reason for this increase is the cash settlement
from a customer mentioned above. Cash released from working capital
was slightly higher than that absorbed by operating losses. The
Group had invested EUR0.9 million in capital equipment in H1 2012.
Working capital decreased by EUR11.1 million, mainly due to a lower
debtor balance following low sales volumes and a change in the
geographical mix of customers. In addition the Company has a number
of contractual liabilities in various Group legal entities that may
require cash resources at some stage in the future.
This strong cash position remains an advantage to the Group and
despite the anticipated difficult trading conditions the Group
expects to retain a healthy financial position through the year
end.
Board and Committee Appointments
Maarten Henderson the former Chairman did not seek re-election
at the AGM held on 24 May and John Sleeman was subsequently
appointed Interim Chairman.
At the Board meeting held on 14 August 2012 the Directors
reviewed the structure, size and composition of the Board and its
committees. John Sleeman was appointed Chairman of the Board and
Michael Parker was appointed Senior Independent Director.
Consequent to these decisions the Board approved changes to its
committees. John Sleeman was appointed to the vacant position of
chairman of the Nomination Committee and remains chairman of the
Audit Committee. Michael Parker replaced John Sleeman as chairman
of the Remuneration Committee.
Dividend
In view of the currently challenging market conditions, the
Board has decided to continue to suspend dividend payments in line
with its current strategy of cash conservation. The Board continues
to recognise the importance of dividends to shareholders and the
directors will review the potential to re-instate dividends based
on the future performance of and on the prospects for the
Group.
Risk factors
The principal risks and uncertainties affecting the business
activities of the Group were identified under the heading
'Principal Risks and Uncertainties' in the Directors' Report on
pages 16 to 17 of the 2011 Annual Report, a copy of which is
available on the Group's website www.pvcrystalox.com. In the view
of the Board the key risks and uncertainties for the remaining six
months of the financial year continue to be those set out in the
2011 Annual Report.
Market drivers
The irrational pricing in the PV industry has led to increasing
tensions between major PV manufacturers throughout the value chain
and has prompted formal pricing investigations in the USA, China
and most recently Europe. Following a complaint filed in October
2011 by a group of US PV companies, the US Department of Commerce
announced in mid-May the imposition of anti-dumping duties ranging
from 31-250% on imports of crystalline silicon photovoltaic cells
from China.
Subsequently on 20 July 2012, China's Ministry of Commerce,
MOFCOM, announced that it was launching an anti-dumping
investigation into imports of polysilicon from both the USA and
South Korea.
In late July 2012 the German environment minister, Peter
Altmaier, indicated that he would consider government support to
German solar companies in their efforts to launch anti-dumping
proceedings in the EU against Chinese PV manufacturers. A few days
later a group of 20 European PV companies led by Solarworld filed a
complaint in the European Commission accusing Chinese competitors
of unfair trade practices and seeking anti-dumping and
countervailing duty relief. The initiation of the case will occur
45 days from the filing of the complaint.
According to the European Photovoltaic Industries Association
("EPIA"), Europe accounted for 74% of global PV installations in
2011. However the strong growth in the two key markets in Germany
and Italy has prompted governments to reduce incentive levels in
2012 in order to dampen demand.
After many months of discussions in Germany between the Federal
and state governments, further reductions in feed in tariffs
("FIT"s) have been agreed and brought forward by three months to 1
April 2012. Monthly tariff degressions will also be introduced with
the aim of regulating new PV installations to between 2.5-3.5GW per
year which is less than half of the 7.5GW installed in 2011. In
addition incentives will be eliminated totally once installed
capacity reaches 52GW from the 27GW installed at the end of 2011.
Delays in agreeing the incentive cuts caused a surge in
installations which reached 4.4GW in the six months to June 2012,
the highest level ever recorded in the first half of a year.
In Italy the budget available for Italy's Conto Energia PV
incentive programme might be cut to less than half of the
originally intended amount and this is expected to limit
installations in 2012 to 3.5GW, which is around half the 2011
level.
China has already taken steps to support domestic PV companies
and compensate for the reduced demand in Europe. In July the
Chinese National Development and Reform Commission ("NDRC")
announced that the country's target for installed solar energy had
been increased from 15GW to 21GW by 2015. More recently it has been
reported that the target has been further raised to 50GW by 2020 in
order to restore confidence amongst its substantial PV
manufacturing base. 4GW is expected to be installed in the second
half of 2012 alone.
Japan has now finalised incentives for renewable energy that
will help the world's third biggest economy shift away from a
reliance on nuclear power after the Fukushima disaster. The
introduction of a FIT scheme for PV on 1 July 2012 with a tariff of
JPY42 fixed for 20 years, which is more than twice the rate in
Germany and three times that in China, is expected to lead to Japan
becoming the world's second largest market.
Outlook
The global PV market is now at a transition in its development
with growth of installations in China, Japan and the USA expected
to compensate for the reduced demand following policy adjustments
in key markets in Europe. Consequently, little global market growth
is forecast in 2012/2013 and the pressure on pricing and the
intensely competitive market are expected to continue.
The Board expects that the difficult trading conditions will
persist and that the Group will incur an operating loss in the
second half. Cash conservation measures will continue with
significantly reduced production levels and customer shipments.
Full year shipment volumes are expected to be in the range
100-120MW. The Group's average selling prices are expected to be
maintained significantly above spot levels.
While the Group continues to believe in the positive long-term
outlook for PV, it is mindful of the intensely competitive
environment which is likely to persist in the short to medium-term
and which has already led to many companies exiting the industry,
either voluntarily or through insolvency. The Group has a strong
net cash balance and the Board will make the necessary decisions
during the remainder of the year to serve the best interests of
shareholders.
John Sleeman
Chairman
Dr Iain Dorrity
Chief Executive Officer
15 August 2012
Statement of directors' responsibilities
The directors confirm that this condensed set of financial
statements has been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the European Union and that this
Interim Report includes a fair review of the information required
by the Disclosure and Transparency Rules of the Financial Services
Authority, paragraphs DTR 4.2.7 and DTR 4.2.8.
The directors of PV Crystalox Solar PLC are listed at the end of
this Interim Report and their biographies are included in the PV
Crystalox Solar Annual Report for the year ended 31 December
2011.
By order of the Board
Dr Peter Finnegan
Chief Financial Officer
15 August 2012
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2012
Six months ended 30 June Six months ended Year ended 31 December
2012 30 June 2011 2011
Before Before Before
exceptional Exceptional exceptional Exceptional exceptional Exceptional
items Items Total items Items Total items Items Total
Notes EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Revenues 4 32,632 - 32,632 129,593 - 129,593 210,400 - 210,400
Other income 2,074 98,700 100,774 2,582 - 2,582 5,605 - 5,605
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
Cost of
material 5,10 (27,394) (51,339) (78,733) (74,831) (4,449) (79,280) (149,415) (43,735) (193,150)
Cost of
services (2,764) (395) (3,159) (10,383) - (10,383) (18,699) - (18,699)
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
Personnel
expenses:
Wages and
salaries (6,155) - (6,155) (7,344) - (7,344) (14,805) - (14,805)
Social
security
costs (1,007) - (1,007) (1,210) - (1,210) (2,295) - (2,295)
Pension costs (188) - (188) (262) - (262) (527) - (527)
Employee share
schemes 6 (198) - (198) (311) - (311) (238) - (238)
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
Depreciation
and
impairment
on property,
plant and
equipment
and
intangible
assets 9 (7,104) (44,700) (51,804) (7,580) - (7,580) (16,107) (27,874) (43,981)
Other expenses (4,908) (272) (5,180) (5,181) - (5,181) (11,284) - (11,284)
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
Currency gains 850 - 850 3,719 - 3,719 1,438 - 1,438
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
Earnings
before
interest
and taxes
(EBIT) (14,162) 1,994 (12,168) 28,792 (4,449) 24,343 4,073 (71,609) (67,536)
Interest
income 348 - 348 452 - 452 855 - 855
Interest
expense (93) - (93) (190) - (190) (404) - (404)
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
Earnings
before taxes
(EBT) (13,907) 1,994 (11,913) 29,054 (4,449) 24,605 4,524 (71,609) (67,085)
Income taxes 7 (9,761) (6,270) (16,031) (7,321) 1,121 (6,200) (13,598) 19,790 6,192
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
(Loss)/profit
attributable
to equity
holders of
the
parent (23,668) (4,276) (27,944) 21,733 (3,328) 18,405 (9,074) (51,819) (60,893)
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
Other
comprehensive
income
Exchange
differences
on
translating
foreign
operations 2,578 - 2,578 (10,396) - (10,396) 5,206 - 5,206
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
Total
comprehensive
income
Attributable
to equity
holders
of the parent (21,090) (4,276) (25,366) 11,337 (3,328) 8,009 (3,868) (51,819) (55,687)
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
Earnings per
share on
continuing
activities:
Basic and
diluted in
Euro
cents 8 (6.9) 4.5 (15.0)
--------------- ------ ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ----------
All of the activities of the Group are classed as
continuing.
The accompanying notes form an integral part of these financial
statements.
Condensed consolidated balance sheet
as at 30 June 2012
As at As at As at
30 June 30 June 31 December
2012 2011 2011
Note EUR'000 EUR'000 EUR'000
Intangible assets 420 593 508
Property, plant and equipment 9 58,238 138,481 107,914
Pension surplus 216 21 157
Other long-term assets 31,121 42,322 32,797
Deferred tax asset 7 580 15,087 19,320
Total non-current assets 90,575 196,504 160,696
------------------------------------- ------- --------- --------- -------------
Cash and cash equivalents 126,924 83,856 71,664
Accounts receivable 8,149 46,679 32,319
Inventories 5 46,563 66,993 48,497
Prepaid expenses and other assets 13,947 17,736 29,620
Current tax assets 10,210 - 9,815
------------------------------------- ------- --------- --------- -------------
Total current assets 205,793 215,264 191,915
------------------------------------- ------- --------- --------- -------------
Total assets 296,368 411,768 352,611
------------------------------------- ------- --------- --------- -------------
Loans payable short-term 4,498 42,534 49,046
Accounts payable 7,644 25,512 8,803
Deferred revenue 3,369 20,006 10,082
Accrued expenses 7,224 5,613 6,589
Provisions 10 12,681 301 7,973
Deferred grants and subsidies 2,839 2,798 2,831
Income tax payable 5,398 9,070 399
Other current liabilities 182 1,037 753
------------------------------------- ------- --------- --------- -------------
Total current liabilities 43,835 106,871 86,476
------------------------------------- ------- --------- --------- -------------
Deferred revenue - - 8,039
Accrued expenses 149 108 131
Deferred grants and subsidies 21,007 23,169 22,426
Deferred tax liability 10 640 8,183
Provisions 10 39,267 - 10,122
Other long-term liabilities 43 43 43
------------------------------------- ------- --------- --------- -------------
Total non-current liabilities 60,476 23,960 48,944
------------------------------------- ------- --------- --------- -------------
Share capital 12,332 12,332 12,332
Share premium 75,607 75,607 75,607
Investment in own shares (8,640) (8,640) (8,640)
Share-based payment reserve 732 550 500
Reverse acquisition reserve (3,601) (3,601) (3,601)
Retained earnings 130,150 237,392 158,094
Currency translation adjustment (14,523) (32,703) (17,101)
------------------------------------- ------- --------- --------- -------------
Total shareholders' equity 192,057 280,937 217,191
------------------------------------- ------- --------- --------- -------------
Total liabilities and shareholders'
equity 296,368 411,768 352,611
------------------------------------- ------- --------- --------- -------------
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2012
Shares
held Share-
by based Reverse Currency
Share Share the payment acquisition Retained translation Total
Capital Premium EBT reserve reserve Profit adjustment Equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
As at 1 January 2012 12,332 75,607 (8,640) 500 (3,601) 158,094 (17,101) 217,191
---------
Dividends paid - - - - - - - -
Share-based payment
charge - - - 232 - - - 232
---------------------- --------- --------- --------- --------- ------------- --------- ------------- ---------
Transactions with
owners - - - 232 - - - 232
---------------------- --------- --------- --------- --------- ------------- --------- ------------- ---------
Loss for the period - - - - - (27,944) - (27,944)
Currency translation
adjustment - - - - - - 2,578 2,578
Total comprehensive
income - - - - - (27,944) 2,578 (25,366)
---------------------- --------- --------- --------- --------- ------------- --------- ------------- ---------
As at 30 June 2012 12,332 75,607 (8,640) 732 (3,601) 130,150 (14,523) 192,057
---------------------- --------- --------- --------- --------- ------------- --------- ------------- ---------
As at 1 January 2011 12,332 75,607 (8,640) 262 (3,601) 227,107 (22,307) 280,760
---------------------- --------- --------- --------- --------- ------------- --------- ------------- ---------
Dividends paid - - - - - (8,120) - (8,120)
Share-based payment
charge - - - 288 - - - 288
---------------------- --------- --------- --------- --------- ------------- --------- ------------- ---------
Transactions with
owners 12,332 75,607 (8,640) 550 (3,601) 218,987 (22,307) 272,928
---------------------- --------- --------- --------- --------- ------------- --------- ------------- ---------
Profit for the period - - - - - 18,405 - 18,405
Currency translation
adjustment - - - - - - (10,396) (10,396)
---------------------- --------- --------- --------- --------- ------------- --------- ------------- ---------
Total comprehensive
income - - - - - 18,405 (10,396) 8,009
---------------------- --------- --------- --------- --------- ------------- --------- ------------- ---------
As at 30 June 2011 12,332 75,607 (8,640) 550 (3,601) 237,392 (32,703) 280,937
---------------------- --------- --------- --------- --------- ------------- --------- ------------- ---------
Condensed consolidated cash flow statement
for the six months ended 30 June 2012
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
EUR'000 EUR'000 EUR'000
Earnings before taxes (11,913) 24,605 (67,085)
Adjustments for:
Net interest income (255) (262) (451)
Depreciation and amortisation 7,104 7,580 16,107
Impairment charge 44,700 - 27,874
Inventory writedown 17,777 4,449 22,866
Change in pension accruals 173 (62) 19
Change in other accruals 30,883 773 17,019
Profit from the disposal of property,
plant and equipment 2 3 249
Unrealised losses in foreign currency
exchange 293 1,170 2,784
Deferred income (1,428) (1,448) (2,862)
----------------------------------------------- ----------- ----------- -------------
87,336 36,808 16,520
----------------------------------------------- ----------- ----------- -------------
Changes in working capital
Increase in inventories (15,039) (22,253) (19,117)
Decrease in accounts receivables 25,963 6,833 26,734
(Decrease)/increase in accounts payables
and advance payments (17,362) 2,473 (15,197)
Decrease in other assets 18,758 455 976
(Decrease)/increase in other liabilities (1,165) 425 (151)
----------------------------------------------- ----------- ----------- -------------
98,491 24,741 9,765
----------------------------------------------- ----------- ----------- -------------
Income taxes paid (65) (7,085) (9,063)
Interest received 348 452 855
----------------------------------------------- ----------- ----------- -------------
Net cash from operating activities 98,774 18,108 1,557
----------------------------------------------- ----------- ----------- -------------
Cash flow from investing activities
Proceeds from sale of property, plant
and equipment - 58 60
Proceeds from investment grants and subsidies 17 1,543 1,097
Payments to acquire property, plant and
equipment (964) (16,537) (21,867)
----------------------------------------------- ----------- ----------- -------------
Net cash flow used in investing activities (947) (14,936) (20,710)
----------------------------------------------- ----------- ----------- -------------
Cash flow from financing activities
Repayment of bank and other borrowings (44,707) (1,910) (317)
Dividends paid - (8,120) (8,120)
Interest paid (93) (190) (404)
Losses in foreign currency exchange (291) - (2,784)
Net cash flows from financing activities (45,091) (10,220) (11,625)
----------------------------------------------- ----------- ----------- -------------
Net change in cash and cash equivalents
available 52,736 (7,048) (30,778)
Effects of foreign exchange rate changes
on cash and cash equivalents 2,524 (10,396) 1,142
----------------------------------------------- ----------- ----------- -------------
Cash and equivalents at beginning of period 71,664 101,300 101,300
----------------------------------------------- ----------- ----------- -------------
Cash and equivalents at end of period 126,924 83,856 71,664
----------------------------------------------- ----------- ----------- -------------
The accompanying notes form an integral part of these financial
statements.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2012
1. Basis of preparation
These condensed consolidated interim financial statements are
for the six months ended 30 June 2012. They have been prepared in
accordance with International Accounting Standard ("IAS") 34
'Interim Financial Reporting'. They do not include all the
information required for full annual financial statements and
should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2011.
The statements have been prepared applying the accounting
policies and presentation that were applied in the preparation of
the 2011 financial statements.
2. Basis of consolidation
The Group financial statements consolidate those of the Group
and its subsidiary undertakings drawn up to 30 June 2012.
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 Group's presentational currency.
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. IFRS 8 requires entity-wide disclosures to
be made about the countries in which the Group earns its revenues
and holds its assets, which are shown below:
Segment information for the six months ended 30 June 2012
The The
rest rest
of United of
Japan China Taiwan Asia Germany Kingdom Europe USA Group
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Revenues
- by entity's
country
of domicile 7,027 - - - 4,860 20,745 - - 32,632
- by country
from
which derived 7,027 13,080 7,182 81 725 8 4,529 - 32,632
----------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Non-current
assets*
- by entity's
country
of domicile 600 - - - 37,285 51,894 - - 89,779
----------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
* Excludes financial instruments, deferred tax assets,
post-employment benefit assets and rights arising under insurance
contracts.
Three customers accounted for more than 10% of Group revenue
each and sales to these customers are as follows (figures in
EUR'000):
-- 12,990 (China);
-- 6,984 (Japan); and
-- 3,976 (Taiwan).
Notes to the condensed consolidated interim financial statements
continued
for the six months ended 30 June 2012
4. Segment reporting continued
Segment information for the six months ended 30 June 2011
The The
rest rest
of United of
Japan China Taiwan Asia Germany Kingdom Europe USA Group
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Revenues
- by entity's
country
of domicile 36,959 - - - 31,787 60,847 - - 129,593
- by country
from
which derived 36,940 33,467 33,416 398 18,154 64 81 7,073 129,593
----------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Non-current
assets*
- by entity's
country
of domicile 568 - - - 118,049 62,779 - - 181,396
----------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
* Excludes financial instruments, deferred tax assets,
post-employment benefit assets and rights arising under insurance
contracts.
Two customers accounted for more than 10% of Group revenue each
and sales to these customers are as follows (figures in
EUR'000):
-- 31,544 (China); and
-- 28,072 (Japan).
5. Cost of material
Cost of material includes an inventory write down of EUR14.2
million (H1 2011: EUR4.4 million).
The write down represents a reduction in value of inventories to
the anticipated sales price in H2 2012 (less future processing
costs where applicable) of finished goods, work in progress and
traded raw materials.
6. Employee Benefit Trust
The Employee Benefit Trust ("EBT") currently holds 10,834,000
shares (2.6%) of the issued share capital in the Company. It holds
these shares in trust for the benefit of employees.
7. Income tax
The average taxation rate shown in the Consolidated Statement of
Comprehensive Income is -135% (H1 2011: +25%).
The taxation rate in the current period is distorted due to both
a provision in respect of tax due on customer settlements and the
writing-off of certain deferred tax assets.
The anticipated long-term average tax rate for the Group,
normalised on the basis that the Group returns to profitability, is
approximately 24%.
8. Earnings per share
The calculation of earnings per share is based on a loss after
tax for the period of EUR27.9 million (H1 2011: profit of EUR18.4
million) and the number of shares as set out below:
Six months Six months
ended ended
30 June 30 June
2012 2011
Number of shares 416,725,335 416,725,335
Average number of shares held by the EBT in
the period (10,834,000) (10,849,345)
--------------------------------------------- ------------- -------------
Weighted average number of shares for basic
earnings per share calculation 405,891,335 405,875,990
Shares granted but not vested - 27,500
--------------------------------------------- ------------- -------------
Weighted average number of shares for fully
diluted earnings per share calculation 405,891,335 405,903,490
--------------------------------------------- ------------- -------------
Notes to the condensed consolidated interim financial statements
continued
for the six months ended 30 June 2012
9. Property, plant and equipment
Additions to property, plant and equipment in the six months
ended 30 June 2012 were EUR1.0 million (H1 2011: EUR16.6
million).
Following the Board's assessment of the carrying values of the
Group's property, plant and equipment for impairment as at 30 June
2012, an impairment charge has been recognised to write down the
carrying value of its polysilicon plant at Bitterfeld by EUR44.7
million. The recoverable value of the plant is estimated based on
its value in use and is derived from a forecast of potential cash
flows from the plant. This is consistent with the methodology used
for the impairment test as at 31 December 2011 which is described
on pages 14 and 15 in the 2011 Annual Report. Management have
revised their expectations for polysilicon prices in the short to
medium-term downwards as a result of further reductions in market
prices in H1 2012. The Group's management continues to review all
possible options in connection with the polysilicon plant at
Bitterfeld and will make a decision in this respect in H2 2012.
10. Onerous contract provision
Included in provisions is an onerous contract provision of
EUR50.7 million. Following a review of all the latest market
information and a review of the inputs to the onerous contract
provision, the following movements are reflected in the financial
statements.
As at As at
30 June 31 December
2012 2011
Onerous contract provision brought forward 17,859 -
FX movement (840) -
Discounting factor adjustment 682 -
Utilised (4,080) -
Additional provision 37,116 17,859
-------------------------------------------- --------- -------------
Onerous contract provision carried forward 50,737 17,859
-------------------------------------------- --------- -------------
11. Exceptional items
The following are considered to be exceptional items.
The inventory writedown at 30 June 2011 is included for
comparison purposes. This was not reported as an exceptional item
at the time.
Six months Six months
ended ended
30 June 30 June
2012 2011
Onerous contract provision (see also note
10) (37,116) -
Onerous contract charge (395) -
Payment by customers for settlement or amendment
to contracts 98,700 -
Legal fees in relation to above settlements (272) -
Impairment (see also note 9) (44,700) -
Inventory writedown (See also note 5) (14,223) (4,449)
-------------------------------------------------- ----------- -----------
Total exceptional items 1,994 (4,449)
-------------------------------------------------- ----------- -----------
Notes to the condensed consolidated interim financial statements
continued
for the six months ended 30 June 2012
12. Changes in contingent assets and liabilities
There were no changes in contingent assets and liabilities.
13. Related party disclosures
The Group defines related parties as the senior executives of
the Group and also companies that these persons could have a
material influence on as related parties. During the reporting
period, none of the shareholders had control over or a material
influence in the parent group. All future transactions with such
related parties will be conducted under normal market
conditions.
14. Material post balance sheet events
There were no material post balance sheet events.
15. Approval of interim financial statements
The unaudited interim financial statements were approved by the
Board of Directors on 15 August 2012.
The financial information for the year ended 31 December 2011
set out in this Interim Report does not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006. The
Group's statutory financial statements for the year ended 31
December 2011 have been filed with the Registrar of Companies. The
auditors' report on those financial statements was unqualified and
did not contain statements under Section 498(2) or Section 498(3)
of the Companies Act 2006.
Officers
Directors
John Sleeman (Chairman)
Dr Hubert Aulich
Dr Iain Dorrity
Dr Peter Finnegan
Michael Parker
Company Secretary
Matthew Wethey
PV Crystalox Solar PLC
Brook House
174 Milton Park
Abingdon
Oxfordshire OX14 4SE
Tel: +44(0) 1235 437 160
Fax: +44(0) 1235 437 199
www.pvcrystalox.com
This information is provided by RNS
The company news service from the London Stock Exchange
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