TIDMPVCS
RNS Number : 5130A
PV Crystalox Solar PLC
21 March 2013
PV Crystalox Solar PLC
Preliminary Results
For the year ended 31 December 2012
PV Crystalox Solar PLC (the "Group"), a leading supplier of
photovoltaic ('PV') silicon wafers, today announces preliminary
results for the year ended 31 December 2012.
Market overview
-- 2012 global PV module installations of 32GW up from 28GW in 2011
-- Wafer pricing has fallen by 75% since April 2011
Operational activity
-- Cash conservation strategy continued throughout 2012
-- Restructuring announced late 2012 in response to adverse market conditions.
-- Decision taken to:
o discontinue polysilicon facility at Bitterfield, Germany
o reduce production at UK ingot and German wafer operations
-- Cash settlements from customers of EUR90.6m
-- Board decided to return cash to shareholders:
o recommending shareholder approval for a cash return to be made
in June 2013
Overview of results
-- Wafer shipments 108MW (2011: 384MW)
-- Net Cash increased to EUR89.4m at the year end (2011: EUR22.6m)
John Sleeman, Chairman, commented:
"PV Crystalox has navigated another extraordinarily challenging
year in 2012, with global over capacity continuing, putting pricing
under extreme pressure. Following a strategic review of the
business, we are in the process of carrying out a radical
restructuring to align our operations with current market demand.
While modest market growth is expected in 2013, the pricing
environment remains very difficult."
Iain Dorrity, Chief Executive Officer commented:
"The Group continues to believe in the positive long-term
outlook for the photovoltaic industry. The Board believes that the
adjustment of operations to align with anticipated sustainable
short term demand will enable generation of positive cash flows
during 2013 and leave the Group well positioned should the market
begin to recover."
Enquiries:
PV Crystalox Solar PLC +44 (0) 1235 437188
Iain Dorrity, Chief Executive Officer
Peter Finnegan, Chief Financial Officer
Matthew Wethey, Group Secretary
FTI
Sophie McMillan / Tracey Bowditch +44 (0) 20 7831 3113
About PV Crystalox
PV Crystalox Solar is a leading supplier to the world's major
photovoltaic companies, producing multicrystalline silicon wafers
for use in solar electricity generation systems.
Our customers, the world's leading solar cell producers, process
these wafers into solar modules to harness the clean, silent and
renewable power from the sun. We are playing a central role in
making solar power cost competitive with conventional hydrocarbon
power generation and, as such, continue to seek to drive down the
cost of production whilst increasing solar cell efficiency.
Overview:
Chairman's introduction
PV Crystalox Solar PLC has navigated another extraordinarily
challenging year for the PV industry. Global overcapacity
principally in China maintained intense pressure on pricing which
continued to fall through the year across the whole PV value chain.
Against this background, the Group has continued to work to protect
shareholder value.
Following the conclusion of a strategic review in the latter
part of 2012, the Board decided to carry out a radical
restructuring in response to the adverse market conditions. The
Group is adjusting its operations to align production with
anticipated sustainable short term market demand so that the
ongoing business will be broadly cash neutral in 2013. As part of
this programme, the Group announced on 13 December 2012 the
decision to discontinue its polysilicon production facility in
Bitterfeld, Germany; and substantially reduce its production output
at its UK ingot and German wafer operations. Regrettably these
actions are leading to significant job losses both in the UK and in
Germany.
The Group has been operating in cash conservation mode since
November 2011; consequently shipment volumes of 108MW and revenues
of EUR46.3 million in 2012 were substantially lower than the 384MW
and EUR210.4 million achieved in 2011. EBIT loss for the year was
EUR110.1 million. Despite the benefit of a EUR90.6 million cash
settlement received for the cancellation of a supply contract the
Group suffered non cash losses from inventory write downs and
onerous contract charges, totalling EUR83.5, million and impairment
to fixed assets of EUR82.5m. Net cash at the end of the year was
EUR89.4 million as against EUR22.6 million at the beginning of the
year.
I took over as chairman in May 2012 following Maarten
Henderson's decision to stand down at last year's Annual General
Meeting. On behalf of the Board, I thank Maarten for his guidance
and leadership as chairman since our IPO in 2007.
Hubert Aulich, Director of German Operations has informed the
Board that he will retire from the Group on 31 May 2013 and
accordingly will not seek re-election at this year's Annual General
Meeting. Hubert has served the Board with distinction and I thank
him for his very significant contribution to the development of the
Group over the last 11 years.
In line with the recommendations of the UK Corporate Governance
Code June 2010 concerning the annual re-election of directors, I
confirm that all other directors are standing for re-election at
this year's Annual General Meeting.
Given our strong net cash position and the challenging market
expectations going forward, the Board has decided to return cash to
shareholders. This will be implemented through an issue of B and C
shares providing the shareholders with the option to take payments
as either income or capital. This cash return will be accompanied
by a share consolidation to maintain broad comparability of the
share price and return per share of the ordinary shares before and
after the creation of the B and C shares. The Board will be
recommending that shareholders approve the necessary measures at a
General Meeting to be held in Q2 2012 to achieve a cash return in
June 2013.
The Board continues to believe that our cash conservation
strategy is a necessary response to current market conditions,
enabling us to protect shareholder value whilst preserving the
Group's core production capabilities. The Board remains committed
to the solar industry and believes that the medium term outlook for
solar installations remains positive.
John Sleeman
Chairman
20 March 2013
Business review:
Operational review
Summary
Trading conditions during 2012 were extremely challenging due to
the chronic overcapacity in the PV industry. The oversupply, which
primarily originates from over-investment in China which took place
during 2010-2011, maintained the intense pressure on prices that
has developed across the value chain during the last 18 months.
Spot wafer prices started to fall in April 2011 and continued to
decrease throughout 2012. Recent weeks have seen some stabilisation
albeit at a level which is 75% below that seen in April 2011, and
significantly below industry production costs.
Our wafer shipment volumes of 108 MW in 2012 were significantly
below the 384MW achieved in 2011 as production output was lowered
as part of the Group's cash conservation strategy adopted at the
end of 2011, in response to the difficult market conditions. At
that time, production was suspended at our polysilicon facility in
Bitterfeld and wafer production levels were significantly
reduced.
During 2007-2008, Group companies entered into a number of long
term agreements with customers to supply wafers at prices which are
considerably above today's market levels. Our focus during 2012 has
been to secure sales to these long-term contract customers where it
was possible to negotiate prices at a premium to spot prices.
However the intensively competitive market environment has also
placed our customers under severe financial pressure with several
exiting the industry during 2012 either voluntarily or due to
insolvency. In one case the Group was successful in negotiating
compensation of approximately EUR91 million for the termination of
a long term wafer supply contract. 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 judgments in the Group's
favour are anticipated, the levels of compensation are not expected
to be as significant. Furthermore there is increasing uncertainty
as to whether either of these companies will have the financial
resources to fully settle these claims.
Despite the very significant customer settlement the Group has
incurred substantial losses as a result of inventory write-downs
and impairment of assets necessitated by the weak market
environment.
Market
Global PV installations in 2012 showed sequential growth and
reached 32GW up from 28GW in 2011 according to market research firm
IHS. However falling prices led to an 18% decline in industry
revenues. Germany regained its position as the number one market
with 7.5GW of installations which was broadly similar to that
achieved in 2011. Overall Europe remained the dominant market but
its share at 52% is declining as demand in Asia particularly from
China and Japan increased.
Installations in China were boosted particularly in the second
half of the year and more than doubled to reach over 4GW in 2012 as
the government provided further support to its PV industry by
raising the 2020 PV installation target from 20GW to 50GW. Japan
has been suffering with power shortages since the Fukushima
disaster and the Ministry of Economy, Trade, and Industry (METI)
announced a much-anticipated PV feed-in-tariff program in June 2012
valid for 20 years which has stimulated installations to 2.5GW.
Overall the Japanese government has set a goal of achieving 28GW of
cumulative PV installations by 2020.
Grafico Azioni Pv Crystalox Solar (LSE:PVCS)
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