TIDMPVCS
RNS Number : 5145T
PV Crystalox Solar PLC
21 March 2019
PV Crystalox Solar PLC
("PV Crystalox", the "Company" or the "Group")
Preliminary Results for the year ended 31 December 2018
PV Crystalox Solar a long established supplier to the global PV
industry now also providing slicing services for high technology
ceramics and optics industries in Germany is pleased to announce
its preliminary results for the year to 31 December 2018.
Highlights
-- EUR28.8m received from customer in settlement of ICC arbitration award
-- Closure of UK operations completed following production shutdown in 2017
-- Multicrystalline wafer production operations terminated in Germany
-- Focusing on transformation of business by applying our wire
sawing expertise to cutting of non-silicon materials
-- GBP38.5m capital return proposed (equivalent to 24 pence per share) for shareholders
Overview of results
l Revenues EUR6.3m (2017: EUR26.4m)
l EBT of EUR1.6m (2017: EUR12.0m)
l Net cash generated from/(used in) operating activities
EUR27.7m (2017: EUR(1.2)m)
l Net cash EUR54.0m (2017: EUR26.9m)
l Inventories EUR0.1m (2017: EUR3.9m)
Iain Dorrity, Chief Executive Officer commented
"Following the capital return the Board will consider the
options available to maximise any value from the listing of Group's
shares on the Official List. Consideration will also be given to
the possible cancellation of the listing. It should be noted that
whilst the majority of the cash resources are available for
immediate return to shareholders, any further possible cash return
will be strongly dependent on developments in the German business
and the decisions taken on the Group's listing."
John Sleeman, Chairman, commented
"After an extensive review of the strategic options for the
future of the Group, the Board has concluded that returning a large
proportion of available cash, as part of an orderly resolution of
the Group's affairs, would be in the best interest of shareholders
rather than the pursuit of acquisitions. The Board intends to
return GBP38.5 million (EUR42.8 million at year end exchange rate)
equivalent to 24 pence per ordinary share to shareholders."
Enquiries:
PV Crystalox Solar PLC
Iain Dorrity, Chief Executive Officer +44 (0) 1235 437160
Matthew Wethey, Chief Financial Officer
and Group Secretary
About PV Crystalox
PV Crystalox Solar a long established supplier to the global PV
industry now also providing slicing services for the high
technology ceramics and optics industries in Germany.
Chairman's introduction
Dear Shareholder
As a result of the dire PV industry environment which has
persisted since 2011, the Group had been operating in cash
conservation mode to protect shareholder value whilst preserving
the Group's core production capabilities. The Board subsequently
made the decision to significantly reduce those capabilities:
initially in July 2017 when the decision was made to close the
Group's production facilities in the United Kingdom; then in H1
2018 the Group terminated multicrystalline silicon wafer production
in Germany and restructured that operation. On 30 November the
Group received the final payment of EUR14.3m due under the
agreement with its customer in settlement of all claims and
obligations relating to the wafer supply contract and arbitration
award (the "Agreement"). Under the Agreement the customer has now
made total payments of EUR28.8m, including the initial payment of
EUR14.5m received in May 2018, and waived its right to demand
delivery of the outstanding wafers. The Group recognised EUR20.5
million in relation to the arbitration award as other income in the
2017 results and has recognised the remaining EUR8.2m in the
results for the year ended 31 December 2018.
Total revenues of EUR6.3 million were 76% lower than in the
prior year and after recognizing EUR8.2 million of other income in
relation to the Agreement we achieved a profit before tax of EUR1.6
million. Year end net cash of EUR54.0 million was EUR27.1 million
higher than at the beginning of the year, mostly as a result of the
settlement from the Agreement.
The restructuring of our German production operations has
resulted in a significant reduction in our staff numbers there. Of
the 90 staff employed when the closure was announced 70 left during
2018 and the remaining 20 employees are now focusing on research
and development activities and non-silicon wafering whilst
retaining limited silicon wafering capabilities. Our employees have
been vital to the Group's ability to pursue the cash conservation
strategy since 2011 and I would like to thank all of them for their
commitment and contribution during these challenging times.
Following an extensive review of the strategic options for the
future of the Group, the Board has concluded that returning a large
proportion of available cash, as part of an orderly resolution of
the Group's affairs, would be in the best interest of shareholders
rather than the pursuit of acquisitions. The Board intends to
return GBP38.5 million (EUR42.8 million at year end exchange rate)
equivalent to 24 pence per ordinary share to shareholders (the
'Capital Return'). All shareholders, on the register at the time,
will participate in the Capital Return, which will be implemented
through a reduction of the capital reserves and will be accompanied
by a share consolidation to maintain broad comparability of the
share price before and after the return. The Board will be
recommending that the shareholders approve the necessary measures
at a General Meeting which is expected to be held in May in order
to achieve a cash return before the end of the Q2 2019. Further
information will be provided in a circular to shareholders.
John Sleeman
Chairman
20 March 2019
OPERATIONAL AND FINANCIAL REVIEW
Operational review of 2018
The difficult PV market environment has persisted since 2011
when the industry was first impacted by Chinese manufacturing
overcapacity which led to a collapse in pricing across the value
chain. During the intervening years the Group progressively
restructured and pursued cost reduction programmes while attempting
to maintain key operational capabilities in the expectation that
the pricing environment might become more rational.
Despite claims of unfair trade practices and anti-dumping
investigations in Europe and the USA, Chinese players in the PV
industry became increasingly dominant and pricing continued to
decline. After concluding that there was no realistic prospect of
an improvement in market conditions or any relaxation in pricing
pressure, the Group announced the permanent shutdown of all United
Kingdom production operations in August 2017 which resulted in mass
redundancies with the majority of United Kingdom employees leaving
by the end of September 2017. In the subsequent months activities
focused on clearing the production facilities and returning the
four leased buildings to the landlord. The programme was concluded
in May 2018 when the final long term lease was surrendered. Only
one employee now remains dealing with administrative activities as
well as any residual trading.
The Group's exit from PV manufacturing was finally completed
with the termination of multicrystalline silicon wafer production
in Germany during H1 2018 in accord with the announcement in the
2017 Annual Report. While it had been hoped that a buyer could be
found who would be willing to develop the operation, the
deteriorating PV market conditions made this impossible. Instead
major restructuring was necessary which following discussion with
the workers council regrettably led to extensive job losses in May
2018. Following restructuring, there are currently around 20
employees and the operational capabilities are being downsized
accordingly. The lease on the production facilities has been
terminated and advanced discussions with the landlord are underway
with the aim of vacating one of the two production buildings at the
end of 2019 and consolidating operations into the other building.
Some silicon wafering capabilities are being retained and limited
contract wafering is periodically carried out for a PV customer in
Germany. The funded PV related research and development activities
which provided income in excess of EUR0.5m in 2018 are
continuing.
The primary focus is now on the transformation of the business
by applying our wire sawing expertise to the cutting and slicing of
a variety of materials other than silicon and establishing
relationships with new customers in Germany. Successful trials have
been carried out in the cutting of glass, quartz, alumina and
piezo-ceramics and some of these customer relationships have
already been consolidated into regular contracting business during
2018. The customer base is expected to develop further during 2019
as companies complete their internal evaluations of the cutting
trials and recognise the economic benefits of the improved yields
delivered by wire sawing.
Group wafer shipments during 2018 totalled 47MW (146MW: 2017)
with the much reduced volume reflecting the termination of
production during H1. Only around 3MW of wafer inventory remained
at the end of the year and this was finally sold during February
2019.
Wafer supply contracts
On 8 November 2017 the Group announced that it had received
notification of the final award rendered by the International Court
of Arbitration of the International Chamber of Commerce in the
claim filed by the Group in March 2015 and arising from an
outstanding long-term wafer supply contract with one of the world's
leading PV companies. The award required the customer, who had
failed to purchase wafers in line with its contractual obligations,
to pay the amount of around EUR36.5m including interest to the
Group as at May 2018. The obligation to pay was not conditioned
upon the Group's delivery of 22.9m wafers, outstanding under the
contract, although the customer's right to seek such delivery was
not precluded by the award. On 17 August 2018 the Group announced
that it had concluded an agreement with the customer in settlement
of all claims and obligations under the wafer supply contract and
arbitration award. Under the agreement the customer committed to
make total payments of EUR28.8m and waive its right to demand
delivery of the outstanding wafers. An initial payment of EUR14.5m
was made on 8 May 2018 and the final outstanding payment of
EUR14.3m was received on 30 November 2018.
A final payment was received in resolution of the Group's other
outstanding wafer supply contract, where the customer had entered
insolvency and shipments stopped in 2012. Claims had been
registered with the administrator and an interim settlement of
EUR0.96m was received during H1 2016. A further payment of around
EUR0.56m was recognised in the 2017 financial statements and
received in April 2018. No further payments are expected unless the
administrator is successful in a claim against the management board
whose members are covered by a D&O insurance policy.
Financial Review
The financial results are driven largely by the settlement
agreement relating to the arbitration award and the termination of
multicrystalline silicon wafer production in Germany in H1 2018.
These two factors led to significant cash inflows, a significant
reduction in the scale of operations and employee numbers and a
release in working capital.
In 2018 Group revenues decreased by 76% to EUR6.3 million (2017:
EUR26.4 million). This decrease was due to the significantly lower
wafer sales volumes following the shutdown of multicrystalline
silicon wafer production in H1 2018 and the absence of any
polysilicon trading.
During 2018 the Group recognised other income of EUR9.6 million,
which was EUR14.2 million lower than in 2017. Additional income in
relation to the settlement agreement was EUR8.2 million whereas the
Group recognised EUR20.5 million in 2017.
Personnel expenses of EUR4.6 million (2016: EUR8.2 million) were
45% lower than those in 2017 due to lower employee numbers.
Termination payments in relation to the closure of United Kingdom
production operations were paid in 2017 and similar payments were
made as a result of the restructuring in Germany in 2018.
Other expenses at EUR2.0 million were EUR2.7 million lower than
in 2017 mainly due to lower land and building operating lease
charges following the surrender of leases in the United Kingdom
during 2017.
The Group's annual depreciation and impairment charge was EUR0.7
million in 2018 which was the same as the charge in 2017. This
level of charge included impairment charges of EUR0.6 million in
2018 and EUR0.5 million in 2017 which were recognised following a
review of the recoverable value of certain assets. It should be
noted that the Group's remaining plant and equipment, was largely
written down between 2011 and 2013.
There was a currency gain in 2018 of EUR0.3 million whereas the
gain in 2017 was negligible.
Overall the Group generated a profit before taxes of EUR1.6
million (2017: profit of EUR12.0 million). The EUR10.4 million
decrease compared to 2017 reflected the decrease in other income of
EUR14.2 million and a EUR2.7 million reduction in gross margin.
Offsetting this were reductions in personnel expenses of EUR3.5
million and other expenses of EUR2.7 million.
The Group's cash position at the year end of EUR54.0 million was
EUR27.1 million higher than the net position of EUR26.9 million at
the start of the year. This was due to net cash inflows of EUR27.7
million from operating activities partially offset by EUR0.7
million of foreign exchange rate changes on cash.
Going concern
The Group's directors are required to make an assessment as to
whether it is appropriate to prepare the financial statements on a
going concern basis by considering the Group's ability and
intention to continue in business.
The Group have been operating a cash conservation strategy to
maximise cash held and to enable the Group to manage its operations
whilst market conditions remain difficult. A description of the
market conditions and the Group's plans are included in the
Strategic Report.
On 31 December 2018 there was a net cash balance of EUR54.0
million. As part of its normal business practice, the Group
regularly prepares both annual and longer-term plans which are
based on the directors' expectations concerning key assumptions.
The directors, after careful consideration and after making
appropriate enquiries, are of the opinion that the levels of net
cash outflows remain low such that Group has sufficient cash to
continue in operational existence for at least twelve months from
the date of approval of the financial statements, in March
2020.
The Group intends to return around GBP38.5m to shareholders in
Q2 2019. The Group intends to continue operations at PV Crystalox
Solar Silicon GmbH, in Germany which involve the cutting of silicon
and non-silicon materials together with a continued focus on funded
research and development activities
As a result of this assessment the directors have concluded that
the Group has the ability and the intention to continue in
business. It should be noted that the Group and PV Crystalox Solar
Silicon GmbH financial statements have been prepared on a going
concern basis whereas those for Crystalox Limited were prepared on
a basis other than going concern following the announcement on 13
July 2017 that Group intended to cease United Kingdom manufacturing
operations in H2 2017.
Outlook
The Board has conducted an extensive review of the strategic
options for the future of the Group and has concluded that
returning a large proportion of available cash, as part of an
orderly resolution of the Group's affairs, would be in the best
interest of shareholders rather than the pursuit of acquisitions.
In parallel we will aim to complete the transformation of the
manufacturing operation in Germany. A sale to a third party or a
transfer of the business to the existing management team would be
given consideration if an offer was made.
Following the cash return, the Board will consider the options
available to maximise any value from the listing of Group's shares
on the Official List. Consideration will also be given to the
possible cancellation of the listing. It should be noted that
whilst the majority of the cash resources are available for
immediate return to shareholders. Any further possible cash return
will be strongly dependent on developments in the German business
and the decisions taken on the Group's listing.
Iain Dorrity
Chief Executive Officer
20 March 2019
Consolidated statement of comprehensive income
For the year ended 31 December 2018
2018 2017
Notes EUR'000 EUR'000
--------------------------------------------------------- ----- -------- --------
Revenues 2 6,308 26,364
Cost of materials and services 3 (7,378) (24,681)
Personnel expenses 4 (4,567) (8,231)
Depreciation and impairment of property, plant and
equipment and amortisation of intangible assets (655) (667)
Other income 5 9,556 23,800
Other expenses 6 (2,025) (4,656)
Currency gains 324 33
--------------------------------------------------------- ----- -------- --------
Profit before interest and taxes ("EBIT") 1,563 11,962
Finance income 7 64 65
Finance cost 7 - (25)
--------------------------------------------------------- ----- -------- --------
Profit before taxes ("EBT") 1,627 12,002
Income taxes 8 (264) (1,084)
--------------------------------------------------------- ----- -------- --------
Profit for the year attributable to owners of the parent 1,363 10,918
--------------------------------------------------------- ----- -------- --------
Other comprehensive (loss)/income
Items that may be reclassified subsequently to profit
or loss:
Currency translation adjustment (537) (1,204)
Actuarial (loss) / gains on defined benefit pension
scheme 9 (126) 295
--------------------------------------------------------- ----- -------- --------
Total comprehensive income
Attributable to owners of the parent 700 10,009
--------------------------------------------------------- ----- -------- --------
Basic and diluted profit per share in Euro cents:
From profit for the year - basic 10 0.9 6.9
From profit for the year - diluted 10 0.9 6.8
--------------------------------------------------------- ----- -------- --------
The accompanying notes form an integral part of these financial
statements.
Consolidated balance sheet
As at 31 December 2018
2018 2017
Notes EUR'000 EUR'000
---------------------------------- ----- -------- --------
Intangible assets 11 - 6
Property, plant and equipment 12 51 651
Other non-current assets 13 - 429
---------------------------------- ----- -------- --------
Total non-current assets 51 1,086
---------------------------------- ----- -------- --------
Cash and cash equivalents 14 53,964 26,881
Trade accounts receivable 15 40 1,548
Inventories 16 125 3,914
Assets held for sale 17 - 390
Prepaid expenses and other assets 18 537 22,430
---------------------------------- ----- -------- --------
Total current assets 54,666 55,163
---------------------------------- ----- -------- --------
Total assets 54,717 56,249
---------------------------------- ----- -------- --------
Trade accounts payable 19 99 1,037
Accrued expenses 20 911 806
Provisions 21 - 1,385
Current tax liabilities 22 1,348 -
Deferred tax liabilities 23 - 1,084
Other current liabilities 24 21 167
---------------------------------- ----- -------- --------
Total current liabilities 2,379 4,479
---------------------------------- ----- -------- --------
Share capital 25 12,332 12,332
Share premium 50,511 50,511
Other reserves 25,096 25,096
Shares held by the EBT (372) (372)
Share-based payment reserve 162 294
Reverse acquisition reserve (3,601) (3,601)
Accumulated losses (7,194) (8,431)
Currency translation reserve (24,596) (24,059)
---------------------------------- ----- -------- --------
Total equity 52,338 51,770
---------------------------------- ----- -------- --------
Total liabilities and equity 54,717 56,249
---------------------------------- ----- -------- --------
The accompanying notes form an integral part of these financial
statements.
The financial statements were approved by the Board of Directors
on 20 March 2019 and signed on its behalf by:
Iain Dorrity Company number
Chief Executive Officer 06019466
Consolidated statement of changes in equity
For the year ended 31 December 2018
Shares Share-
held based Reverse Currency
Share Share Other by the payment acquisition Accumulated translation Total
capital premium reserves EBT reserve reserve losses reserve equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
As at 1 January
2017 12,332 50,511 25,096 (372) 260 (3,601) (19,644) (22,855) 41,727
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
Share-based
payment
credit - - - - 34 - - - 34
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
Transactions
with owners - - - - 34 - - - 34
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
Profit for the
year - - - - - - 10,918 - 10,918
Currency
translation
adjustment - - - - - - - (1,204) (1,204)
Actuarial gains - - - - - - 295 - 295
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
Total
comprehensive
income - - - - - - 11,213 (1,204) 10,009
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
As at 31
December 2017 12,332 50,511 25,096 (372) 294 (3,601) (8,431) (24,059) 51,770
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
As at 1 January
2018 12,332 50,511 25,096 (372) 294 (3,601) (8,431) (24,059) 51,770
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
Share-based
payment
credit - - - - (132) - - - (132)
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
Transactions
with owners - - - - (132) - - - (132)
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
Profit for the
year - - - - - - 1,363 - 1,363
Currency
translation
adjustment - - - - - - - (537) (537)
Actuarial loss - - - - - - (126) - (126)
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
Total
comprehensive
income - - - - - - 1,237 (537) 700
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
As at 31
December 2018 12,332 50,511 25,096 (372) 162 (3,601) (7,194) (24,596) 52,338
---------------- -------- -------- --------- -------- -------- ------------ ----------- ------------ --------
Consolidated cash flow statement
For the year ended 31 December 2018
2018 2017
EUR'000 EUR'000
------------------------------------------------------------------ -------- --------
Profit before taxes 1,627 12,002
Adjustments for:
Net interest income (64) (40)
Depreciation, impairment and amortisation 655 667
Inventory writedown 591 -
(Charge)/credit for retirement benefit obligation and share-based
payments (132) 48
Change in provisions (1,385) 1,385
Gain from the disposal of property, plant and equipment and
intangibles (27) (254)
(Gains)/losses in foreign currency exchange 145 14
Change in deferred grants and subsidies - -
------------------------------------------------------------------ -------- --------
1,410 13,822
Changes in working capital
Decrease in inventories 3,197 7,148
Decrease in accounts receivables 1,000 755
Decrease in accounts payables and deferred income (329) (1,534)
Decrease/(increase) in other assets 22,549 (21,591)
(Decrease)/Increase in other liabilities (147) 112
------------------------------------------------------------------ -------- --------
27,680 (1,288)
Income taxes received - 1
Interest received 64 40
------------------------------------------------------------------ -------- --------
Net cash generated from/(used in) operating activities 27,744 (1,247)
------------------------------------------------------------------ -------- --------
Cash flow from investing activities
Proceeds from sale of property, plant and equipment 29 431
Payments to acquire property, plant and equipment and intangibles (12) (133)
------------------------------------------------------------------ -------- --------
Net cash generated from/(used in) investing activities 17 298
------------------------------------------------------------------ -------- --------
Cash flow from financing activities
Interest paid - -
------------------------------------------------------------------ -------- --------
Net cash used in financing activities - -
------------------------------------------------------------------ -------- --------
Cash generated from/(used in) operations 27,761 (949)
Effects of foreign exchange rate changes on cash and cash
equivalents (678) (997)
------------------------------------------------------------------ -------- --------
Cash and cash equivalents at the beginning of the year 26,881 28,827
------------------------------------------------------------------ -------- --------
Cash and cash equivalents at the end of the year 53,964 26,881
------------------------------------------------------------------ -------- --------
The accompanying notes form an integral part of these financial
statements.
Notes to the consolidated financial statements
For the year ended 31 December 2018
1. Group accounting policies
Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union, IFRIC
interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS. The financial information has also been
prepared under the historical cost convention except that it has
been modified to include certain financial assets and liabilities
(including derivatives) at their fair value through profit and
loss. These policies have been consistently applied to all years
presented unless otherwise stated.
PV Crystalox Solar PLC is incorporated and domiciled in the
United Kingdom.
The address of the registered office is 11B(ii) Park House,
Milton Park, Abingdon, OX14 4RS.
The financial statements for the year ended 31 December 2018
were approved by the Board of Directors on [--] March 2019.
Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the "functional
currency"). The functional currency of the parent company is
Sterling. The financial information has been presented in Euros,
which is the Group's presentational currency. The Euro has been
selected as the Group's presentational currency as this is the
currency used in its significant contracts. The financial
statements are presented in round thousands.
Foreign currency translation
Transactions in foreign currencies are translated into the
functional currency of the respective entity at the foreign
exchange rate ruling at the date of the transactions. Monetary
assets and liabilities denominated in foreign currencies at the
balance sheet date are translated to the functional currency at the
foreign exchange rate ruling at that date. Non-monetary assets and
liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the date
of the transaction. Non-monetary assets and liabilities that are
stated at fair value are translated to the functional currency at
foreign exchange rates ruling at the date the fair value was
determined. Exchange gains and losses on monetary items are charged
to the Statement of Comprehensive Income.
The assets and liabilities of foreign operations are translated
to Euros at foreign exchange rates ruling at the balance sheet
date. The income and expenses of foreign operations are translated
into Euros at the average foreign exchange rates of the year that
the transactions occurred in. In the Consolidated Financial
Statements exchange rate differences arising on consolidation of
the net investments in subsidiaries are recognised in other
comprehensive income under "Currency translation adjustment".
Non-going concern entities
Subsidiary accounts for Crystalox Limited are no longer prepared
on a going concern basis and include an estimate of all related
costs either committed to or incurred in the period. Where the
Company continues to trade any losses incurred in so doing are
booked in the same period as revenue derived and therefore no
accrual is made for these. The preparation of these accounts
differs from that of going concern in that:
-- non-current assets/liabilities become current;
-- assets are written down to a recoverable amount; and
-- provision for wind-down costs is charged to the income statement.
Use of estimates and judgements - overview
The preparation of financial statements in conformity with
adopted IFRS requires management to make judgements and estimates
that affect the application of policies and reported amounts of
assets, liabilities, income, expenses and contingent assets and
liabilities. Estimates and assumptions mainly relate to the useful
life of non-current assets, the discounted cash flows used in
impairment testing, taxes, share-based payments and inventory
valuations. Estimates are based on historical experience and other
assumptions that are considered reasonable under the circumstances.
Actual values may vary from the estimates. The estimates and the
assumptions are under continuous review with particular attention
paid to the life of material plant.
Critical accounting and valuation policies and methods are those
that are both most important to the depiction of the Group's
financial position, results of operations and cash flows and that
require the application of subjective and complex judgements, often
as a result of the need to make estimates about the effects of
matters that are inherently uncertain and may change in subsequent
years. The critical accounting policies that the Group discloses
will not necessarily result in material changes to our financial
statements in any given year but rather contain a potential for
material change. The main accounting and valuation policies used by
the Group are outlined in the following notes. While not all of the
significant accounting policies require subjective or complex
judgements, the Group considers that the following accounting
policies should be considered critical accounting policies.
Use of estimates - deferred taxes
To compute provisions for taxes, judgements have to be
applied.
There is a risk that an intra-group compensation payment could
be challenged by tax authorities under transfer pricing rules
resulting in a higher tax liability. The Group believe this
likelihood is remote and have not recognised a provision.
Other estimates involve assessing the probability that deferred
tax assets resulting from deductible temporary differences and tax
losses can be utilised to offset taxable income in the future.
Due to the lack of certainty around future profits, all deferred
tax assets continue to be unrecognised in the year's balance
sheet.
Use of estimates - inventory valuation
Given the decline in market prices for silicon wafers to below
the Group's cost of production, the carrying amount of inventory is
recorded at net realisable value.
Net realisable value has been determined as estimated selling
price less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution.
Basis of consolidation
The Group financial statements consolidate those of the Group
and its subsidiary undertakings drawn up to 31 December 2018.
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.
The results of any subsidiary sold or acquired are included in
the Consolidated Statement of Comprehensive Income up to, or from,
the date control passes.
Consolidation is conducted by eliminating the investment in the
subsidiary with the parent's share of the net equity of the
subsidiary.
On acquisition of a subsidiary, all of the subsidiary's
separately identifiable assets and liabilities existing at the date
of acquisition are recorded at their fair value reflecting their
condition at that date. Goodwill arises where the fair value of the
consideration given for a business exceeds the fair value of such
net assets. So far no acquisitions have taken place since inception
of the Group.
Amounts reported in the financial statements of subsidiaries
have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group. All intra-group
transactions, balances, income and expenses are eliminated upon
consolidation.
Going concern
The Group's directors are required to make an assessment as to
whether it is appropriate to prepare the financial statements on a
going concern basis by considering the Group's ability and
intention to continue in business.
The Group have been operating a cash conservation strategy to
maximise cash held and to enable the Group to manage its operations
whilst market conditions remain difficult. A description of the
market conditions and the Group's plans are included in the
Strategic Report.
On 31 December 2018 there was a net cash balance of EUR54.0
million. As part of its normal business practice, the Group
regularly prepares both annual and longer-term plans which are
based on the directors' expectations concerning key assumptions.
The directors, after careful consideration and after making
appropriate enquiries, are of the opinion that the levels of net
cash outflows remain low such that Group has sufficient cash to
continue in operational existence for at least twelve months from
the date of approval of the financial statements, in March
2020.
The Group intends to return around GBP38.5m to shareholders in
Q2 2019. The Group intends to continue operations at PV Crystalox
Solar Silicon GmbH, in Germany which involve the cutting of silicon
and non-silicon materials together with a continued focus on
research and development activities. A sale to a third party or a
transfer of the business to the existing management team remains
under consideration.
As a result of this assessment the directors have concluded that
the Group has the ability and the intention to continue in
business. It should be noted that whilst the Group and PV Crystalox
Solar Silicon GmbH have been prepared on a going concern basis the
operations at Crystalox Limited have not following the announcement
on 13 July 2017 that Group intended to cease United Kingdom
manufacturing operations in H2 2017.
Effects of new accounting pronouncements
Accounting standards, IFRICs and other guidance in effect or
applied for the first time in 2018
-- IFRS 9 'Financial instruments'
-- IFRS 14, 'Regulatory Deferral Accounts'
-- IFRS 15, 'Revenue from Contracts with Customers'
IFRS 9 'Financial instruments' and IFRS 15 'Revenue from
contracts with customers' are new accounting standards that are
effective for the year ended 31 December 2018. As explained, IFRS 9
and IFRS 15 were adopted without restating comparative information.
The new accounting policies are set out in note 1.
a) IFRS 9 'Financial instruments'
IFRS 9 replaces the provisions of IAS39 that relate to the
recognition, classification and measurement of financial assets and
financial liabilities de-recognition of financial instruments,
impairment of financial assets and hedge accounting.
The company has two types of financial assets subject to IFRS
9's new credit loss model:
-- Trade receivables from sale of inventory; and
-- Amounts owed by group undertakings.
While cash is also subject to impairment movements of IFRS 9,
the identified impairment loss is not material.
The Group applies the IFRS simplified approach to measuring
expected credit losses which uses a lifetime expected allowance for
all trade receivables Trade receivables outstanding as at 31
December 2017 were held with recurring customers with low credit
risk. Amounts owed by group undertakings are repayable on demand
with low credit risk. Accordingly the restatement amount on
transition was immaterial.
a) IFRS 15 'Revenue from contracts with customers'
IFRS 15 replaces IAS 18. The core principal of the guidance is
that an entity should recognise revenue to depict the transfer of
promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in
exchange for the goods or services. The new guidance establishes a
five-step model to achieve that core principle. Based on completion
of the assessment, the Company has determined that there is not a
material difference between the recognition under IAS 18 and IFRS
15. Therefore, no adjustment is recorded to the opening balance
sheet 31 December, 2017.
The above have not made a material difference to the financial
statements.
In issue, but not yet effective
-- IFRS 16 'Leases'
-- Amendments to IFRS 2, 'Share-based Payments', on clarifying
how to account for certain types of share-based payment
transactions
The Group does not believe that any of these will have a
material impact on the Group's financial positions, results of
operations or cash flows, but will complete a full exercise
assessing their impact during 2019.
Intangible assets
Intangible assets are stated at cost net of accumulated
amortisation. The Group's policy is to write off the difference
between the cost of intangible assets and their estimated
realisable value systematically over their estimated useful life.
Amortisation of intangible assets is recorded under "Depreciation
and impairment of property, plant and equipment and amortisation of
intangible assets" in the Consolidated Statement of Comprehensive
Income.
Acquired computer software licences and patents are capitalised
on the basis of the costs incurred to purchase and bring into use
the software.
The capitalised costs are written down using the straight-line
method over the expected economic life of the patents and licences
(five years) or the software under development (three to five
years).
Internally generated intangible assets - research and
development expenditure
Expenditure on research activities undertaken with the prospect
of gaining new scientific or technical knowledge and understanding
is recognised in the Consolidated Statement of Comprehensive
Income.
Property, plant and equipment
Property, plant and equipment is stated at acquisition or
construction cost, net of depreciation and provision for
impairment. No depreciation is charged during the period of
construction. The cost of own work capitalised is comprised of
direct costs of material and manufacturing and directly
attributable costs of manufacturing overheads. All allowable costs
up until the point at which the asset is physically able to operate
as intended by management are capitalised. The capitalised costs
are written down using the straight-line method.
The Group's policy is to write off the difference between the
cost of property, plant and equipment and its residual value
systematically over its estimated useful life. Reviews of the
estimated remaining lives and residual values of individual
productive assets are made annually, taking commercial and
technological obsolescence as well as normal wear and tear into
account.
The total useful lives range from five to ten years for plant
and machinery and up to 15 years for other furniture and equipment.
Property, plant and equipment are reviewed for impairment at each
balance sheet date or upon indication that the carrying value may
not be recoverable.
The gain or loss arising on disposal of an asset is determined
as the difference between the disposal proceeds and the carrying
amount of the asset and is recognised in the Consolidated Statement
of Comprehensive Income.
Impairment
The carrying amount of the Group's non-financial assets is
subject to impairment testing upon indication of impairment.
If any such indication exists, the asset's recoverable amount is
estimated. An impairment loss is recognised for the amount by which
the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of fair value, reflecting market
conditions less costs of disposal and value in use based on an
internal discounted cash flow evaluation. The asset is subsequently
reviewed for possible reversal of the impairment at each reporting
date.
Leased assets
Leases are categorised as per the requirements of IAS 17. Where
risks and rewards are transferred to the lessee, the lease is
classified as a finance lease. All other leases are classed as
operating leases.
Rentals under operating leases are charged to the Consolidated
Statement of Comprehensive Income on a straight-line basis over the
lease term. Lease incentives are spread over the total period of
the lease.
The obligations from operating lease contracts are disclosed
among financial obligations.
For the reporting year, no assets were recorded under finance
leases.
Other income
Income other than that from sale of silicon products is
recognised at the point of entitlement to receipt and shown as
other income.
Financial instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument. Financial instruments are
recorded initially at fair value net of transaction costs.
Subsequent measurement depends on the designation of the
instrument, as follows:
Amortised cost
-- short-term borrowing, overdrafts and long-term loans are held at amortised cost; and
-- accounts payable which are not interest bearing are
recognised initially at fair value and thereafter at amortised cost
under the effective interest method.
Loans and receivables
-- Trade receivables are amounts due from customers for goods
sold or services performed in the ordinary course of business.
Trade receivables are recognised initially at the amount of
consideration that is unconditional. The group holds the trade
receivables with the objective of collecting the contractual cash
flows, and so it measures them subsequently at amortised cost using
the effective interest method. Details about the group's impairment
policies are provided in note 15.
-- non-interest bearing accounts receivable 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 profit or
loss net of any advance payment held by the Group where a right of
offset exists; and
-- cash and cash equivalents comprise cash balances and call
deposits with maturities of less than three months together with
other short-term, highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.
Interest and other income resulting from financial assets are
recognised in profit or loss on the accruals basis, using the
effective interest method.
Inventories
Inventories are stated at the lower of cost or net realisable
value.
Acquisition costs for raw materials are usually determined by
the weighted average method.
For finished goods and work in progress, cost of production
includes directly attributable costs for material and manufacturing
and an attributable proportion of manufacturing overhead expenses
(including depreciation) based on normal levels of activity.
Selling expenses and other overhead expenses are excluded. Interest
is expensed as incurred and therefore not included. Net realisable
value is determined as estimated selling price for silicon wafers
or polysilicon less all estimated costs of completion and costs to
be incurred in marketing, selling and distribution.
Contingent liabilities
Provisions are made for contingent liabilities where there is an
obligation at the balance sheet date, an adverse outcome is
probable and associated costs can be estimated reliably. Where no
obligation is present at the balance sheet date no provision is
made, although, where material, the contingent liability will be
disclosed in a note.
Current and deferred taxes
Current tax is the tax currently payable based on taxable profit
for the year, including any under or over provisions from prior
years.
Deferred income taxes are calculated using the liability method
on temporary differences. Deferred tax is generally provided on the
difference between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not provided on the
initial recognition of goodwill, nor on the initial recognition of
an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with shares in
subsidiaries is not provided if reversal of these temporary
differences can be controlled by the Group and it is probable that
reversal will not occur in the foreseeable future. In addition, tax
losses available to be carried forward as well as other income tax
credits to the Group are assessed for recognition as deferred tax
assets.
Deferred tax liabilities are provided in full. Deferred tax
assets are recognised to the extent that it is probable that the
underlying deductible temporary differences will be able to be
offset against future taxable income. Current and deferred tax
assets and liabilities are calculated at tax rates that are
expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted at the balance
sheet date.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the Consolidated Statement of
Comprehensive Income, except where they relate to items that are
charged or credited directly to equity, in which case the related
deferred tax is also charged or credited directly to equity.
Public grants and subsidies
As the German wafering operation is located in a region
designated for economic development, the Group received both
investment subsidies and investment grants. Government grants and
subsidies relating to capital expenditure were credited to the
"Deferred grants and subsidies" account and released to the
Consolidated Statement of Comprehensive Income by equal annual
instalments over the expected useful lives of the relevant assets
under "Other income".
Government grants of a revenue nature, mainly for research and
development purposes, were credited to the Consolidated Statement
of Comprehensive Income in the same year as the related
expenditure.
All required conditions of these grants have been met and it is
the Group's intention that they will continue to be met.
Provisions
Provisions are formed where a third party obligation exists,
which will lead to a probable future outflow of resources and where
this outflow can be reliably estimated. Provisions are measured at
the best estimate of the expenditure required to settle the
obligation, discounted to present value. The resulting charge upon
the discounting being unwound is recorded as a finance cost.
Future expected wind-down costs for Group companies no longer
classed as going concern are included within provisions.
Accruals
Accruals are recognised when an obligation to meet an outflow of
economic benefit in the future arises at the balance sheet
date.
Accruals are initially recognised at fair value and subsequently
at amortised cost using the effective interest method.
Revenue recognition
Revenue is recognised in according with the requirements of IFRS
15 'Revenue from Contracts with Customers'. The Company recognises
revenue to depict the transfer of promised goods and services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. This core principle is delivered in a five-step model
framework:
1. Identify the contract(s) with the customer;
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to the performance obligations in the contract; and
5. Recognise revenue when (or as) the entity satisfy a performance obligation.
Revenue is recognised when control of the products have been
transferred to the customer. Control is considered to have
transferred once products have been received by the customer unless
shipping terms dictate any different. Revenues exclude intra-group
sales and value added taxes and represent net invoice value less
estimated rebates, returns and settlement discounts. The net
invoice value is measured by reference to the fair value of
consideration received or receivable by the Group for goods
supplied.
Finance income and costs
Net financing costs comprise interest payable on borrowings
calculated using the effective interest rate method, interest
receivable on funds invested, dividend income and gains and
financial income and costs relating to the defined benefit pension
scheme.
Interest income is recognised in the Consolidated Statement of
Comprehensive Income as it accrues, using the effective interest
method.
Defined contribution pension plan
For defined contribution plans, the Group pays contributions to
pension insurance plans on a contractual basis. The Group has no
further payment obligations once the contributions have been paid.
The contributions are recognised as employee benefit expenses when
they are incurred.
Defined benefit pension plan
For defined benefit plans, the Group previously made
contributions to pension insurance plans in Germany which covered
the estimated liability for the two German members. These amounts
have historically been shown netted off due to the fact that the
gross balances were not deemed to be material to the financial
statements. During 2017 the liability was reduced due to the death
of the spouse of one of the employees and in 2018 the pension
obligation was eliminated following the transfer of the obligation
to an insurance company. The plans are reviewed annually by an
actuary and any actuarial gains or losses are recorded in the
Consolidated Statement of Comprehensive Income.
Employee Benefit Trust
All assets and liabilities of the Employee Benefit Trust ("EBT")
have been consolidated in these financial statements as the Group
has de facto control over the trust's net assets as the parent of
its sponsoring company.
Share-based payments
The Group has applied the requirements of IFRS 2, 'Share-based
Payments'. The Group issues equity-settled share-based payments to
certain employees. These are measured at their fair value at the
date of the grant using an appropriate option pricing model and are
expensed over the vesting year, based on the Group's estimate of
the number of shares that will eventually vest. Grants of shares
made during 2008 and 2007 are not subject to performance criteria
and were valued at the date of the grant at market value. During
2011 awards were granted under the Performance Share Plan to
employees. The share options granted are subject to performance
criteria required for the option to vest and are considered in the
method of measuring fair value. Fair value is assessed using the
Black-Scholes method.
Charges made to the Consolidated Statement of Comprehensive
Income in respect of share-based payments are credited to the
share-based payment reserve.
Shareholders' equity
Shareholders' equity is comprised of the following balances:
-- share capital is comprised of 160,278,975 ordinary shares of 5.2 pence each;
-- share premium represents the excess over nominal value of the
fair value of consideration received for equity shares, net of
expenses of share issue;
-- other reserves arising from the issue and redemption of B shares in 2013;
-- investment in own shares is the Group's shares held by the
EBT that are held in trust for the benefit of employees;
-- share-based payment reserve is the amount charged to the
Consolidated Statement of Comprehensive Income in respect of shares
already granted or options outstanding relative to the vesting date
or option exercise date;
-- the reverse acquisition reserve is the difference between the
value of the assets acquired and the consideration paid by way of a
share for share exchange on 5 January 2007;
-- accumulated losses is the cumulative loss retained by the Group; and
-- currency translation reserve represents the differences
arising from the currency translation of the net assets in
subsidiaries.
2. Segment reporting
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance, has been identified
as the Group Board. The Group is organised around the production
and supply of wafers from silicon and non-silicon materials.
Accordingly, the Board reviews the performance of the Group as a
whole and there is only one operating segment. Disclosure of
reportable segments under IFRS 8 is therefore not made.
Geographical information 2018
Rest Rest
United of of
Taiwan Canada Germany Kingdom Europe world Group
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------------------------- -------- -------- -------- -------- -------- -------- --------
Revenues
By entity's country of domicile - - 350 5,958** - - 6,308
By country from which derived 5,958 - 274 - - 77 6,308
--------------------------------- -------- -------- -------- -------- -------- -------- --------
Non-current assets*
By entity's country of domicile - - 51 - - - 51
--------------------------------- -------- -------- -------- -------- -------- -------- --------
* Excludes financial instruments, deferred tax assets and post-employment benefit assets.
One customer in Taiwan accounted for more than 10% of Group
revenue, with sales to this customer of EUR5,958 (figures in
EUR'000).
Geographical information 2017
Rest Rest
United of of
Taiwan Canada Germany Kingdom Europe world Group
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------------------- -------- -------- -------- -------- -------- -------- --------
Revenues
By entity's country of
domicile - - 3,418 22,946** - - 26,364
By country from which
derived 16,966 1,993 312 - 816 6,277 26,364
------------------------ -------- -------- -------- -------- -------- -------- --------
Non-current assets*
By entity's country of
domicile - - 1,086 - - - 1,086
------------------------ -------- -------- -------- -------- -------- -------- --------
* Excludes financial instruments, deferred tax assets and post-employment benefit assets.
** Includes sales of surplus polysilicon feedstock.
One customer in Taiwan accounted for more than 10% of Group
revenue, with sales to this customer of EUR16,720 (figures in
EUR'000).
3. Cost of materials 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.
2018 2017
EUR'000 EUR'000
---------------------------------------------------------- -------- --------
Cost of raw materials, supplies and purchased merchandise 3,904 20,681
Change in unfinished and finished goods 2,939 1,699
Purchased services 535 2,301
---------------------------------------------------------- -------- --------
Cost of materials and services 7,378 24,681
---------------------------------------------------------- -------- --------
4. Personnel expenses
2018 2017
EUR'000 EUR'000
------------------------------------------ -------- --------
Staff costs for the Group during the year
Wages and salaries 3,952 7,000
Social security costs 517 843
Other pension costs 56 356
Employee share schemes 42 32
Total 4,567 8,231
------------------------------------------ -------- --------
Employees
The Group employed a monthly average of 64 employees during the
year ended 31 December 2018 (2017: 126).
2018 2017
Number Number
--------------- ------- -------
Germany 60 89
United Kingdom 4 37
--------------- ------- -------
64 126
--------------- ------- -------
2018 2017
Number Number
--------------- ------- -------
Production 28 76
Administration 36 50
--------------- ------- -------
64 126
--------------- ------- -------
The Group employed 24 employees at 31 December 2018 (31 December
2017: 98).
The remuneration of the Board of Directors, including
appropriations to pension accruals, is shown in the Directors'
Remuneration Report.
5. Other income
2018 2017
EUR'000 EUR'000
----------------------------------------------------------- -------- --------
Customer compensations 8,161 21,811
Gain on disposals of assets held for sale/ property, plant
and equipment 369 256
Sale of uncapitalised assets 339 408
Research and development grants 382 520
Miscellaneous 305 805
----------------------------------------------------------- -------- --------
9,556 23,800
----------------------------------------------------------- -------- --------
Customer compensations relate to realisation of payments
received in respect of unfulfilled customer purchase obligations
and includes EUR8.2 million (2017:EUR20.5 million) in relation to
the arbitration award/settlement agreement.
6. Other expenses
2018 2017
EUR'000 EUR'000
----------------------------------------------- -------- --------
Land and building operating lease charges 424 2,018
Repairs and maintenance 47 99
Selling expenses - 1
Technical consulting, research and development 68 38
Legal costs 530 1,144
Other professional services 517 182
Insurance premiums 99 167
Travel and advertising expenses 44 61
Bad debts - 7
Staff related costs 29 82
Other 267 857
----------------------------------------------- -------- --------
2,025 4,656
----------------------------------------------- -------- --------
Amounts payable to the Group's auditors
2018 2017
EUR'000 EUR'000
------------------------------------------------------------------ -------- --------
Fees payable to the Company's auditors and their associates
for the audit of the parent company
and consolidated financial statements 83 76
Fees payable to the Company's auditors and their associates
for other services:
- The audit of the Company's subsidiaries pursuant to legislation 45 53
- Other assurance services 4 9
------------------------------------------------------------------ -------- --------
132 138
------------------------------------------------------------------ -------- --------
7. Finance income and costs
Finance income and costs are derived/incurred on financial
assets/liabilities and recognised under the effective interest
method.
2018 2017
EUR'000 EUR'000
------------------------------ -------- --------
Finance income 64 65
------------------------------ -------- --------
Finance expense:
Expense of pension commitment - (25)
------------------------------ -------- --------
Finance expense - (25)
------------------------------ -------- --------
8. Income taxes
2018 2017
EUR'000 EUR'000
------------------------------------- -------- --------
Current tax:
Current tax on profit for the year (140) -
Adjustment in respect of prior years 404 -
------------------------------------- -------- --------
Total current tax 264 -
------------------------------------- -------- --------
Deferred tax (note 23):
Total deferred tax - 1,084
------------------------------------- -------- --------
Total tax charge/(credit) 264 1,084
------------------------------------- -------- --------
The total tax rate for the German companies is 32.275% (2017:
32.275%). The effective total tax rate in the United Kingdom was
19.0% (2017: 19.25%). These rates are based on the legal
regulations applicable or adopted at the balance sheet date.
The rate of corporation tax in the United Kingdom will fall to
17% in 2020. The German rate will be unchanged in 2019. The impact
of these changes is not expected to be material.
The tax on the Group's results before tax differs from the
theoretical amount that would arise using the effective UK tax rate
applicable to the losses of the consolidated entities as
follows:
2018 2017
EUR'000 EUR'000
--------------------------------------------------------- -------- --------
Profit before tax 1,627 12,002
--------------------------------------------------------- -------- --------
Expected income tax charge at United Kingdom tax rate of
19.00% (2017: 19.25%) 309 2,310
Adjustments for foreign tax rates - 1,249
Income not subject to tax - (141)
Unrecognised adjustments to deferred tax (395) (2,481)
Adjustment in respect of prior years 264 -
Utilisation of tax losses and other deductions - -
Expenses not deductible for tax 86 147
--------------------------------------------------------- -------- --------
Total tax (credit) / charge 264 1,084
--------------------------------------------------------- -------- --------
9. Actuarial gains on defined benefit scheme
Actuarial losses represent the net of movements in the defined
benefit obligation and the asset value of the Group's defined
benefit pension scheme.
Following the transfer of the last remaining pension obligation
to an insurance company there was loss of EUR126k being a EUR791k
release of benefit obligation and EUR917k decrease in value of the
plan assets. In 2017 following the death of one beneficiary in the
year there was a gain of EUR295k being a EUR759k release of benefit
obligation and EUR464k decrease in the value of the plan
assets.
10. Earnings per share
Net earnings per share is computed by dividing the net profit
for the year attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year.
Diluted net earnings per share is computed by dividing the net
profit for the year by the weighted average number of ordinary
shares outstanding and, when dilutive, adjusted for the effect of
all potentially dilutive shares, including share options.
2018 2017
---------------------------------------- ----------- -----------
Basic shares (average) 158,305,912 158,307,027
Basic earnings per share (Euro cents) 0.9 6.9
Diluted shares (average) 159,250,047 160,051,162
Diluted earnings per share (Euro cents) 0.9 6.8
---------------------------------------- ----------- -----------
Basic shares and diluted shares for this calculation can be
reconciled to the number of issued shares (see note 25) as
follows:
2018 2017
------------------------------------------------------------ ----------- -----------
Shares in issue (see note 25) 160,278,975 160,278,975
Weighted average number of EBT shares held (1,973,063) (1,971,948)
------------------------------------------------------------ ----------- -----------
Weighted average number of shares for basic EPS calculation 158,305,912 158,307,027
Dilutive share options 944,135 1,744,135
------------------------------------------------------------ ----------- -----------
Weighted average number of shares for fully diluted
EPS calculation 159,250,047 160,051,162
------------------------------------------------------------ ----------- -----------
11. Intangible assets
Intangible assets relate to software licences.
Total
EUR'000
------------------------- --------
Cost
At 1 January 2018 824
Disposals (23)
At 31 December 2018 801
------------------------- --------
Accumulated amortisation
At 1 January 2018 818
Charge for the year 4
Impairment 2
Disposals (23)
At 31 December 2018 801
------------------------- --------
Net book amount
At 31 December 2018 -
------------------------- --------
At 31 December 2017 6
------------------------- --------
Total
EUR'000
----------------------------------------- --------
Cost
At 1 January 2017 863
Additions 5
Reclassification to assets held for sale (23)
Disposals (20)
Net effect of foreign currency movements (1)
----------------------------------------- --------
At 31 December 2017 824
----------------------------------------- --------
Accumulated amortisation
At 1 January 2017 856
Charge for the year 6
Reclassification to assets held for sale (23)
Disposals (19)
Net effect of foreign currency movements (2)
----------------------------------------- --------
At 31 December 2017 818
----------------------------------------- --------
Net book amount
At 31 December 2017 6
----------------------------------------- --------
At 31 December 2016 7
----------------------------------------- --------
12. Property, plant and equipment ("PPE")
Other
Plant furniture
and and
machinery equipment Total
EUR'000 EUR'000 EUR'000
--------------------------------- ---------- ---------- --------
Cost
At 1 January 2018 25,270 2,890 28,160
Additions 6 47 53
Disposals (4,853) (132) (4,985)
At 31 December 2018 20,423 2,805 23,228
--------------------------------- ---------- ---------- --------
Accumulated depreciation
At 1 January 2018 24,802 2,707 27,509
Depreciation charge for the year 43 29 72
Impairment charge for the year 400 179 579
On disposals (4,853) (130) (4,983)
At 31 December 2018 20,392 2,785 23,177
--------------------------------- ---------- ---------- --------
Net book amount
At 31 December 2018 31 20 51
--------------------------------- ---------- ---------- --------
At 31 December 2017 468 183 651
--------------------------------- ---------- ---------- --------
Other
Plant furniture
and and
machinery equipment Total
EUR'000 EUR'000 EUR'000
----------------------------------------- ---------- ---------- --------
Cost
At 1 January 2017 66,336 4,260 70,596
Additions 3 136 139
Reclassification to assets held for sale (23,293) (237) (23,530)
Disposals (16,228) (1,213) (17,441)
Net effect of foreign currency movements (1,548) (56) (1,604)
----------------------------------------- ---------- ---------- --------
At 31 December 2017 25,270 2,890 28,160
----------------------------------------- ---------- ---------- --------
Accumulated depreciation
At 1 January 2017 64,711 4,105 68,816
Depreciation charge for the year 108 40 148
Impairment charge for the year 502 11 513
Reclassification to assets held for sale (22,949) (191) (23,140)
On disposals (16,062) (1,202) (17,264)
Net effect of foreign currency movements (1,508) (56) (1,564)
----------------------------------------- ---------- ---------- --------
At 31 December 2017 24,802 2,707 27,509
----------------------------------------- ---------- ---------- --------
Net book amount
At 31 December 2017 468 183 651
----------------------------------------- ---------- ---------- --------
At 31 December 2016 1,625 155 1,780
----------------------------------------- ---------- ---------- --------
13. Other non-current assets
As at 31 December
------------------------- -------------------
2018 2017
EUR'000 EUR'000
------------------------- --------- --------
Other non-current assets - 429
------------------------- --------- --------
- 429
------------------------- --------- --------
The Group has historically paid in to an insurance policy for
two German employees that served to match the liabilities that
arose under a legacy pension scheme. These amounts have
historically been shown netted off due to the fact that the gross
balances were not deemed to be material to the financial
statements. During 2017 the liability was reduced due to the death
of the spouse of one of the employees.
In December the Group concluded an agreement with the insurance
company such that the insurance asset was sold and the contingent
pension liability was transferred to the insurance company.
14. Cash and cash equivalents
All short-term deposits are interest bearing at the various
rates applicable in the business locations of the Group.
As at 31 December
------------------------- -------------------
2018 2017
EUR'000 EUR'000
------------------------- -------- ---------
Cash at bank and in hand 53,964 26,881
53,964 26,881
------------------------- -------- ---------
15. Trade accounts receivable
As at 31 December
--------------- -------------------
2018 2017
EUR'000 EUR'000
--------------- -------- ---------
Germany 40 30
United Kingdom - 1,518
--------------- -------- ---------
40 1,548
--------------- -------- ---------
All receivables have short-term maturity. During the year
receivables of EURnil were written off (2017: EUR7k).
All amounts outstanding as at 31 December 2018 and due at date
of signing had been received, consequently there is no provision
for doubtful debts (2017: EURnil).
None of the unimpaired trade receivables are past due at the
reporting date.
These amounts, together with the customer compensations detailed
in note 5, represent the Group's maximum exposure to credit risk at
the year end.
16. Inventories
Inventories include finished goods as well as production
supplies. The change in inventories is included in the Consolidated
Statement of Comprehensive Income in the line "Cost of
materials".
As at 31 December
------------------ -------------------
2018 2017
EUR'000 EUR'000
------------------ -------- ---------
Finished products 53 2,598
Raw materials 72 1,316
------------------ -------- ---------
125 3,914
------------------ -------- ---------
EUR591k of inventory writedowns are included in cost of
materials in 2018 (2017: EURnil).
17. Assets held for sale
As at 31 December
------------------------- -------------------
2018 2017
EUR'000 EUR'000
------------------------- -------- ---------
At 1 January 390 -
Sold (390) -
Cost transferred - 23,530
Depreciation transferred - (23,140)
------------------------- -------- ---------
At 31 December - 390
------------------------- -------- ---------
The brought forward assets held for sale had an estimated fair
value of EUR586k.
18. Prepaid expenses and other assets
As at 31 December
----------------------- -------------------
2018 2017
EUR'000 EUR'000
----------------------- -------- ---------
VAT 36 611
Prepaid expenses 59 551
Energy tax claims 26 113
Customer compensations - 21,077
Other current assets 416 78
----------------------- -------- ---------
537 22,430
----------------------- -------- ---------
Customer compensations relate to realisation of payments
received in respect of unfulfilled customer purchase obligations
and, for the prior year, includes EUR20.5 million in relation to
arbitration award/settlement agreement.
Other current assets include EUR0.3 million in relation to the
sale of the insurance asset. The payment for this was received in
January 2019.
19. Trade accounts payable
As at 31 December
--------------- -------------------
2018 2017
EUR'000 EUR'000
--------------- -------- ---------
United Kingdom 18 32
Germany 81 1,005
--------------- -------- ---------
99 1,037
--------------- -------- ---------
20. Accrued expenses
As at 31 December
------------------------------- -------------------
2018 2017
EUR'000 EUR'000
------------------------------- -------- ---------
Rents and ancillary rent costs 129 437
Salary related costs 183 130
Other accrued expenses 599 239
------------------------------- -------- ---------
911 806
------------------------------- -------- ---------
21. Provisions
Building Staff
lease costs
related related Total
EUR'000 EUR'000 EUR'000
----------------------------------------------- -------- -------- --------
Provisions brought forward at 1 January 2018 520 865 1,385
Additional provision 182 1,324 1,506
----------------------------------------------- -------- -------- --------
Utilised (702) (2,189) (2,891)
----------------------------------------------- -------- -------- --------
Provisions carried forward at 31 December 2018 - - -
----------------------------------------------- -------- -------- --------
All brought forward provisions are short term and relate to the
winding down of operations in the UK. The additional provision
relates to the restructuring of German operations. All provisions
were utilised in 2018.
22. Current taxes liabilities
As at 31 December
--------------- -------------------
2018 2017
EUR'000 EUR'000
--------------- -------- ---------
United Kingdom 405 -
Germany 943 -
--------------- -------- ---------
1,348 -
--------------- -------- ---------
Current tax liabilities comprises corporation and other non-tax
liabilities, calculated or estimated by the Group companies, as
well as corresponding taxes abroad due to local tax laws, including
probable amounts arising on completed or current tax audits.
23. Deferred tax liabilities
Deferred tax assets arising as a result of losses are recognised
where, based on the Group's budget, they are expected to be
realised in the foreseeable future.
As at 31 December 2018 there were unrecognised potential
deferred tax assets in respect of losses of EUR43.8 million (2017:
EUR44.5 million).
Deferred tax liabilities
As at 31 December
--------------- -------------------
2018 2017
EUR'000 EUR'000
--------------- -------- ---------
United Kingdom - -
Germany - 1,084
--------------- -------- ---------
- 1,084
--------------- -------- ---------
Deferred tax liabilities, calculated or estimated by the Group
companies, comprise taxes payable due to local tax laws, including
probable amounts arising on completed or current tax audits.
Movement in the year is shown below.
2018 2017
EUR'000 EUR'000
---------------------------- -------- ---------
As at 1 January 1,084 -
Charged to income statement (1,084) 1,084
---------------------------- -------- ---------
As at 31 December - 1,084
---------------------------- -------- ---------
24. Other liabilities
As at 31 December
-------------------- -------------------
2018 2017
EUR'000 EUR'000
-------------------- -------- ---------
Payroll liabilities 21 35
Other liabilities - 132
-------------------- -------- ---------
21 167
-------------------- -------- ---------
As at 31 December
----------- -------------------
2018 2017
EUR'000 EUR'000
----------- -------- ---------
Short term 21 167
Long term - -
----------- -------- ---------
21 167
----------- -------- ---------
25. Share capital
2018 2017
EUR'000 EUR'000
------------------------------------------------------- -------- --------
Allotted, called up and fully paid
160,278,975 (2017: 160,278,975) ordinary shares of 5.2
pence each 12,332 12,332
------------------------------------------------------- -------- --------
Summary of rights of share capital
The ordinary shares are entitled to receipt of dividends. On
winding up, their rights are restricted to a repayment of the
amount paid up to their share in any surplus assets arising. The
ordinary shares have full voting rights.
Shares held by the EBT
At 31 December 2018, 1,973,063 ordinary shares of 5.2 pence were
held by the EBT (2017: 1,973,063). The market value of these shares
was EUR0.550 million (2017: EUR0.461 million). Additionally, the
cash balance held by the EBT on 31 December 2018 was EUR0.595
million (2017: EUR0.603 million).
26 Share-based payment plans
The Group established the PV Crystalox Solar PLC EBT on 18
January 2007, which has acquired, and may in the future acquire,
the Company's ordinary shares for the benefit of the Group's
employees.
During the year the Group had three share incentive plans in
operation which are satisfied by grants from the EBT.
PV Crystalox Solar PLC Executive Directors' Deferred Share Plan
("EDDSP")
At the AGM on 28 May 2009 a bonus plan (with deferred share
element) for executive directors was approved by the Company's
shareholders in the context of bringing the arrangements more in
line with market practice and aligning executive directors' pay
more closely with the interests of the Company's shareholders. Half
of each bonus was to be payable in cash and the other half deferred
and payable in shares under the EDDSP, which vests three years
after the award date. Awards of deferred shares under the EDDSP are
to be satisfied on vesting by the transfer of shares from the
existing PV Crystalox Solar PLC Employee Benefit Trust.
On 31 March 2017 awards over 544,135 shares were made to Iain
Dorrity, as detailed in the Directors' Remuneration Report. No
awards were made during 2018.
Market Value Option ("MVO")
An MVO is an option with an exercise price per share equal to
the market value of a share on the date of grant. The vesting
period of each award is three years from the date of grant and the
award must be exercised no later than ten years following the date
of grant.
On 24 November 2008 an MVO over 200,000 ordinary shares was
granted to a senior employee and this option was exercisable from
24 November 2011 at GBP1.00 per share subject to agreed performance
criteria. This option was forfeited when the employee left the
Group in May 2018.
On 26 March 2009 an MVO over 200,000 ordinary shares was granted
to a senior employee and this option is exercisable from 26 March
2012 at 76.0 pence per share subject to agreed performance
criteria, and on 25 September 2009 MVO awards over 1,200,000
ordinary shares were granted to key senior employees and these
options are exercisable from 25 September 2012 at 76.9 pence per
share subject to agreed performance criteria.
One of the employees to whom an award over 200,000 ordinary
shares was issued on 25 September 2009 left the Group after the
closure of PV Crystalox Solar KK during 2016 and the award was
forfeited. Two employees to whom awards over 400,000 ordinary
shares were issued on 25 September 2009 left the Group after being
made redundant from Crystalox Limited during in April and May 2018
and the awards were forfeited. One of the employees to whom an
award over 200,000 ordinary shares was issued on 25 September 2009
left the Group top pursue other career opportunities during October
2018 and the award was forfeited.
Awards over 800,000 shares were forfeited in 2018 (2017: nil).
There are two remaining awards: one over 200,000 shares expires on
26 March 2019 at an exercise price of 76.0 pence per share; the
other over 200,000 shares expires on 25 September 2009 at an
exercise price of 76.9 pence per share.
PV Crystalox Solar PLC Share Incentive Plan ("SIP")
The SIP is an employee share scheme approved by HM Revenue and
Customs in accordance with the provisions of Schedule 8 to the
Finance Act 2000. On 26 February 2008 awards were granted to United
Kingdom employees of 500 shares each over a total of 37,000
ordinary shares of 2 pence. These 37,000 ordinary shares of 2 pence
each were transferred from the EBT into the SIP. The shares in the
SIP were subject to the share consolidation so that each holding of
500 ordinary shares of 2 pence became a holding of 192 shares of
5.2 pence following the 5 for 13 share consolidation in 2013.
During 2017 awards over 3,455 shares vested due to employees
leaving the Group as good leavers due to redundancy and/or where
the employees had held the award for more than five years and were
able to withdraw the shares from the SIP without incurring a tax
personal liability. The balance of 1,153 shares which had
previously been within the SIP as a result of leavers forfeiting
their shares was transferred to the EBT. At the end of 2017 the
Group closed the SIP.
The Group recognised a total credit before tax of EUR132,000
(2017: EUR34,000) related to equity-settled share-based payment
transactions during the year.
The number of share options and weighted average exercise price
("WAEP") for each of the schemes is set out as follows:
MVO WAEP
EDDSP* MVO price SIP*
Number Number Pence Number
---------------------------------------- ------- --------- -------- -------
Share grants and options outstanding
at 1 January 2017 - 1,200,000 79.7 4,608
Share grants and options granted during
the year 544,135 - - -
Share grants and options forfeited
during the year - - - (1,153)
Share grants vested during the year - - - (3,455)
Options exercised during the year - - - -
---------------------------------------- ------- --------- -------- -------
Share grants and options outstanding
at 31 December 2017 544,135 1,200,000 79.7 -
------------------------------------------ ------- --------- -------- -------
Exercisable at 31 December 2017 - 1,200,000 79.7 -
------------------------------------------ ------- --------- -------- -------
Share grants and options granted during - - - -
the year
Share grants and options forfeited
during the year - (800,000) - -
Share grants vested during the year - - - -
Options exercised during the year - - - -
---------------------------------------- ------- --------- -------- -------
Share grants and options outstanding
at 31 December 2018 544,135 400,000 79.7 -
------------------------------------------ ------- --------- -------- -------
Exercisable at 31 December 2018 - 400,000 79.7 -
------------------------------------------ ------- --------- -------- -------
* The weighted average exercise price for the PSP, SABP, PSA and SIP options is GBPnil.
27. Risk management
The main risks arising from the Group's financial instruments
are credit risk, exchange rate fluctuation risks, interest rate
risk and liquidity risk. The Board reviews and determines policies
for managing each of these risks and they are, as such, summarised
below. These policies have been consistently applied throughout the
period.
Credit risk
Credit risk arises from cash and cash equivalents, as well as
credit exposure to customers including outstanding receivables. The
main credit risk arises from accounts receivable. All trade
receivables are of a short-term nature, with maximum payment terms
of 60 days, although the majority of customers currently have
payment terms of 45 days. In order to manage credit risk, local
management defines limits for customers based on a combination of
payment history and customer reputation. Credit limits are reviewed
by local management on a regular basis. Where appropriate, the
Group requests payment or part payment in advance of shipment,
which generally covers the cost of the goods. Different forms of
retention of title are used for security depending on local
restrictions prevalent on the respective markets. The maximum
credit risk to the Group is the total of trade accounts receivable
details of which can be seen in note 15.
Cash is not considered to be a high credit risk due to all funds
being immediately available, consideration being given to the
institution in which it is deposited and the setting of
counterparty limits. All institutions used have a minimum Moody's
credit rating of A3.
Exchange rate fluctuation risks
Significant cash funds are denominated in currencies other than
the presentational currency of the Group. Excess cash funds not
needed for local sourcing are exposed to exchange rate and
associated interest fluctuation risks, particularly so in the
United Kingdom. The exchange rate risk is based on assets held in
currencies other than Euros.
The following exchange rates were used to translate individual
companies' financial information into the Group's presentational
currency:
Average Year-end
rate rate
--------------- ------- --------
Euro:US Dollar 1.1809 1.1444
Sterling:Euro 1.1302 1.1126
--------------- ------- --------
During 2018 the net gain on foreign currency adjustments was
EUR0.3 million (2017: gain of EURnil).
In addition to the above, upon translation of net assets in the
consolidation, there was a negative impact in 2018 of EUR1.0
million (2017: negative impact of EUR1.2 million) recording as a
currency translation adjustment which is shown in the Consolidated
Statement of Comprehensive Income as "other comprehensive
income".
Interest rate risk
The Group has limited exposure to interest rate fluctuation
risks, since the Group does not have any borrowings.
Sensitivity analysis of the accruals and loans outstanding at
the year end has not been disclosed as these are all current and
paid in line with standard payment terms.
The Group had a cash balance at the end of 2018 of EUR54.0
million (2017: EUR26.9 million) and places these cash funds on
deposit with various quality banks subject to a counterparty limit
of EUR15 million. Accordingly, there is an interest rate risk in
respect of interest receivable which amounted to EUR0.1 million in
the year (2017: EUR0.1 million). The Group is cash positive and
current interest rates are low. The risk of interest rates falling
is considered small and in any case would have a small impact on
the Group's income statement and cash flows. Group management
considers that in the medium term it is more likely that interest
rates might rise. The impact of interest rate rises would
positively impact the Group's profits and cash flow.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
On 31 December 2018 the Group had a net cash balance of EUR54.0
million (2017: EUR26.9 million) and this together with cash flow
projections from the cash conservation plan indicate, assuming the
projections are broadly correct, that the Group will have adequate
cash reserves until at least twelve months beyond the signing of
the accounts.
Financial assets and liabilities
Fair value of financial instruments
There is no significant difference between the book values and
fair values of the financial assets and liabilities of the Group
and the latter are reviewed on a regular basis to ensure that no
such exposure arises or, if it does, to enable the Group to take
action to mitigate or eliminate any such potential loss. The
carrying value of financial assets and liabilities is summarised in
the table below:
2018 2017
EUR'000 EUR'000
--------------------------------------------- -------- --------
Financial assets measured at amortised cost:
Cash and cash equivalents 53,964 26,881
Accounts receivable 40 1,548
Prepaid expenses and other assets 537 22,820
--------------------------------------------- -------- --------
54,541 51,249
--------------------------------------------- -------- --------
Financial assets measured at amortised cost:
Accounts payable trade (99) (1,037)
Accrued expenses (911) (806)
Provisions - (1,385)
--------------------------------------------- -------- --------
Total tax charge/(credit) (1,010) (3,228)
--------------------------------------------- -------- --------
Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns to shareholders and other stakeholders and to
maintain an optimal capital structure that strikes the appropriate
balance between risk and the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
debt.
The Group defines capital as all elements of equity.
The Group's capital (plus its cash and cash equivalents) is set
out in the following table. The Group is not subject to any
externally imposed capital requirements.
2018 2017
EUR'000 EUR'000
---------------------------------------- -------- --------
Cash and cash equivalents (see note 14) 53,964 26,881
Total net cash 53,964 26,881
---------------------------------------- -------- --------
Total equity 52,338 51,770
---------------------------------------- -------- --------
The Group is net cash positive and therefore does not have any
gearing. Accordingly, the leverage ratio has no meaning and has not
been calculated.
28. Calculation of fair value
There are no publicly traded financial instruments (e.g.
publicly traded derivatives and securities held for trading and
available-for-sale securities) nor any other financial instruments
held at fair value.
29. Contingent liabilities
The Group did not assume any contingent liabilities for third
parties. No material litigation or risks from violation of third
parties' rights or laws are pending at the time of approval of
these financial statements.
30. Other financial obligations
Lease agreements (operating leases)
The leases primarily relate to rented buildings and have terms
of no more than five years. The future aggregate minimum lease
payments under non-cancellable operating leases are as follows:
As at 31 December
----------------------- -------------------
2018 2017
EUR'000 EUR'000
----------------------- --------- --------
Less than one year 392 555
Two to five years - 919
Longer than five years - -
----------------------- --------- --------
392 1,474
----------------------- --------- --------
The above represent the contractual obligation at balance sheet
date.
There were no significant purchase commitments at the year
end.
31. Related party disclosures
Related parties as defined by IAS 24 comprise the senior
executives of the Group, including their close family members, and
also companies that these persons could have a material influence
on as related parties as well as other Group companies. During the
reporting year, none of the shareholders had control over or a
material influence in the parent company.
Transactions between the Company and its subsidiaries have been
eliminated on consolidation.
The remuneration of the directors, who are the key management
personnel of the Group, is set out in the audited part of the
Directors' Remuneration Report.
32. Dividends and return of cash
No dividends were paid in 2018 (2017: EURnil).
33. Post-balance sheet events
There are no significant post-balance sheet events.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR URSURKSAOUUR
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