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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Pv Crystalox Solar Plc | LSE:PVCS | London | Ordinary Share | GB00BJ0CHQ31 | ORD 3.0206P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 33.10 | 30.20 | 36.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMPVCS
RNS Number : 2559A
PV Crystalox Solar PLC
23 March 2017
PV Crystalox Solar PLC
("PV Crystalox", the "Company" or the "Group")
Preliminary Results for the year ended 31 December 2016
PV Crystalox, the long established supplier to the global photovoltaic industry of multicrystalline silicon wafers for use in solar electricity generation systems is pleased to announce its preliminary results for the year to 31 December 2016.
Highlights
-- Industry environment has deteriorated sharply in the second half of the year -- Wafer shipments were 114MW (2015: 203MW) -- Significant reduction in polysilicon inventory and consequent release of cash -- UK ingot production expected to close during 2017 -- Termination of final major long term polysilicon contract agreed in September 2016 -- ICC arbitration evidentiary hearing scheduled for end of March 2017
Overview of results
-- Revenues: EUR56.7m (2015: EUR64.5m) -- EBT: EUR1.7m (2015: LBT of EUR(13.7)m) -- Net cash from operating activities: EUR18.0m (2015: EUR(12.9)m) -- Net Cash at the year end: EUR28.8m (2015: EUR12.7m) -- Inventories at the year end: EUR11.2m (2015: EUR23.2m)
Iain Dorrity, Chief Executive Officer commented
"The current market conditions are particularly severe for multicrystalline silicon products with massive over-capacity in China depressing prices for both cells and wafers. Although the Group achieved a creditable financial performance in 2016, the prospects for 2017 are bleak without a recovery in market pricing."
John Sleeman, Chairman, commented
"The Board remains mindful of the need to protect shareholder value and despite the deteriorating industry situation believes that extending the period of the strategic review until the judgement of the arbitral tribunal is received in Q3 2017 is in the best interests of shareholders."
Enquiries:
PV Crystalox Solar PLC +44 (0) 1235 437188 Iain Dorrity, Chief Executive Officer Matthew Wethey, Chief Financial Officer and Group Secretary
About PV Crystalox
PV Crystalox Solar continues to contribute to making solar power cost competitive with conventional hydrocarbon power generation and, as such, continues to seek to drive down the cost of production whilst increasing solar cell efficiency.
We are the only remaining pure play wafer manufacturer in Europe and are able to take advantage of any EU specific manufacturing incentives. The Group exports the vast majority of its wafers to customers around the world.
Chairman's statement
Despite 2016 being another record year for global PV installations, market conditions deteriorated sharply in H2 2016 with wafer prices reaching new historic lows. In view of the difficult industry environment which has persisted since 2011, the Group has been operating under a cash conservation strategy to protect shareholder value whilst preserving the Group's core production capabilities. The Board has been conducting an ongoing strategic review and has now made the decision to close its ingot production facilities in the UK during 2017. The Group will instead source ingots from a third party supplier and process these into blocks in the UK and continue to supply wafers to customers from its facility in Germany.
The Group has a significant outstanding long term sales contract with one of the world's leading PV companies which has failed to purchase wafers in line with its obligations since 2013. A request for arbitration was filed in March 2015 with the International Court of Arbitration of the International Chamber of Commerce and the evidentiary hearing of the arbitral tribunal is scheduled to take place in Frankfurt at the end of March 2017. The judgment of the arbitral tribunal is not expected before Q3 2017.
In September 2016 the Group successfully negotiated the termination of its remaining long-term polysilicon purchase contract. This contract required the Group to purchase polysilicon at prices considerably in excess of market prices and shipments were scheduled to continue until late 2018. The Group forfeited a significant portion of the pre-payment outstanding as at 31 December 2015 and received the remainder in cash in Q4 2016. The obligations under the other larger contract had been concluded successfully at the end of 2015.
Wafers sales volumes in 2016 of 114MW were markedly below the 203MW achieved in 2015 but we were successful in trading much higher polysilicon volumes and significantly reduced our inventory accordingly. Total revenue of EUR56.7 million was 12.1% lower than in the prior year. Despite the difficult market conditions in H2 2016, we achieved a profit before tax of EUR1.7 million which represents a significant improvement on the loss of EUR13.7 million recorded in 2015. Net cash of EUR28.8 million at the end of the period was EUR16.1 million higher than at the beginning of the year largely as a result of reducing inventory by EUR12.0 million.
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.
The Board remains committed to maintaining governance at their historic levels to ensure that the right people, systems and processes are in place to manage risk and to deliver the Group's agreed strategy. These governance levels are above those required for a company with a standard listing. The Board has agreed that it is now more appropriate to report against the Quoted Companies Alliance Code rather than the UK Corporate Governance Code from 2012, which we reported against last year, or the current 2014 Code. Our internal review found that the Board is operating effectively, and full details of our governance activities can be found in the Corporate Governance section of the Annual Report.
The Board remains mindful of the need to protect shareholder value and despite the deteriorating industry situation believes that extending the period of the strategic review until the judgement of the arbitral tribunal is received in Q3 2017 is in the best interests of shareholders.
Operational and financial review
Operational review of 2016
Market environment
Since 2011 the PV market environment has been extremely challenging and these adverse conditions persisted in 2016. The relentless pressure on pricing continued despite another year of strong growth in global PV installations. Wafer producers enjoyed a brief respite in the early months of 2016 when market conditions were favourable with a combination of strong demand, stable prices and low polysilicon pricing. However this period was short-lived as wafer prices fell progressively during Q2 2016 while polysilicon prices increased. The industry environment deteriorated markedly during Q3 2016 as a result of the slowdown in PV installations in China which weakened demand and led to oversupply across the value chain and falling prices. Wafer pricing fell more rapidly during this period reaching a new historic low in late-September, down 35% from the previous low point seen in mid-2015 and down 40% from the high at the beginning of 2016.
Over-supply across the value chain, primarily in China, continues to plague the industry with little sign of any slowdown in the expansion of manufacturing capacity. China has further increased its dominant position according to the China Photovoltaic Industry Association (CPIA) who reported that China-based manufacturers of polysilicon, wafers, solar cells and PV modules had expanded production capacities by 18%, 31%, 20% and 16% respectively during 2016. Overcapacity and the associated price pressure is particularly severe in multicrystalline wafer and cell production and has led to a number of companies shifting production to higher efficiency monocrystalline products where demand is growing and which are in a relatively shorter supply.
Group operations in 2016
Wafers
Following the suspension of subcontract wafer production in Japan during 2015, the Group has focused on wafering at its own facility in Germany where the cost structure is more favourable and has effectively been operating with reduced production output in comparison with recent years. Wafer shipments during 2016 were 114MW (2015:203MW) with a further 10MW shipped as blocks for wafering by our customers. The Group had significant polysilicon inventory at the end of 2015 which was written down to market values at that time. Due to a combination of the low polysilicon price, favourable wafer pricing during H1 and the developing French low carbon footprint PV market in H2, we were able to maintain an average wafer sales price which was above the cash cost of production during the year.
The French government has set aggressive growth targets for PV and is planning to almost treble installed PV capacity from 6.8 GW at the end of 2016 to between 18.2GW and 20.2GW by 2023. Our wafers have previously commanded a price premium when used in modules for the French PV market where incentives in the form of higher feed in tariffs were offered when two out of the three parts of the manufacturing process (wafer/cell/module) are carried out in the EU. More recently the French government has introduced programmes which incentivise low carbon footprint installations. In December 2015 800MW of PV projects were awarded under the CR3 tender and installations must be completed within a two year period. Subsequently contracts have just been awarded in March 2017 for the first 500MW tender of its 3GW large-scale CR4 programme. The Group benefited from the CR3 scheme during H2 2016 as the carbon footprint obtained by wafering in Germany is lower than product produced in China and Taiwan, the major manufacturing locations. This special market supports demand but only provides limited insulation from the pricing pressure which is currently ravaging the PV industry.
Polysilicon contracts and polysilicon revenue
In common with most PV companies, the Group has laboured for several years under the burden of long term contracts for the purchase of polysilicon. The pricing in these contracts, signed at time when polysilicon was in short supply, was significantly in excess of market prices which fell sharply in the years following the PV market upheaval in 2011. The Group had two separate contracts with different suppliers and concluded its obligations under the major contract at the end of 2015. The second contract was originally agreed in 2008 when polysilicon prices were around four times current spot levels. The contract was amended in 2014 to adjust both the pricing and the volumes and extend the purchase period until 2018. Following discussions with the supplier an agreement was reached in September 2016 to terminate the contract and cease any further purchase obligations. The Group forfeited a significant portion of the outstanding polysilicon feedstock deposit and received a cash refund for the remainder.
Although the Group was successful in reaching agreement to adjust prices under the polysilicon contracts, the annual purchase volumes were considerably in excess of production requirements following the decision to reduce wafer output, as a result of the Group's cash conservation policy. In order to manage inventory volumes over the years it has been necessary to trade polysilicon. Nevertheless a slowdown in the polysilicon market led to a significant build up in raw material inventory at the end of 2015. In line with normal accounting policy this was written down to market value at that time. The trading activity resumed with particular success during 2016 and the Group was able to take advantage of the strong polysilicon demand especially when pricing peaked in Q2 2016. The combined effect of the polysilicon trading and the conclusion of the Group's major polysilicon purchase contract obligation in 2015 has resulted in an 85% reduction in the polysilicon inventory volume and a significant improvement in the Group's net cash position.
Wafer supply contracts
The Group has a significant outstanding long term sales contract with one of the world's leading PV companies which has failed to purchase wafers in line with its obligations since 2013. The supply contract was signed in 2008 and related to wafer shipments over a seven year period with prices which reflected market prices at that time and which are considerably above current levels. Despite extensive negotiations it has not been possible to reach a mutually acceptable agreement and a request for arbitration was filed in March 2015 with the International Court of Arbitration of the International Chamber of Commerce. The evidentiary hearing of the arbitral tribunal was originally scheduled to take place in Frankfurt in July 2016 but following requests by our customer the tribunal first agreed to postpone the hearing until November 2016 and subsequently until late March 2017. In an attempt to find an amicable solution both parties agreed to follow a mediation process led by an external mediator during December 2016 but the process has been unsuccessful to date.
The arbitral tribunal hearing will start on 27 March and the judgement is not expected until Q3 2017. While the outcome is uncertain, the Group indicated in March 2016 that the value of any award if our claim is upheld could be a multiple of the Group's market capitalisation at that time.
A partial resolution of the other outstanding wafer supply contract, with a customer which entered insolvency and where shipments stopped in 2012, has now been achieved. Claims had been registered with the administrator and an interim settlement of EUR0.96m was eventually received during H1 2016. A final payment is expected to bring our aggregate settlement up to EUR1.5m although the timing of the receipt of the final amount is uncertain.
Financial Review
In 2016 Group revenue decreased by 12.0% to EUR56.7 million (2015: EUR64.5 million). This was mainly due to a decline in wafer shipments which was partially offset by an increase in sales of excess polysilicon feedstock when compared to 2015.
During 2016 the Group recognised other income of EUR5.4 million, which was EUR4.2 million higher than in 2015. EUR4.6 million of this income was in relation to customer compensations of which EUR3.2 million related to amounts which were held as deferred revenue at the start of the year.
The positive gross margin in the year was EUR8.1 million whereas in 2015 there was a gross margin of EUR0.2 million. Two factors contributed to this positive margin in 2016: sales of excess polysilicon inventory at prices above the 2015 year end valuation as a result of the rebound in polysilicon spot prices during H1 2016 and stronger wafer sales prices during that period. The gross margin in the prior year had been reduced by an inventory writedown of EUR5.5 million as a result of the fall in spot price of polysilicon.
Personnel expenses of EUR7.6 million (2015: EUR8.4 million) were 19.4% below those in 2015 when additional compensation costs of EUR0.6 million were incurred as a result of the wind-up of the Japanese subsidiary.
Other expenses at EUR7.9 million were EUR2.5 million higher than in 2015 mainly due to the EUR4.3 million cost of cancelling the polysilicon purchase contract, where the Group forfeited a significant portion of its outstanding prepayment. The 2015 expenses were inflated by costs relating to running and shutting down the Japanese subsidiary.
The Group's annual depreciation charge in 2016 remained modest at EUR0.2 million (2015: EUR0.4 million). It should be noted that the Group's remaining plant and equipment, was largely written down between 2011 and 2013.
The currency gain was EUR3.9 million in 2016 compared to a loss of EUR0.2 million in 2015. Approximately two thirds of this gain relates to the retranslation of the polysilicon contract deposit, whilst the remainder of the gain mostly relates to revaluing foreign currency cash balances held in the UK.
Overall the Group generated a profit before taxes of EUR1.7 million (2015: loss of EUR13.7 million). The EUR15.4 million margin improvement was driven largely by increases of EUR7.9 million in gross margin, EUR4.2 million in other income and EUR4.0 million in currency gains. Reductions in personnel costs (EUR0.8 million) and (EUR0.7 million) finance costs also contributed but were offset by an increase in other expenses (EUR2.5 million).
The Group's cash position at the year end of EUR28.8 million was EUR16.1 million higher than the net position of EUR12.7 million at the start of the year. Net cash inflows of EUR18.0 million from operating activities were partially offset by negative foreign exchange rate changes on cash of EUR1.7 million.
Inventories decreased during the year by EUR12.0 million from EUR23.2 million at the end of 2015 to EUR11.2 million at the end of 2016. Raw materials inventory decreased by EUR16.4 million compared to 2015 as polysilicon inventory decreased by 85%. Finished product increased by EUR3.1 million as wafer inventory increased. Work in progress increased by EUR1.3 million.
Going concern
The Group's directors continue to operate a cash conservation strategy to enable the Group to manage its operations whilst market conditions remain difficult. The deterioration in market conditions means that the Group's cash cost of wafer production is greater than the market price, however it does allow a contribution to gross margin. A description of the market conditions and the Group's actions to conserve cash is included in the Strategic Report.
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 assumptions around contracted sales volumes/prices and contracted purchase volumes/prices are based on management's expectations which are consistent with the Group's experience in the first part of 2017. The Group looked at the sensitivity in the model by considering different sales volumes and prices and noted that a significant drop in either would still leave the Group in a cash positive position in March 2018.
The nature of the Group's operation means that it can vary production levels to match market requirements. As part of the cash conservation measures and the associated planning assumptions, production output currently remains reduced to match expected demand. In line with the Group's strategy of retaining flexibility in production levels, production can be brought back on stream should market conditions allow. In order to manage inventory levels the Group continues to sell excess polysilicon into the spot market.
On 31 December 2016 there was a net cash balance of EUR28.8 million, including funds held by an employee benefit trust. Therefore, whilst any consideration of future matters involves making a judgement at a particular point in time about future events that are inherently uncertain, the directors, after careful consideration and after making appropriate enquiries, are of the opinion that the Group has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. Thus the Group continues to adopt the going concern basis of accounting in preparing the annual financial statements.
As a result of these modelling assumptions the base plans indicate that the Group will be able to operate within its net cash reserves for the foreseeable future
Cash conservation focus in 2017
In view of current adverse market environment where wafer prices are well below production costs, the Group will maintain its focus on the niche low carbon footprint wafer market where it has a competitive advantage and can obtain some shelter from market pricing pressure. In order to better align production costs with market prices and reduce overheads the Group intends to phase out ingot production in the UK during 2017. This will involve the closure of the two remaining facilities with a total capacity of 450MW per annum and which have not been fully utilised for several years. In future the Group will rely on the purchase of ingots from an external supplier. Ingots will continue to be processed into blocks in the UK and wafers produced in our German facility in order to retain the low carbon footprint.
Outlook
The current market conditions are particularly severe for multicrystalline silicon products with massive over-capacity in China depressing prices for both cells and wafers. Recent PV company announcements have indicated a shift to higher efficiency monocrystalline cells where supply and demand are better balanced and pricing more favourable. Such shifts can only exacerbate the pressure on multicrystalline silicon pricing. Indeed it is difficult not to conclude that with profitability continuing to be elusive the PV manufacturing industry outside China faces an existential crisis.
The Board advised in early 2016 that it was extending the period of the strategic review in view of the improved market conditions that positively impacted the Group's competitive position at that time. Although the Group achieved a creditable financial performance in 2016, the prospects for 2017 are bleak without a recovery in market pricing. Nevertheless the Board now expects to conclude its strategic review when the judgement is received from the arbitral tribunal during Q3 2017.
A copy of annual report together with a notice of Annual General Meeting to be held at the offices of Norton Rose Fullbright at 3 More London Riverside, London, SE1 2AQ, on 18 May 2017 at 2.00 pm will be posted to shareholders on 21 April 2017 and will be available from the Company's website at www.pvcrystalox.com on that date.
Consolidated statement of comprehensive income
For the year ended 31 December 2016
Hot Features
Premium
2016 2015
Notes EUR'000 EUR'000
--------------------------------------------- ----- -------- --------
Revenues 8 56,732 64,464
Cost of materials and services 3 (48,622) (64,268)
Personnel expenses 4 (7,611) (8,447)
Depreciation and impairment of property,
plant and equipment and amortisation
of intangible assets (226) (382)
Other income 2 5,376 1,187
Other expenses 5 (7,870) (5,390)
Currency gains and (losses) 3,860 (184)
--------------------------------------------- ----- -------- --------
Profit / (loss) before interest and taxes
("EBIT") 1,639 (13,020)
Finance income 6 97 78
Finance cost 6 (36) (721)
--------------------------------------------- ----- -------- --------
Profit / (loss) before taxes ("EBT") 1,700 (13,663)
Income taxes 7 44 (94)
--------------------------------------------- ----- -------- --------
Profit / (loss) for the year attributable
to owners of the parent 1,744 (13,757)
--------------------------------------------- ----- -------- --------
Other comprehensive (loss) / income
Items that may be reclassified subsequently
to profit or loss:
Currency translation adjustment (4,887) 2,867
--------------------------------------------- ----- -------- --------
Total comprehensive loss
Attributable to owners of the parent (3,143) (10,890)
--------------------------------------------- ----- -------- --------
Basic and diluted profit / (loss) per
share in Euro cents:
From profit / (loss) for the year 9 1.1 (8.8)
--------------------------------------------- ----- -------- --------
The accompanying notes form an integral part of these financial statements.
Consolidated balance sheet
As at 31 December 2016
2016 2015
Notes EUR'000 EUR'000
---------------------------------- ----- -------- --------
Intangible assets 14 7 12
Property, plant and equipment 15 1,780 2,049
Other non-current assets 16 - 5,179
---------------------------------- ----- -------- --------
Total non-current assets 1,787 7,240
---------------------------------- ----- -------- --------
Cash and cash equivalents 10 28,827 12,691
Trade accounts receivable 11 2,446 5,658
Inventories 12 11,217 23,186
Prepaid expenses and other assets 13 1,292 3,386
Total current assets 43,782 44,921
---------------------------------- ----- -------- --------
Total assets 45,569 52,161
---------------------------------- ----- -------- --------
Trade accounts payable 18 2,006 1,436
Deferred revenue 23 - 3,518
Accrued expenses 19 1,469 1,885
Deferred grants and subsidies 20 - 70
Current tax liabilities 21 - 117
Other current liabilities 22 55 96
---------------------------------- ----- -------- --------
Total current liabilities 3,530 7,122
---------------------------------- ----- -------- --------
Accrued expenses 19 31 42
Other non-current liabilities 22 281 222
---------------------------------- ----- -------- --------
Total non-current liabilities 312 264
---------------------------------- ----- -------- --------
Share capital 24 12,332 12,332
Share premium 50,511 50,511
Other reserves 25,096 25,096
Shares held by the EBT (372) (679)
Share-based payment reserve 260 472
Reverse acquisition reserve (3,601) (3,601)
Accumulated losses (19,644) (21,388)
Currency translation reserve (22,855) (17,968)
---------------------------------- ----- -------- --------
Total equity 41,727 44,775
---------------------------------- ----- -------- --------
Total liabilities and equity 45,569 52,161
---------------------------------- ----- -------- --------
The accompanying notes form an integral part of these financial statements.
The financial statements on pages -- to -- were approved by the Board of Directors on 22 March 2017 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 2016
Shares
held Share- Retained
by based Reverse earnings/ Currency
Share Share Other the payment acquisition (accumulated translation Total
capital premium reserves EBT reserve reserve losses) reserve equity
Notes EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------- ------ ------- ------- -------- ------- ------- ----------- ------------ ----------- --------
As at 1 January
2015 12,332 50,511 25,096 (679) 741 (3,601) (7,631) (20,835) 55,934
---------------------- ------- ------- -------- ------- ------- ----------- ------------ ----------- --------
Share-based payment
charge - - - - (269) - - - (269)
Transactions
with owners - - - - (269) - - - (269)
---------------------- ------- ------- -------- ------- ------- ----------- ------------ ----------- --------
Loss for the
year - - - - - - (13,757) - (13,757)
Currency translation
adjustment - - - - - - - 2,867 2,867
---------------------- ------- ------- -------- ------- ------- ----------- ------------ ----------- --------
Total comprehensive
loss - - - - - - (13,757) 2,867 (10,890)
---------------------- ------- ------- -------- ------- ------- ----------- ------------ ----------- -------- As at 31 December 2015 12,332 50,511 25,096 (679) 472 (3,601) (21,388) (17,968) 44,775 ---------------------- ------- ------- -------- ------- ------- ----------- ------------ ----------- -------- As at 1 January 2016 12,332 50,511 25,096 (679) 472 (3,601) (21,388) (17,968) 44,775 ---------------------- ------- ------- -------- ------- ------- ----------- ------------ ----------- -------- Share-based payment charge - - - 307 (212) - - - 95 ---------------------- ------- ------- -------- ------- ------- ----------- ------------ ----------- -------- Transactions with owners - - - 307 (212) - - - 95 ---------------------- ------- ------- -------- ------- ------- ----------- ------------ ----------- -------- Loss for the year - - - - - - 1,744 (4,887) (3,143) Currency translation adjustment - - - - - - - - - -------------- ------ ------- ------- -------- ------- ------- ----------- ------------ ----------- -------- Total comprehensive loss - - - - - - 1,744 (4,887) (3,143) ---------------------- ------- ------- -------- ------- ------- ----------- ------------ ----------- -------- As at 31 December 2016 12,332 50,511 25,096 (372) 260 (3,601) (19,644) (22,855) 41,727 ---------------------- ------- ------- -------- ------- ------- ----------- ------------ ----------- --------
Consolidated cash flow statement
For the year ended 31 December 2016
2016 2015
Notes EUR'000 EUR'000
------------------------------------------- ----- -------- --------
Profit / (Loss) before taxes 1,700 (13,663)
Adjustments for:
Net interest (income) / expense 6 (61) 643
Depreciation and amortisation 14,15 226 382
Inventory writedown 12 - 5,538
Credit / (Charge) for retirement
benefit obligation and share-based
payments 25 161 (314)
Decrease in provisions - (17,468)
Gain from the disposal of property,
plant and equipment and intangibles 2 - (191)
(Gains)/losses in foreign currency
exchange 700 (145)
Change in deferred grants and subsidies 20 (70) (41)
------------------------------------------- ----- -------- --------
2,656 (25,259)
Changes in working capital
Decrease in inventories 12 9,639 1,729
Decrease in accounts receivables 11,13 395 813
Decrease in accounts payables and
deferred income 18,19 (1,181) (512)
Decrease in other assets 13,16 6,490 10,322
(Decrease) / Increase in other liabilities 22 (57) 23
------------------------------------------- ----- -------- --------
17,942 (12,884)
Income taxes paid (69) (121)
Interest received 6 97 78
------------------------------------------- ----- -------- --------
Net cash generated from / (used in)
operating activities 17,970 (12,927)
------------------------------------------- ----- -------- --------
Cash flow from investing activities
Proceeds from sale of property, plant
and equipment - 249
Payments to acquire property, plant
and equipment and intangibles 14,15 (131) (20)
------------------------------------------- ----- -------- --------
Net cash generated (used in) / from
investing activities (131) 229
------------------------------------------- ----- -------- --------
Cash flow from financing activities
Interest paid 6 - (23)
------------------------------------------- ----- -------- --------
Net cash used in financing activities - (23)
------------------------------------------- ----- -------- --------
Cash generated from / (used in) operations 17,839 (12,721)
Effects of foreign exchange rate
changes on cash and cash equivalents (1,702) 820
------------------------------------------- ----- -------- --------
Cash and cash equivalents at the
beginning of the year 12,691 24,592
------------------------------------------- ----- -------- --------
Cash and cash equivalents at the
end of the year 28,828 12,691
------------------------------------------- ----- -------- --------
The accompanying notes form an integral part of these financial statements.
Notes to the consolidated financial statements
For the year ended 31 December 2016
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 financial statements for the year ended 31 December 2016 were approved by the Board of Directors on 22 March 2017.
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".
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 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 - property, plant and equipment impairment
Property, plant and equipment are depreciated over their estimated useful lives. The estimated useful lives are based on estimates of the period during which the assets will generate revenue. The carrying amount of the Group's non-financial assets, other than inventories, are subject to regular impairment testing and are reviewed annually and upon indication of impairment.
Having considered the current and, lack of certainty of, future profitability of other Group companies, the majority of property, plant and equipment has previously been written down to scrap value.
Although we believe that our estimates of the relevant expected useful lives, our assumptions concerning the business environment and developments in our industry and our estimations of the discounted future cash flows are appropriate, changes in assumptions or circumstances could require changes in the analysis. This could lead to additional impairment charges or allowances in the future or to valuation write-backs should the expected trends reverse.
Use of estimates - deferred taxes
To compute provisions for taxes, estimates have to be applied. These 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 significant unexpected decline in market prices for silicon wafers, the carrying amount of inventory has been recorded as 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.
Any improvement in anticipated selling prices would reduce the level of writedown necessary and would be taken as profit in 2017.
Basis of consolidation
The Group financial statements consolidate those of the Group and its subsidiary undertakings drawn up to 31 December 2016. 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 continue to operate a cash conservation strategy to enable the Group to manage its operations whilst market conditions remain difficult. Despite the deterioration in market conditions the Group's cash cost of wafer production is currently below the market price, and allows a contribution to gross margin. A description of the market conditions and the Group's actions to conserve cash is included in the Strategic Report.
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 assumptions around contracted sales volumes/prices and contracted purchase volumes/prices are based on management's expectations which are consistent with the Group's experience in the first part of 2017. The Group looked at the sensitivity in the model by considering different sales volumes and prices and noted that a significant drop in either would still leave the Group in a cash positive position in March 2018.
The nature of the Group's operation means that it can vary production levels to match market requirements. As part of the cash conservation measures and the associated planning assumptions, production output currently remains reduced to match expected demand. In line with the Group's strategy of retaining flexibility in production levels, production can be brought back on stream should market conditions allow. In order to manage inventory levels the Group continues to sell excess polysilicon into the spot market.
On 31 December 2016 there was a net cash balance of EUR28.8 million, including funds held by an employee benefit trust. Therefore, whilst any consideration of future matters involves making a judgement at a particular point in time about future events that are inherently uncertain, the directors, after careful consideration and after making appropriate enquiries, are of the opinion that the Group has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. Thus the Group continues to adopt the going concern basis of accounting in preparing the annual financial statements.
As a result of these modelling assumptions the base plans indicate that the Group will be able to operate within its net cash reserves for the foreseeable future.
Effects of new accounting pronouncements
Accounting standards, IFRICs and other guidance in effect or applied for the first time in 2016
-- Annual improvements 2012 -- Annual improvements 2014 -- Amendment to IAS19, regarding defined benefit plans -- Amendment to IFRS11, 'Joint Arrangements' -- Amendment to IAS 16, 'Property, Plant and Equipment' and IAS 38, 'Intangible Assets' -- Amendments to IAS 16, 'Property, Plant and Equipment' -- Amendments to IAS 27, 'Separate Financial Statements'
-- Amendments to IFRS 10, 'Consolidated Financial Statements' and IAS 28, 'Investments in Associates and Joint Ventures'
-- Amendment to IAS 1, 'Presentation of Financial Statements'
The above have not made a material difference to the financial statements.
In issue, but not yet effective
The following interpretations are in issue, but not yet effective. The Group does not believe that any will have a material impact on the Group's financial positions, results of operations or cash flows.
-- Amendments to IAS7, statement of cash flows -- Amendments to IAS12, 'Income taxes' -- Amendments to IFRS 2, 'Share based payments' -- IFRS 9, 'Financial Instruments' -- IFRS 15, 'Revenue from Contracts with Customers' -- IFRS 16 'Leases' -- Amendments to IFRS 4, 'Insurance contracts' -- Amendment to IAS 40, 'Investment property' -- Annual improvements 2014-2016 -- IFRIC 22, 'Foreign currency transactions'
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.
Held for trading
-- derivatives, if any, comprising interest rate swaps and foreign exchange contracts, are classified as held for trading. They are included at fair value, upon the valuation of the local bank.
Loans and receivables
-- 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.
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 when the significant risks and rewards of ownership have been transferred to the customer. Ownership 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.
The Group has outsourced some elements of production to external companies. In cases in which the Group retains power of disposal over the product or product element, a sale is only recognised under IFRS when the final product is sold. The final product is deemed to have been sold when the risks and rewards of ownership have been transferred to a third party.
Finance income and costs
Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, interest receivable on funds invested and dividend income and gains.
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.
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.
Deferred revenue and other long-term assets
As is common practice within the sector, the Group, where appropriate, both seeks to receive deposits from customers in advance of shipment and makes deposits in advance of supplies of silicon tetrachloride and polysilicon feedstock.
These deposits are held on the balance sheet and matched against revenue/cost as appropriate.
Deposits received from customers are not discounted, as the effect is not considered to be material.
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. Other income
2016 2015
EUR'000 EUR'000
-------------------------------------------- -------- --------
Recognition of accrued grants and subsidies
for investments 70 455
Sale of property, plant and equipment - 191
Customer compensations 4,618 -
Supplier compensations 33 36
Research and development grants 411 83
Miscellaneous 244 422
-------------------------------------------- -------- --------
5,376 1,187
-------------------------------------------- -------- --------
Customer compensations relate to realisation of payments received in respect of unfulfilled customer purchase obligations.
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.
2016 2015
EUR'000 EUR'000
---------------------------------------------- -------- --------
Cost of raw materials, supplies and purchased
merchandise 48,971 64,900
Change in unfinished and finished goods (4,402) 7,356
Inventory writedowns - 5,538
Onerous contract release - (17,414)
Purchased services 4,053 3,887
---------------------------------------------- -------- --------
Cost of materials and services 48,622 64,267
---------------------------------------------- -------- --------
4. Personnel expenses
2016 2015
EUR'000 EUR'000
------------------------------------------ -------- --------
Staff costs for the Group during the year
Wages and salaries 6,261 7,256
Social security costs 893 901
Other pension costs 323 251
Employee share schemes 134 39
------------------------------------------ -------- --------
Total 7,611 8,447
------------------------------------------ -------- --------
Included within pension costs is EUR87k (2015: EURnil) relating to actuarial losses on defined benefit pension obligations.
Employees
The Group employed a monthly average of 138 employees during the year ended 31 December 2016 (2015: 141).
2016 2015
Number Number
--------------- ------- -------
Germany 88 85
United Kingdom 50 51
Japan - 5
--------------- ------- -------
138 141
--------------- ------- -------
2016 2015
Number Number
--------------- ------- -------
Production 84 80
Administration 54 61
--------------- ------- -------
138 141
--------------- ------- -------
The Group employed 139 employees at 31 December 2016 (31 December 2015: 136).
The remuneration of the Board of Directors, including appropriations to pension accruals, is shown in the Directors' Remuneration Report.
5. Other expenses
2016 2015
EUR'000 EUR'000
----------------------------------------------- -------- --------
Land and building operating lease charges 1,810 2,508
Repairs and maintenance 138 136
Selling expenses 5 9
Technical consulting, research and development 72 28
Legal costs 525 659
Other professional services 529 950
Insurance premiums 201 222
Travel and advertising expenses 73 97
Bad debts - 418
Cost of cancelling supply contract (see
below) 4,266 -
Staff related costs 65 72
Other 186 291
----------------------------------------------- -------- --------
7,870 5,390
----------------------------------------------- -------- --------
The Group's last remaining supply contract was cancelled during the year and as part of the mutual agreement, the Group forfeited a proportion of the deposit previously made.
Amounts payable to the Group's auditors:
2016 2015
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 71 94
Fees payable to the Company's auditors
and their associates for other services:
- The audit of the Company's subsidiaries
pursuant to legislation 70 74
- Other assurance services 4 11
------------------------------------------- -------- --------
145 179
------------------------------------------- -------- --------
6. Finance income and costs
Finance income and costs are derived/incurred on financial assets/liabilities and recognised under the effective interest method.
The resulting charge upon unwinding the discount charge on provisions is recorded as a finance cost.
2016 2015
EUR'000 EUR'000
------------------------------------------- -------- --------
Finance income 97 78
------------------------------------------- -------- --------
Finance expense:
Expense of pension commitment (36) (31)
Expense of prior year tax - (24)
Expense of unwinding provision discounting
charge - (666)
------------------------------------------- -------- --------
Finance expense (36) (721)
------------------------------------------- -------- --------
7. Income taxes
2016 2015
EUR'000 EUR'000
------------------------------------- -------- --------
Current tax:
Current tax on loss for the year - 2
Adjustment in respect of prior years (44) 92
------------------------------------- -------- --------
Total current tax (44) 94
------------------------------------- -------- --------
Deferred tax (note 17):
Total deferred tax - -
------------------------------------- -------- --------
Total tax (credit) / charge (44) 94
------------------------------------- -------- --------
The total tax rate for the German companies is 32.275% (2015: 32.275%). The effective total tax rate in the United Kingdom was 20.0% (2015: 20.25%) . These rates are based on the legal regulations applicable or adopted at the balance sheet date.
The rate of corporation tax in the UK will fall to 19% with effect from 1 April 2017 and to 18% in 2020. The German rate will be unchanged in 2017. 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 weighted average tax rate applicable to the losses of the consolidated entities as follows:
2016 2015
EUR'000 EUR'000
----------------------------------------------- -------- --------
Profit / (Loss) before tax 1,700 (13,663)
----------------------------------------------- -------- --------
Expected income tax credit at UK tax rate
20.0% (2015: 20.25%) 340 (2,766)
Adjustments for foreign tax rates 19 (447)
Income not subject to tax (5) (1,375)
Unrecognised adjustments to deferred tax
due to changes in tax rate (146) -
Adjustment in respect of prior years (44) 92
Utilisation of tax losses and other deductions (169) 3,154
Expenses not deductible for tax (39) 1,436
----------------------------------------------- -------- --------
Total tax (credit) / charge (44) 94
----------------------------------------------- -------- --------
8. 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 one product, multicrystalline silicon wafers. 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 2016
Rest Rest
United of of
Japan Taiwan Canada Germany Kingdom Europe world Group
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------------- -------- -------- -------- -------- -------- -------- -------- --------
Revenues
By entity's country
of domicile - - - 2,648 54,084-- - - 56,732
By country from
which derived 14 18,399 26,536 246 15 6,796 4,726 56,732
-------------------- -------- -------- -------- -------- -------- -------- -------- --------
Non-current assets*
By entity's country
of domicile - - - 660 1,127 - - 1,787
-------------------- -------- -------- -------- -------- -------- -------- -------- --------
* Excludes: financial instruments, deferred tax assets and post-employment benefit assets.
-- Includes sales of surplus polysilicon feedstock
Two customers accounted for more than 10% of Group revenue each and sales to these customers are as follows (figures in EUR'000):
1. 26,536 (Canada); and
2. 18,399 (Taiwan).
Geographical information 2015
Rest Rest
United of of
Japan Taiwan Canada Germany Kingdom Europe world Group
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------------- -------- -------- -------- -------- -------- -------- -------- --------
Revenues
By entity's country
of domicile 325 - - 4,012 60,127-- - - 64,464
By country from
which derived 325 31,271 20,462 109 17 8,573 3,707 64,464
-------------------- -------- -------- -------- -------- -------- -------- -------- --------
Non-current assets*
By entity's country
of domicile 2 - - 740 6,498 - - 7,240
-------------------- -------- -------- -------- -------- -------- -------- -------- --------
* Excludes: financial instruments, deferred tax assets and post-employment benefit assets.
-- Includes sales of surplus polysilicon feedstock
Two customers accounted for more than 10% of Group revenue each and sales to these customers are as follows (figures in EUR'000):
1. 27,254 (Taiwan); and
2. 20,462 (Canada).
9. Earnings per share
Net earnings per share is computed by dividing the net Profit / (loss) 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 loss 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.
2016 2015
------------------------------------------ ----------- -----------
Basic shares (average) 157,843,010 156,425,065
Basic earnings / (loss) per share (Euro
cents) 1.1 (8.8)
Diluted shares (average) 159,047,618 159,804,673
Diluted earnings / (loss) per share (Euro
cents) 1.1 (8.8)
------------------------------------------ ----------- -----------
In 2015, the dilutes earnings per share was the same as the basic earnings per share due to the loss in the period.
Basic shares and diluted shares for this calculation can be reconciled to the number of issued shares (see note 24) as follows:
2016 2015
-------------------------------------- ----------- -----------
Shares in issue (see note 24) 160,278,975 160,278,975
Weighted average number of EBT shares
held (2,435,965) (3,853,910)
-------------------------------------- ----------- -----------
Weighted average number of shares for
basic EPS calculation 157,843,010 156,425,065
Dilutive share options 1,204,608 3,379,608
-------------------------------------- ----------- -----------
Weighted average number of shares for
fully diluted EPS calculation 159,047,618 159,804,673
-------------------------------------- ----------- -----------
10. 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
------------------------- -----------------
2016 2015
EUR'000 EUR'000
------------------------- ----------------- ---------
Cash at bank and in hand 28,763 12,627
Short-term bank deposits 64 64
------------------------- ----------------- ---------
28,827 12,691
------------------------- ----------------- ---------
11. Trade accounts receivable
As at 31 December
--------------- -----------------
2016 2015
EUR'000 EUR'000
--------------- ----------------- ---------
Japan - 92
Germany 35 471
United Kingdom 2,411 5,095
--------------- ----------------- ---------
2,446 5,658
--------------- ----------------- ---------
All receivables have short-term maturity. During the year no receivables were written off (2015: EUR418k).
None of the unimpaired trade receivables are past due at the reporting date.
These amounts represent the Group's maximum exposure to credit risk at the year end. All amounts outstanding as at 31 December 2016 and due at date of signing had been received.
12. Inventories
Inventories include finished goods and work in progress (ingots and blocks), 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
------------------ -----------------
2016 2015
EUR'000 EUR'000
------------------ ----------------- ---------
Finished products 4,115 1,001
Work in progress 2,146 857
Raw materials 4,956 21,328
------------------ ----------------- ---------
11,217 23,186
------------------ ----------------- ---------
No Inventory writedowns are included in cost of materials in 2016 (2015: EUR5.5 million).
13. Prepaid expenses and other assets
As at 31 December
--------------------- -----------------
2016 2015
EUR'000 EUR'000
--------------------- ----------------- ---------
VAT 321 354
Prepaid expenses 338 2,557
Energy tax claims 133 124
Other current assets 500 351
--------------------- ----------------- ---------
1,292 3,386
--------------------- ----------------- ---------
Prepaid expenses previously primarily comprised polysilicon feedstock deposits.
14. Intangible assets
Intangible assets relate to software licences.
Total
EUR'000
----------------------------------------- --------
Cost
At 1 January 2016 1,116
Additions 5
Disposals (283)
Net effect of foreign currency movements 25
----------------------------------------- --------
At 31 December 2016 863
----------------------------------------- --------
Accumulated amortisation
At 1 January 2016 1,104
Charge for the year 10
Disposals (283)
Net effect of foreign currency movements 25
----------------------------------------- --------
At 31 December 2016 856
----------------------------------------- --------
Net book amount
At 31 December 2016 7
----------------------------------------- --------
At 31 December 2015 12
----------------------------------------- --------
Total
EUR'000
----------------------------------------- --------
Cost
At 1 January 2015 1,084
Additions 5
Net effect of foreign currency movements 27
----------------------------------------- --------
At 31 December 2015 1,116
----------------------------------------- --------
Accumulated amortisation
At 1 January 2015 1,046
Charge for the year 32
Net effect of foreign currency movements 26
----------------------------------------- --------
At 31 December 2015 1,104
----------------------------------------- --------
Net book amount
At 31 December 2015 12
----------------------------------------- --------
At 31 December 2014 38
----------------------------------------- --------
15. Property, plant and equipment
Other
Plant furniture
and and
machinery equipment Total
EUR'000 EUR'000 EUR'000
----------------------------------------- ---------- ---------- --------
Cost
At 1 January 2016 73,630 4,692 78,322
Additions 104 25 129
Disposals (1,187) (252) (1,439)
Net effect of foreign currency movements (6,211) (205) (6,416)
----------------------------------------- ---------- ---------- --------
At 31 December 2016 66,336 4,260 70,596
----------------------------------------- ---------- ---------- --------
Accumulated depreciation
At 1 January 2016 71,759 4,514 76,273
Charge for the year 174 42 216
On disposals (1,187) (249) (1,436)
Net effect of foreign currency movements (6,035) (202) (6,237)
----------------------------------------- ---------- ---------- --------
At 31 December 2016 64,711 4,105 68,816
----------------------------------------- ---------- ---------- --------
Net book amount
At 31 December 2016 1,625 155 1,780
----------------------------------------- ---------- ---------- --------
At 31 December 2015 1,871 178 2,049
----------------------------------------- ---------- ---------- --------
Other
Plant furniture
and and
machinery equipment Total
EUR'000 EUR'000 EUR'000
----------------------------------------- ---------- ---------- --------
Cost
At 1 January 2015 81,995 4,612 86,607
Additions - 19 19
Disposals (11,679) (57) (11,736)
Net effect of foreign currency movements 3,314 118 3,432
----------------------------------------- ---------- ---------- --------
At 31 December 2015 73,630 4,692 78,322
----------------------------------------- ---------- ---------- --------
Accumulated depreciation
At 1 January 2015 79,923 4,329 84,252
Charge for the year 222 128 350
On disposals (11,622) (54) (11,676)
Net effect of foreign currency movements 3,236 111 3,347
----------------------------------------- ---------- ---------- --------
At 31 December 2015 71,759 4,514 76,273
----------------------------------------- ---------- ---------- --------
Net book amount
At 31 December 2015 1,871 178 2,049
----------------------------------------- ---------- ---------- --------
At 31 December 2014 2,072 283 2,355
----------------------------------------- ---------- ---------- --------
16. Other non-current assets
As at 31 December
------------------------------- -----------------
2016 2015
EUR'000 EUR'000
------------------------------- ----------------- ---------
Polysilicon feedstock deposits - 5,179
- 5,179
------------------------------- ----------------- ---------
The Group's last remaining supply contract was cancelled during the year.
17. Deferred taxes
Analysis of deferred tax assets and liabilities:
2016 2015
EUR'000 EUR'000
------------------------ -------- --------
Tax loss carried forward - -
------------------------ -------- --------
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 2016 there were unrecognised potential deferred tax assets in respect of losses of EUR50.2 million (2015: EUR56.6 million)
18. Trade accounts payable
As at 31 December
--------------- -----------------
2016 2015
EUR'000 EUR'000
--------------- ----------------- ---------
Japan - 111
United Kingdom 1,520 701
Germany 486 624
--------------- ----------------- ---------
2,006 1,436
--------------- ----------------- ---------
The book value of these payables is materially the same as the fair value.
19. Accrued expenses
2016 2015
EUR'000 EUR'000
------------------------------- -------- --------
Rents and ancillary rent costs 676 681
Salary related costs 260 632
Other accrued expenses 533 572
------------------------------- -------- --------
Current accruals 1,469 1,885
------------------------------- -------- --------
Non-current accruals 31 42
------------------------------- -------- --------
Total accruals 1,500 1,927
------------------------------- -------- --------
20. Deferred grants and subsidies
The grants from governmental institutions are bound to specific terms and conditions. The Group is obliged to observe retention periods of five years for the respective assets in the case of investment subsidies as well as of five years for assets under investment grants, and to retain a certain number of jobs created in conjunction with the underlying assets. In cases of breach of the terms, the grants received must be repaid. In the past, the grants received were subject to periodic audits, which were concluded without significant findings or adjustments.
The deferred grants and subsidies in the year under review consist of the following:
As at 31 December
------------------ -----------------
2016 2015
EUR'000 EUR'000
------------------ ----------------- ---------
Investment grants - 70
------------------ ----------------- ---------
Current portion - 70
------------------ ----------------- ---------
21. Current tax liabilities
As at 31 December
--------------- -----------------
2016 2015
EUR'000 EUR'000
--------------- ----------------- ---------
United Kingdom - -
Germany - 116
Japan - 1
--------------- ----------------- ---------
- 117
--------------- ----------------- ---------
Current tax liabilities comprise both corporation and other non-VAT tax liabilities, calculated or estimated by the Group companies, as well as corresponding taxes payable abroad due to local tax laws, including probable amounts arising on completed or current tax audits.
22. Other liabilities
As at 31 December
-------------------- -----------------
2016 2015
EUR'000 EUR'000
-------------------- ----------------- ---------
Payroll liabilities 314 252
Other liabilities 22 66
-------------------- ----------------- ---------
336 318
-------------------- ----------------- ---------
As at 31 December
----------- -----------------
2016 2015
EUR'000 EUR'000
----------- ----------------- ---------
Short term 55 96
Long term 281 222
----------- ----------------- ---------
336 318
----------- ----------------- ---------
23. Deferred revenue
Where appropriate the Group entered into long-term contracts with its customers and requested payment deposits from them ahead of the supply of goods. At 31 December 2015 such deposits amounted to EUR3.2 million from one customer. Additionally, EUR0.3m revenue from one customer was deferred. There was no such deferred revenue at 31 December 2016.
As at 31 December
-------- -----------------
2016 2015
EUR'000 EUR'000
-------- ----------------- ---------
Current - 3,518
-------- ----------------- ---------
24. Share capital
2016 2015
EUR'000 EUR'000
----------------------------------------- -------- --------
Allotted, called up and fully paid
160,278,975 (2015: 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 2016, 1,971,910 ordinary shares of 5.2 pence were held by the EBT (2015: 3,853,910). The market value of these shares was EUR0.546 million (2015: EUR0.471 million). Additionally, the cash balance held by the EBT on 31 December 2016 was EUR0.627 million (2015: EUR0.739 million).
25. 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.
The Group currently has four share incentive plans in operation which are satisfied by grants from the EBT.
PV Crystalox Solar PLC Performance Share Plan ("PSP")
This plan was approved by shareholders at the 2011 AGM under which awards are made to employees, including executive directors, consisting of a conditional right to receive shares in the Company. The awards will normally vest after the end of a three-year performance period, to the extent that performance conditions are met as detailed in the Directors' Remuneration Report.
No awards were made during 2016 (2015: nil).
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.
No awards were made during 2016 (2015: nil).
PV Crystalox Solar PLC Long Term Incentive Plan ("LTIP")
This is a long-term incentive scheme under which awards are made to employees consisting of the right to acquire ordinary shares for a nominal price subject to the achievement of specified performance conditions at the end of the vesting period which is not less than three years from the date of grant. Under the LTIP it is possible for awards to be granted which are designated as a Performance Share Award, a Market Value Option or a Nil Cost Option. To date Performance Share Awards and Market Value Options have been granted.
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 is exercisable from 24 November 2011 at GBP1.00 per share subject to agreed performance criteria. This option is now exercisable at any time until 23 November 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.
No awards were issued in 2016 (2015: nil).
PV Crystalox Solar PLC Share Award Bonus Plan ("SABP")
This plan was approved by the Board in January 2014 under which awards can be made to employees, excluding the executive directors. Under the SABP conditional awards are granted for a specific number of ordinary shares which may be acquired for nil consideration. On 31 March 2015 SABP awards were granted to key senior employees over 1,975,000 shares. These awards vested on 31 March 2016.
No awards were issued in 2016
25. Share-based payment plans continued
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 UK 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.
No awards vested in 2016 or 2015.
The Group recognised a total credit before tax of EUR212,000 (2015: EUR269,000) 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
PSP* SABP* EDDSP* MVO price SIP*
Number Number Number Number Pence Number
--------------------------- ------- ----------- ------- --------- ------ -------
Share grants and options
outstanding
at 1 January 2015 - 2,550,000 - 1,400,000 79.7 4,608
Share grants and options
granted during the year - 1,975,000 - - - -
Share grants and options
forfeited during the
year - (2,550,000) - - - -
Options exercised during
the year - - - - - -
--------------------------- ------- ----------- ------- --------- ------ -------
Share grants and options
outstanding
at 31 December 2015 - 1,975,000 - 1,400,000 79.7 4,608
--------------------------- ------- ----------- ------- --------- ------ -------
Exercisable at 31 December
2015 - - - 1,400,000 79.7 -
--------------------------- ------- ----------- ------- --------- ------ -------
Share grants and options
granted during the year - - - - - -
Share grants and options
forfeited during the
year - - - (200,000) - -
Options exercised during
the year - (1,975,000) - - - -
--------------------------- ------- ----------- ------- --------- ------ -------
Share grants and options
outstanding
at 31 December 2016 - - - 1,200,000 79.7 4,608
--------------------------- ------- ----------- ------- --------- ------ -------
Exercisable at 31 December
2016 - - - 1,200,000 79.7 -
--------------------------- ------- ----------- ------- --------- ------ -------
* The weighted average exercise price for the PSP, SABP, PSA and SIP options is GBPnil.
26. 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
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. As a supplier to some of the leading manufacturers of solar cells, the Group has a limited number of customers. In 2016 46.8% of the Group's sales are related to the largest customer (2015: 42.3%). The number of customers accounting for approximately 95% of the annual revenue was six, which was down from ten in 2015. 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 11.
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 Ba3.
Exchange rate fluctuation risks
In the financial year 2016 95% (2015: 95%) of sales revenue was invoiced in US Dollars potentially exposing the Group to exchange rate 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 spot prices of wafers and polysilicon are quoted in US Dollars and this influences the price the Group can obtain. The Group sells its products in a number of currencies (mainly US Dollars and Euros) and also purchases goods and services in a number of currencies (mainly Euros, Japanese Yen, Sterling and to a small extent US Dollars).
The following exchange rates were used to translate individual companies' financial information into the Group's presentational currency:
Average Year-end
rate rate
------------------- ------- --------
Euro: Japanese Yen 120.28 123.04
Euro: US Dollar 1.1015 1.0516
Sterling: Euro 1.2240 1.1722
------------------- ------- --------
Hedging strategy
The Group sells to customers in the worldwide photovoltaic market and sells in two main currencies: US Dollars (95%) and Euros (5%). It operates its wafering factory in Germany, with local costs in Euros. However, the ingot manufacturing operation is within the United Kingdom and therefore a relatively small proportion of overall costs are in Sterling, being mainly related to personnel costs, overheads and utilities (most of the raw materials are purchased in US Dollars and Euros).
During 2016 the net gain on foreign currency adjustments was EUR3.9 million (2015: loss of EUR0.2 million).
In addition to the above, upon translation of net assets in the consolidation, there was a negative impact in 2016 of EUR4.9 million (2015: positive impact of EUR2.9 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 virtually all current and paid in line with standard payment terms.
The Group had a cash balance at the end of 2016 of EUR28.8 million (2015: EUR12.7 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 (2015: 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. The Group manages its exposure to liquidity risk by regularly reviewing net debt and forecast cash flows to ensure that current cash resources are available to meet its business objectives. The Group is exposed to the worldwide photovoltaic market where wafer prices have remained below industry production costs for several years. Accordingly, the market pricing of the Group's main product (silicon wafers) has been under pressure. Against this difficult market background, Group management introduced a cash conservation strategy in 2011. This cash conservation plan has been maintained, so that the Group can optimise its cash position whilst these conditions persist. Various measures have been taken to adjust production to levels appropriate to current market conditions. At the same time production capacity has been maintained so that this can be utilised when market conditions allow. Due to changing market and economic conditions, the expenses and liabilities actually arising in the future may differ materially from the estimates made in this plan.
On 31 December 2016 the Group had a net cash balance of EUR28.8 million (2015: EUR12.7 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
Cash
Book and Amortised Non-
value receivables cost financial Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------ -------- ------------ --------- ---------- --------
2016
Assets:
Cash and cash equivalents 28,827 28,827 - - 28,827
Accounts receivable 2,446 2,446 - - 2,446
Prepaid expenses and other
assets 1,292 - - 1,292 1,292
Non-financial assets 13,004 - - 13,004 13,004
------------------------------------ -------- ------------ --------- ---------- --------
Total 45,569 31,273 - 14,296 45,569 ------------------------------------ -------- ------------ --------- ---------- -------- Liabilities: Accounts payable trade (2,006) - (2,006) - (2,006) Accrued expenses (1,500) - (1,500) - (1,500) Other current liabilities (55) - - (55) (55) Other long-term liabilities (281) - (281) - (281) Non-financial liabilities - - - - - ------------------------------------ -------- ------------ --------- ---------- -------- Total (3,842) - (3,787) (55) (3,842) ------------------------------------ -------- ------------ --------- ---------- -------- 2015 Assets: Cash and cash equivalents 12,691 12,691 - - 12,691 Accounts receivable 5,658 5,658 - - 5,658 Prepaid expenses and other assets 3,381 - - 3,381 3,381 Non-financial assets 30,431 - - 30,431 30,431 ------------------------------------ -------- ------------ --------- ---------- -------- Total 52,161 18,349 - 33,812 52,161 ------------------------------------ -------- ------------ --------- ---------- -------- Liabilities: Accounts payable trade (1,436) - (1,436) - (1,436) Accrued expenses (1,927) - (1,927) - (1,927) Miscellaneous current liabilities (96) - - (96) (96) Miscellaneous long-term liabilities (222) - (222) - (222) Non-financial liabilities (3,705) - - (3,705) (3,705) ------------------------------------ -------- ------------ --------- ---------- -------- Total (7,386) - (3,585) (3,801) (7,386) ------------------------------------ -------- ------------ --------- ---------- --------
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 from time to time uses debt as a natural hedging instrument, where amounts are borrowed in the same foreign currency as it holds assets (for instance debtors) denominated in the same foreign currency. However, these borrowings have always been lower than the balance of cash and cash equivalents in any period. Accordingly, the Group has maintained a net cash positive position. This is a different approach to others in the photovoltaic industry where being heavily indebted (particularly in China) has become the norm. The directors believe that the Group's policy of not carrying any net debt has significantly reduced the Group's risk, which has been particularly important during the current extremely difficult market conditions.
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.
2016 2015
EUR'000 EUR'000
---------------------------------------- -------- --------
Cash and cash equivalents (see note 10) 28,827 12,691
Bank and other borrowings - -
---------------------------------------- -------- --------
Total net cash 28,827 12,691
---------------------------------------- -------- --------
Total equity 41,726 44,775
---------------------------------------- -------- --------
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.
27. 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.
28. 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.
29. Other financial obligations
Lease agreements (operating leases)
The leases primarily relate to rented buildings and have terms of no more than six years. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
As at 31 December
----------------------- -------------------
2016 2015
EUR'000 EUR'000
----------------------- -------- ---------
Less than one year 1,116 1,310
Two to five years 1,956 2,740
Longer than five years 15 227
----------------------- -------- ---------
3,087 4,277
----------------------- -------- ---------
There were no significant purchase commitments at the year end.
30. 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.
31. Dividends and return of cash
No dividends were paid in 2016 (2015: EURnil).
32. Post balance sheet events
There are no significant post balance sheet events.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKBDKFBKDCNB
(END) Dow Jones Newswires
March 23, 2017 03:00 ET (07:00 GMT)
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