PV Crystalox Solar plc 2015 Preliminary Results 17 March 2016 - PowerPoint PPT Presentation

PV Crystalox Solar plc 2015 Preliminary Results 17 March 2016

Disclaimer This presentation has been issued by PV Crystalox Solar plc (the “ Company ”) and comprises of written materials/slides concerning the Company’s Preliminary Results for 2015. The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness. No representation or warranty, express or implied, is given by or on behalf of the Company or any of such persons’ directors, of ficers or employees or any other person as to the accuracy or completeness of the information or opinions contained in this document. In particular, no representation or warranty is given as to the achievement or reasonableness of future projections, estimates, prospects or returns, if any. Certain statements are included in this presentation, including those regarding customers, costs, potential market share and other statements that express the Company directors’ expectations or estimates of the Company’s future performance, which constitute “forward -looking statements”. Forward -looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the directors are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the Company to be materially different from its estimated future results, performance or achievements expressed or implied by those forward- looking statements and the Company’s forward -looking statements are not guarantees of future performance. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, events or otherwise. Investors are cautioned against placing undue reliance on such statements. The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by the Company. Any person at any time acquiring the securities must do so only on the basis of such person’s own judgement as to the merits of the suitability of the securities for its purposes and o nly on such information as is contained in public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained herein. The information is not tailored for any particular investor and does not constitute individual investment advice. Any information in this presentation relating to the price at which investments have been bought or sold in the past or the yield on investments cannot be relied upon as a guide to future performance. Page 1

Market Overview  Market conditions volatile during 2015 Oversupply persisting across value chain but wafer supply tightening  Wafer prices fell to historic lows during H1 but recovered by year end  30% fall in polysilicon pricing during 2015 favourably impacting wafer production costs   Global PV installations grow by 35% to 59GW in 2015 China remains the major market with over 15GW of installations  Further double digit growth forecast for global market in 2016 and 2017   PV trade disputes between USA/Europe and China continue China maintains anti dumping duties on polysilicon imports  Minor adjustments to US duties on Chinese module imports  EU minimum import price agreement (MIP) on Chinese modules remains in place  Page 2

2015 Overview  Shipment volumes broadly unchanged at 203MW (2014: 212MW) Wafer inventory now at minimum levels  Additional block shipments equivalent to 9MW   Strategy review period extended in view of improved market conditions Cash cost of wafer production now below wafer market price   Further restructuring measures to reduce fixed costs Wind up of Japan subsidiary  Leases surrendered at one of two ingot production sites in UK   Burden of major long term polysilicon contract removed Last shipment delivered in December  Shipments under remaining smaller contract match wafer production requirements   ICC arbitration evidentiary hearing scheduled for July Filed for arbitration in March 2015 after being unable to agree terms with long term wafer  contract customer which would have enabled resumption of supply Page 3

Financials

Financial Overview  Revenues €64.5m (2014: €53.3m)  Other Income €1.2m (2014: €12.1m)  LBT €(13.7)m (2014: € (4.7)m)  Net cash flow used in operating activities €(12.9)m (2014: €(15.7)m)  Net cash of €12.7m on 31 Dec 2015 (2014: €24.6m)  Inventories of €23.2m on 31 Dec 2015 (2014: €28.6m) Page 5

Financial Overview (€'000) 31-Dec-15 31-Dec-14 Revenues 64,464 53,132 Cost of materials and services (64,268) (65,694) Overheads (14,219) (11,120) Other income 1,187 12,132 Currency (loss)/gain (184) 9,043 EBIT (13,020) (2,306) Net finance cost (643) (2,344) Earnings before taxes (EBT) (13,663) (4,650) Income taxes (94) (2) Loss from operations (13,757) (4,652) Earnings per share on continuing activities (8.8) (3.0) (€ cents) Page 6

Gross Profit (€m) 31-Dec-15 31-Dec-14 Revenues 64.5 53.3 Cost of raw materials, supplies and purchased 64.9 merchandise 54.8 Change in unfinished and finished goods 7.4 (1.1) Inventory writedowns 5.5 - Onerous contract (release)/charge (see note 21) (17.4) 8.2 3.9 Purchased services 4.0 Cost of materials and services 64.3 65.7 Gross (Loss) Profit 0.2 (12.4) Page 7

Summary consolidated balance sheet (€m) 31-Dec-15 31-Dec-14 Current Assets 44.9 71.0 Non-current Assets 7.2 7.8 Total Assets 52.1 78.8 Current Liabilities 7.1 21.5 Non-current Liabilities 0.2 1.4 Share Cap & Reserves 44.8 55.9 Total Liabilities and Shareholder Equity 52.1 78.8 Page 8

Cash flows Summary cash flow analysis (€m) 31-Dec-15 31-Dec-14 Operating cash pre-working capital after taxes (25.3) (16.6) Changes in working capital 12.4 0.9 Exchange difference 0.8 1.3 Net cash flows from investing activities 0.2 (0.2) Other cash flows used in financing activities - (0.7) Net change in cash in period (11.9) (15.3) Cash and equivalents, start of year 24.6 39.9 Cash and equivalents, end of period 12.7 24.6 Page 9

Operational and Strategic Review

2015 Operations Polysilicon and Wafer price 2014-2016 1.15 25 24 23 1.10 Polysilicon price ($/kg) 22 21 1.05 20 Wafer price ($/pc) 19 1.00 18 17 0.95 16 15 0.90 14 13 0.85 12 11 0.80 10 01/2014 05/2014 09/2014 01/2015 05/2015 09/2015 01/2016 Standard wafer High efficiency wafer Polysilicon Source: PVinsights.com  Wafer prices have recovered from historic lows seen in mid 2015  Polysilicon prices have fallen continuously since March 2014 Recent modest rally in pricing  Current price levels below cash production costs  Lower polysilicon price enables cash cost of wafer production below spot market price  Page 11

2015 Operations  Wafer production now concentrated at Group’s internal facility in Germany Sub-contract production suspended in Japan  In house production cost more favourable   Consolidating relationships with customers in Taiwan and Europe French PV module market incentives support demand for EU wafers   One remaining long term polysilicon contract Pricing amended in 2014-deliveries continue until 2018  Annual volumes in line with current wafer production requirements   Arbitration with long term wafer supply contract customer Contract with major PV company signed in 2008 with deliveries over seven year period  No shipments since 2013 and arbitration request filed with ICC in March 2015  Arbitral tribunal hearing schedule for July  Page 12

Global PV Market

2016 Global Demand Forecast  Global PV installations expected to increase by over 10% in 2016 Analysts forecasts in range 64-69GW   Global installed PV capacity expected to reach 310GW at end 2016 . Almost eightfold growth since 40GW at end 2010  Total installed capacity in China overtook Germany during 2015  China USA and Japan are key markets in 2016  Page 14

International Trade Disputes  Chinese anti-dumping duties on polysilicon imports remain in place Over 50% duties on US polysilicon have effectively halted imports  Some US producers temporarily or permanently shutting down polysilicon production  Imports from Wacker Germany exempted due to minimum price commitments  Korean producer OCI benefits from low 2.4% duty   US maintains duties on modules partially manufactured in China Minor changes to duties announced in July 2015  Combined anti dumping and anti-subsidy tariffs of around 30% for major producers   EU agreement on €0.56/W MIP maintained for Chinese modules Many companies exiting MIP agreement and then shipping product manufactured in Asia  Duties imposed on companies using imports from third party countries to evade restrictions  Page 15

Outlook