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2007-08-07 09:30:00 CEST 2007-08-07 09:30:00 CEST REGULATED INFORMATION Okmetic Oyj - Quarterly reportOKMETIC'S INTERIM REPORT 1 JANUARY - 30 JUNE 2007OKMETIC OYJ STOCK EXCHANGE RELEASE 7 AUGUST 2007 1(16) OKMETIC'S INTERIM REPORT 1 JANUARY - 30 JUNE 2007 Okmetic is a technology Company which manufactures and processes silicon wafers for sensor and semiconductor industries worldwide. The Company also sells technology. During the period under review, Okmetic's net sales amounted to 32.9 million euro (31.8 million euro). Operating profit was 2.6 million euro (2.6 million euro). REVIEW IN BRIEF - Net sales amounted to 32.9 million euro (31.8 million euro). The comparable net sales for the period were 31.9 million euro. - Operating profit was 2.6 million euro (2.6 million euro). - The equity ratio strengthened, amounting to 56.8 percent (45.5%). - Net sales and operating profit for the latter half of the year are expected to come in at a level similar to the first half, minus the 1.0 million euro earned from technology sales during the first half of the year. - Okmetic and Nordea Bank Finland Plc signed an agreement concerning a financial arrangement that helped to refinance Okmetic's syndicated bank facility of around 20 million euro. - The Company paid out 3.4 million euro worth of interest on subordinated loans and 4.7 million euro worth of capital repayments. KEY FIGURES 1,000 euro 1.1.07- 1.1.06- 1.1.06- 1.1.05- 1.1.04- 30.6.07 30.6.06 31.12.06 31.12.05 31.12.04 Net sales 32,935 31,784 63,694 49,822 54,524 Operating profit/loss 3,339 3,848 9,877 580 -5,735 % of net sales 10.1 12.1 15.5 1.2 -10.5 Earnings per share, 0.16 0.15 0.41 -0.10 -0.50 euro Net cash flow from operating activities 1,213 7,388 17,945 3,125 3,655 Return on equity, % 12.8 14.8 18.6 -5.1 -22.2 Gearing, % 35.8 75.4 31.3 99.5 116.9 Equity ratio, % 56.8 45.5 51.1 41.1 36.9 Average number of personnel during the 361 350 360 359 446 period PROJECTIONS FOR THE NEAR FUTURE Volume-wise the most important market for Okmetic's sensor wafers is the manufacture of pressure sensors and accelerometers. Demand for these sensor types is expected to continue to grow steadily this year as well. The market situation within the semiconductor industry is expected to remain unchanged. Annual forecasts have been revised downwards somewhat in recent months. The current estimate for annual growth is between two and six percent. The forecasts anticipate stronger growth in 2008. (SIA, WSTS, Gartner, IC Insights) 2 Demand for silicon wafers grows hand in hand with the sales figures of the customer industries. According to prevailing industry estimates, the total volume of wafer shipments is expected to grow by around ten percent in 2007. The growth will be most prominent in wafers with a 300 mm diameter. Demand for other wafer sizes, including those that are important to Okmetic, are expected to experience more moderate growth than the 300 mm wafers on an annual level. Okmetic's order book for the rest of the year is nevertheless looking good. Net sales and operating profit for the latter half of the year are expected to come in at a level similar to the first half, minus the 1.0 million euro earned from technology sales during the first half of the year. MARKETS Demand for micro-mechanical sensors worldwide grew steadily during the first half of the year. On average sensor shipments grew by just over ten percent per year (SIA). New, more advanced sensor products are being introduced to the market on a regular basis, which is also boosting the market potential of Okmetic's extensive customer base. Within the semiconductor industry the market situation remained stable throughout the first half of the year. Between January and May semiconductor sales increased by a couple of percent from the corresponding period of the previous year (WSTS, SIA). Okmetic's customers experienced short-term fluctuations in their demand. The growth in the demand for silicon wafers was unsteady during the first half of the year. Growth mostly affected large wafer sizes. Demand for the wafer sizes that Okmetic manufactures experienced a passing period in the spring during which customers revised their stock levels. Fluctuations in the shipment volumes of sensor wafers were less significant. SALES The Group's net sales amounted to 32.9 million euro (31.8 million euro). As a result of technology sales, comparable net sales for the period amounted to 31.9 million euro. Sales per customer segments 2007 (2006) from beginning of year (on average) Sensors 33% (34%) Semiconductors 58% (59%) Technology 9% (7%) Okmetic's sensor business progressed in line with the set targets. Sensor wafers are used in the automotive, aviation and pharmaceutical industries, for example, as well as in consumer applications. Sales of semiconductor wafers remained at the previous level. Typically, semiconductor wafers are used in consumer electronics, computers, telecommunications and automotive applications. 3 Technology sales comprise both manufacturing technology and crystal sales. Net sales per market area 2007 (2006) from beginning of year (on average) North America 52% (55%) Europe 31% (28%) Asia 17% (17%) PROFIT Okmetic Group's profit was 2.6 million euro (2.6 million euro). Earnings per share amounted to 0.16 euro (0.15 euro). A 0.2 million euro loss, which resulted from decommissioning a piece of production machinery towards the end of the period, weakened the profit. FINANCING The Group's financial situation is good. Net cash flow from operating activities amounted to 1.2 million euro (7.4 million euro). Advance payments made with reference to long-term raw material supply agreements signed during the period and interest payments relating to subordinated loans that have been recorded as debt weakened the cash flow by 4.5 million euro. The Company paid out 3.4 million euro worth of interest on subordinated loans and 4.7 million euro worth of capital repayments. Okmetic and Nordea Bank Finland Plc signed an agreement concerning a financial arrangement that helped to refinance Okmetic's syndicated bank facility of around 20 million euro in June. The Group's investment costs amounted to a total of 4.8 million euro. The largest costs resulted from the extension that is being built at the Vantaa plant as part of a technology sale agreement and from increasing the production capacity of the plant in Texas. At the end of the period, cash and cash equivalents amounted to 8.2 million euro (4.9 million euro). Return on equity amounted to 12.8 percent (14.8%). The Group's equity ratio strengthened, amounting to 56.8 percent (45.5%). Shareholders' equity per share amounted to 2.49 euro (2.11 euro). PRODUCT DEVELOPMENT Product development accounted for 2.9 percent (2.6%) of Okmetic's net sales. Persistent product and process development efforts materialised in the form of launching mass production of demanding SOI sensor wafers. PERSONNEL The average number of employees at Okmetic was 361 (350). At the end of the period, 321 of these were located in Finland, 46 in the US and two in Japan. 4 BUSINESS RISKS The majority of Okmetic's sales are concluded in US dollars and a small proportion in Japanese yen. Both currencies have weakened during the first half of the year. Despite hedging, the Company remains vulnerable to exchange rate fluctuations. Okmetic believes that the availability of polycrystalline silicon, the principal raw material of silicon wafers, will remain low and that the increase in prices will continue. The Company has continued to secure access to the raw material through long-term purchase agreements. In June, Okmetic and Tokuyama Corporation, a Japanese manufacturer of polycrystalline silicon, signed an agreement whereby Tokuyama will supply Okmetic with polycrystalline silicon. The agreement will improve the availability of Okmetic's raw material significantly and is worth around 60 million dollars. It covers the years 2008-2012 and includes a total of around 4.4 million dollars' worth of advance payments, which will be made between now and next year. SHARE PRICE DEVELOPMENT, TRADING AND STATUTORY DISCLOSURES A total of 8.4 million shares (10.8 million shares) were traded between 1 January and 30 June 2007, representing 50.0 percent (64.1%) of the share total of 16.9 million. The lowest quotation of the period was 3.34 euro (1.80 euro) and the highest was 4.67 euro per share (3.70 euro), with an average of 4.06 euro (2.93 euro). The closing quotation of the period was 4.40 euro (3.25 euro). The total market value of the share capital amounted to 74.3 million euro (54.9 million euro) at the end of the period. At the end of June, the mutual investment fund OP-Suomi Arvo's holding in Okmetic had increased to 6.29 percent, while the life insurance company Henki-Sampo's holding had decreased to 4.47 percent and Etra- Invest Oy's holding to 2.96 percent. By the end of June, foreign investors' ownership of Okmetic's share capital had increased from the 8.7 percent that it was at the beginning of the year to 20.7 percent. OWN SHARES The Company has not repurchased its own shares and the Board of Directors has not been authorised to repurchase or convey the Company's own shares. OPTIONS The Company currently has no options on issue. The subscription period for shares under the old option rights expired on 31 May 2007. 5 BOARD OF DIRECTORS' AUTHORISATION TO INCREASE SHARE CAPITAL The Annual General Meeting held on 29 March 2007 authorised the Board of Directors to decide on new issues and other share entitlements according to the first paragraph of section 10 of the Finnish Companies Act. The aggregate number of shares issued on the basis of the authorisation may not exceed 3,377,500 shares, which represents approximately 20 percent of all the shares of the Company. The Board of Directors is authorised to decide on all the terms and conditions concerning the issue of shares and other share entitlements. The authorisation relates to the issuance of new shares. Issuance of shares and other share entitlements can be carried out as a directed issue. The authorisation is effective until the following Annual General Meeting of Shareholders, however no later than 29 March 2008. Vantaa, 7 August 2007 Board of Directors 6 FINANCIAL STATEMENTS JANUARY 1 - JUNE 30 2007 (unaudited) ACCOUNTING PRINCIPLES This Interim Report has been prepared in accordance with the IAS 34 standard. The accounting policies adopted are consistent with those followed in the preparation of the Group's annual Financial Statements for the year 2006 with the exception that Okmetic has adopted the following new or amended standards on 1 January 2007: - IFRS 7 Financial Instruments: Disclosures (effective in financial years commencing after 1 January 2007) - IAS 1 (amendment): IAS 1 Presentation of Financial Statements - Capital Disclosures (effective in financial years commencing after 1 January 2007) - IFRIC 8: Scope of IFRS 2 (effective in financial years commencing after 1 May 2006) - IFRIC 9: Reassessment of Embedded Derivatives (effective in financial years commencing after 1 June 2006) - IFRIC 10: Interim Financial Reporting and Impairment (effective in financial years commencing after 1 November 2006). The adoption has not had any significant impact on the information presented in this Interim Report. CONDENSED CONSOLIDATED INCOME STATEMENT 1,000 euro 1.4.- 1.4.- 1.1.- 1.1.- 1.1.- 30.6.07 30.6.06 30.6.07 30.6.06 31.12.06 Net sales 15,613 15,872 32,935 31,784 63,694 Cost of sales -13,442 -13,130 -26,100 -25,142 -48,165 Gross profit 2,170 2,742 6,835 6,642 15,529 Other income and -1,508 -1,599 -3,496 -2,794 -5,652 expenses Operating profit 662 1,142 3,339 3,848 9,877 Financial income and expenses -455 -735 -806 -1,280 -3,198 Profit before taxes 207 407 2,533 2,568 6,679 Income taxes 1) 5 - 95 - 206 Profit for the period 212 407 2,627 2,568 6,885 Basic and diluted earnings per share 0.02 0.02 0.16 0.15 0.41 1) In addition to deferred tax assets and liabilities, the estimated income taxes for the period of 2007 include the tax loss carry- forwards of the Group Companies. 7 CONDENSED CONSOLIDATED BALANCE SHEET 1,000 euro June 30, June 30, December 31, 2007 2006 2006 Assets Non-current assets Property, plant and equipment 47,307 54,148 47,821 Available-for-sale financial 1,054 2,029 1,502 assets Other receivables 1,233 238 123 Total non-current assets 49,593 56,415 49,446 Current assets Inventories 6,643 6,728 7,915 Receivables 9,635 10,414 9,036 Cash and cash equivalents 8,162 4,882 13,184 Total current assets 24,440 22,025 30,135 Total assets 74,033 78,439 79,581 Equity and liabilities Equity Share capital 11,821 11,821 11,821 Other equity 30,201 23,728 28,259 Total equity 42,023 35,549 40,080 Liabilities Non-current liabilities 20,679 15,524 21,294 Current liabilities 11,332 27,366 18,206 Total liabilities 32,011 42,890 39,501 Total equity and liabilities 74,033 78,439 79,581 8 CONDENSED CONSOLIDATED CASH FLOW STATEMENT 1,000 euro January 1- January 1- January- June 30, June 30, December 31, 2007 2006 2006 Cash flows from operating activities: Profit before taxes 2,533 2,568 6,679 Adjustments 5,089 5,142 10,259 Change in working capital -2,392 706 2,652 Interest and dividends 228 72 172 received Interest paid and other financial items -4,182 -1,099 -1,818 Taxes paid -63 - - Net cash from operating 1,213 7,388 17,945 activities Cash flows from investing activities: Proceeds from investing 912 102 4,777 activities Capital expenditure -4,344 -440 -1,203 Net cash used in investing -3,432 -338 3,574 activities Cash flows from financing activities: Payments of long-term -20,665 -3,594 -6,916 borrowings Proceeds of long-term 18,000 - 10,000 borrowings Payments of finance lease -99 -7 -343 liabilities Payments of short-term - -3,000 -15,500 borrowings Net cash used in financing -2,764 -6,601 -12,759 activities Increase (+) / decrease (-) in cash and cash equivalents -4,983 449 8,760 Exchange rate changes -39 -19 -27 Cash and cash equivalents at the beginning of the period 13,184 4,452 4,452 Cash and cash equivalents at the end of the period 8,162 4,882 13,184 9 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 1,000 euro Share Share Trans- Fair Re- Total capital premium lation value tained equity differ- reserve earnings ences Balance at Jan 1, 2007 11,821 20,256 669 -1,042 8,376 40,080 Available-for- sale financial assets: Fair value gains/ losses -448 -448 recognised directly in equity Translation -167 -167 differences Equity component of convertible loan notes -70 -70 Net income recognised directly in - -70 -167 -448 - -686 equity Profit/loss for the period 2,627 2,627 Total recognised income and - -70 -167 -448 2,627 1,942 expenses Balance at June 30,2007 11,821 20,185 502 -1,491 11,004 42,023 Balance at Jan 1,2006 11,821 36,401 759 -340 -14,654 33,987 Available-for- sale financial assets: Fair value gains/ losses -185 -185 recognised directly in equity Translation differences -821 -821 Losses offset from previous financial years -16,145 16,145 0 Net income recognised directly in - -16,145 -821 -185 16,145 -1,005 equity Profit/loss for the period 2,568 2,568 Total recognised income and - -16,145 -821 -185 18,713 1,562 expenses Balance at June 30,2006 11,821 20,256 -62 -525 4,059 35,549 10 CHANGES IN PROPERTY, PLANT AND EQUIPMENT 1,000 euro January 1- January 1- January 1- June 30, June 30, December 31, 2007 2006 2006 Carrying amount at the beginning 47,821 58,629 58,629 of the period Additions 4,753 407 1,671 Disposals -1,044 0 -3,118 Depreciation -4,059 -4,265 -8,486 Exchange differences -164 -624 -875 Carrying amount at the end of the period 47,307 54,148 47,821 CHANGES IN INTEREST-BEARING LIABILITIES - 1,000 euro January 1- January 1- January 1- June 30, June 30, December 31, 2007 2006 2006 Carrying amount at the beginning 25,731 38,279 38,279 of the period Proceeds of loans from financial institutions 17,974 - 9,962 Repayments of loans from financial institutions -15,962 -6,578 -22,403 Repayments of subordinated -4,591 - - loans Changes in finance lease 43 -23 -107 liabilities Carrying amount at the end of the period 23,194 31,679 25,731 11 COMMITMENTS AND CONTINGENCIES 1,000 euro June 30, June 30, December 2007 2006 31,2006 Loans secured by mortgages or pledges 17,500 24,618 18,870 Mortgages 34,046 40,701 30,610 Other pledges - 8,908 8,908 Off-balance sheet lease commitments 253 750 322 Nominal values of derivative contracts: Currency forward agreements 2,000 2,402 3,355 Interest-rate swap contracts - 9,000 - Electricity derivatives 2,388 2,306 2,580 Fair values of derivative contracts: Currency forward agreements 11 48 117 Interest-rate swap contracts - -2 - Electricity derivatives 209 556 80 The contract price of the derivatives has been used as the nominal value of the underlying asset. Derivative contracts are held for hedging. RELATED PARTY TRANSACTIONS Key management compensation during the period under review amounted to 664 thousand euro (706 thousand euro). 12 KEY FIGURES SHOWING FINANCIAL PERFORMANCE January 1 - January 1 - January 1 - June 30, June 30, December 31, 2007 2006 2006 Net sales 32,935 31,784 63,694 Change in net sales compared to the previous year's 3.6 30.9 27.8 period, % Export and foreign operations share of net sales, % 94.5 95.7 95.7 Operating profit 3,339 3,848 9,877 % of net sales 10.1 12.1 15.5 Profit before taxes 2,533 2,568 6,679 % of net sales 7.7 8.1 10.5 Return on equity, % 12.8 14.8 18.6 Return on investment, % 10.8 10.3 14.2 Non-interest bearing 8,817 11,212 13,770 liabilities Gearing, % 35.8 75.4 31.3 Equity ratio, % 56.8 45.5 51.1 Capital expenditure 4,753 407 1,671 % of net sales 14.4 1.3 2.6 Depreciation 4,059 4,265 8,486 Research and development expenditure 1) 970 835 1,731 % of net sales 2.9 2.6 2.7 Average number of personnel during the period 361 350 360 Personnel at the end of the 369 379 365 period 1) Research and development expenditure has been presented in gross figures and only long-term projects based on research program have been taken into account. 13 KEY FIGURES PER SHARE June 30, June 30, December 31, 2007 2006 2006 Continuing operations: Earnings per share basic and diluted, euro 0.16 0.15 0.41 Equity per share, euro 2.49 2.11 2.37 Dividend per share, euro 0.00 0.00 0.00 Dividend/earnings, % - - - Price/earnings (P/E) 28.3 21.4 9.3 Share price development (Jan 1 -) Average trading price 4.06 2.93 3.11 Lowest trading price 3.34 1.80 1.80 Highest trading price 4.67 3.70 3.75 Trading price at the end 4.40 3.25 3.69 of the period Market capitalisation at the end of the period, 1,000 euro 74,305 54,884 62,315 Trading volume (Jan 1-) Trading volume, transactions 8,441,471 10,818,550 16,500,162 In relation to weighted average number of shares, % 50.0 64.1 97.7 Trading volume, euro 34,266,428 31,740,705 51,312,696 The weighted average number of shares during the period under review adjusted by the 16,887,500 16,887,500 16,887,500 share issue The number of shares at the end of the period adjusted by the share issue 16,887,500 16,887,500 16,887,500 14 QUARTERLY KEY FIGURES 10-12/07 7-9/07 4-6/07 1-3/07 Net sales 15,613 17,322 Compared to previous -9.9 8.2 quarter, % Operating profit 662 2,677 % of net sales 4.2 15.5 Profit before taxes 207 2,326 % of net sales 1.3 13.4 Net cash flow generated from: Operating activities -414 1,628 Investing activities -1,582 -1,850 Financing activities -3,582 817 Increase/decrease in cash -5,578 595 and cash equivalents Personnel at the end of the 369 360 period 10-12/06 7-9/06 4-6/06 1-3/06 Net sales 16,008 15,903 15,872 15,912 Compared to previous 0.7 0.2 -0.3 13.7 quarter, % Operating profit 3,339 2,690 1,142 2,706 % of net sales 20.9 16.9 7.2 17.0 Profit before taxes 1,774 2,338 407 2,161 % of net sales 11.1 14.7 2.6 13.6 Net cash flow generated from: Operating activities 4,863 5,694 3,431 3,957 Investing activities 3,996 -84 -329 -9 Financing activities -3,190 -2,968 -5,017 -1,584 Increase/decrease in cash 5,669 2,641 -1,915 2,364 and cash equivalents Personnel at the end of the 365 368 379 337 period 15 DEFINITIONS OF KEY FINANCIAL FIGURES Return on equity, % (ROE) = Profit/loss for the period from continuing operations x 100/ Equity (average for the period) Return on investment, % = (Profit/loss before tax + interest and (ROI) other financial expenses) x 100/ Balance sheet total - non-interest bearing liabilities (average for the period) Equity ratio (%) = Total equity x 100/ Balance sheet total - advances received Gearing (%) = (Interest-bearing liabilities - cash and cash equivalents) x 100/ Equity Earnings per share = Profit/loss for the period attributable to the equity holders of the Parent Company/ Adjusted weighted average number of shares in issue during the period Equity per share = Equity attributable to the equity holders of the Parent Company/ Adjusted number of shares at the end of the period Price/earnings ratio (P/E) = Last adjusted trading price at the end of the period/ Earnings per share Average share price = Total traded amount in euro/ Adjusted number of shares traded during the period Market capitalisation at = Number of shares at the end of the period the end of the period x trading price at the end of the period Trading volume = Number of shares traded during the period/ Weighted average number of shares during the period All figures of the financial tables are rounded, and consequently the sum of individual figures can deviate from the presented sum figure. 16 The figures are unaudited. In the written report, the figures in parenthesis refer to the corresponding period in the previous year. OKMETIC OYJ Antti Rasilo President For further information, please contact: President Antti Rasilo, Okmetic Oyj, Tel. +358 40 746 1351, email: antti.rasilo@okmetic.com Senior Vice President, Finance Esko Sipilä, Okmetic Oyj, Tel. +358 9 5028 0286, email: esko.sipila@okmetic.com Distribution: Helsinki Exchanges Principal media IN BRIEF Okmetic - Take it higher Okmetic is a technology Company that manufactures and carries out further processing on high-quality silicon wafers for the sensor and semiconductor industries. The Company also sells technology. Okmetic's wafers are part of a further processing chain, which produces end products that improve human interaction and quality of life. Okmetic's products are based on innovative product development, an efficient production process and a strong partner network. The Company offers its customers solutions that enhance their competitiveness and profitability. Okmetic has plants in Vantaa, Finland and in Allen, Texas in North America. The Company is quoted on the Helsinki Stock Exchange (Nordic Small Cap list: OKM1V). More information about the Company can be found at www.okmetic.com. |
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