2016-07-22 07:00:50 CEST
2016-07-22 07:00:50 CEST
REGULATED INFORMATION
Okmetic Oyj - Interim report (Q1 and Q3)
Okmetic Oyj interim report 1 January - 30 June 2016: Strong cash flow in very challenging market situation
OKMETIC OYJ INTERIM REPORT 22 JULY 2016 AT 8.00 A.M.
OKMETIC OYJ INTERIM REPORT 1 JANUARY - 30 JUNE 2016: STRONG CASH FLOW IN VERY
CHALLENGING MARKET SITUATION
APRIL-JUNE IN BRIEF:
* Net sales amounted to 19.0 (22.1) million euro, down 14.0 (up 18.0) %.
* Sensor wafer net sales were 9.5 (11.2) million euro, down 15.2%.
* D&A wafer net sales were 9.4 (10.8) million euro, down 12.9%.
* Operating profit without items affecting comparability (IAC, previously
operating profit without non-recurring items) was 1.8 (2.9) million euro
corresponding to 9.7 (13.2) % of net sales.
* Operating profit was -2.9 (2.9) million euro corresponding to -15.3 (13.2) %
of net sales. Operating profit includes items affecting comparability of
-4.7 million euro.
* Profit for the period was -3.1 (2.2) million euro.
* Basic earnings per share was -0.19 (0.13) euro.
* Net cash flow from operations amounted to 4.2 (3.7) million euro.
JANUARY-JUNE IN BRIEF:
* Net sales amounted to 38.6 (43.7) million euro, down 11.6 (up 21.0) %.
* Sensor wafer net sales were 19.8 (22.0) million euro, down 10.3%.
* D&A wafer net sales were 18.8 (21.7) million euro, down 13.0%.
* Operating profit without items affecting comparability (IAC) was 3.2 (5.8)
million euro corresponding to 8.3 (13.4) % of net sales.
* Operating profit was 3.8 (5.8) million euro corresponding to 9.9% (13.4%) of
net sales. Operating profit includes items affecting comparability of 0.6
million euro.
* Profit for the period was 3.4 (4.4) million euro.
* Basic earnings per share was 0.20 (0.26) euro.
* Net cash flow from operations amounted to 8.7 (4.6) million euro.
Unless otherwise stated, figures in parenthesis refer to the corresponding
period of the previous year.
SHORT-TERM OUTLOOK
The early part of the year saw demand for Okmetic's advanced sensor wafers fall
as a result of developments in the smartphone market in particular: the sluggish
demand, the declining production volumes and the inventory adjustments that
continued across the entire value chain. The market will remain weak through the
rest of the year. Due to sluggish demand in the early months of the year, the
company anticipates negative development for D&A wafers in 2016. At the same
time, there is tighter price competition to win orders.
FINANCIAL GUIDANCE FOR 2016
After the difficult market situation in the beginning of the year, the company
revised its guidance for 2016 on 20 July 2016. In 2016, the net sales and
operating profit without items affecting comparability (previously operating
profit without non-recurring items) are estimated to decline from the levels of
2015. According to the earlier guidance, the net sales were estimated to decline
from the level of the previous year and operating profit without non-recurring
items was estimated to exceed the level of 2015.
PRESIDENT KAI SEIKKU:
"Some of the leading smartphone manufacturers have cut production during the
early part of the year by several tens of percent in response to weakening
demand. The underlying reason is that high-end smartphones have now reached
saturation in major markets. Manufacturers are also running down their high
inventories, built up amid historically high growth rates, and this has led to
ongoing adjustment across the whole value chain. In practice, these inventory
adjustments have meant that the drop in the number of new orders has been even
sharper than the cuts in smartphone production. As a result, order volumes for
Okmetic's advanced sensor wafers and certain D&A wafers, among others, have
declined.
These challenges in the smartphone market come in the wake of the slow-down in
the PC market, and with the exception of steady growth in demand for electronics
applications in the automotive industry, there are hardly any glimmers of light
in sight in the high-volume segments of the electronics industry. It will likely
be a few years before the much talked-about applications for the Internet of
Things can make up for the reduction in volumes.
The lacklustre demand was reflected in Okmetic's sales in the North American
market in particular, where the drop was approximately 20 percent. Europe has
seen a more moderate drop, while Asia, a key strategic market for Okmetic,
actually showed sales growth in early 2016 - suggesting that the industry's
centre of gravity is shifting to Asia at an increasingly fast pace. Despite the
fact that net sales were down, the company was able to maintain its relative
market shares in the early part of the year.
For Okmetic, the early part of 2016 has also been characterised by strong net
cash flow and major investments in the manufacture of advanced 200 mm wafers,
further processing, and crystal growing. The year has been challenging in many
ways, but, in line with its strategy, Okmetic's focus is on improving its market
position over the long term. The new owner, National Silicon Industry Group,
will offer strong support and better resources for Okmetic's future development.
Meanwhile, the company will continue to see stronger relative growth in demand
in the Chinese and other Asian markets."
KEY FIGURES
1,000 euro 1 Apr- 1 Apr- 1 Jan- 1 Jan- 1 Jan-
30 Jun, 30 Jun, 30 Jun, 30 Jun, 31 Dec,
2016 2015 2016 2015 2015
Net sales 18,969 22,068 38,597 43,680 84,540
Operating profit
before depreciation
(EBITDA) -1,252 4,556 7,169 9,101 15,115
Operating profit
without items
affecting
comparability
(IAC) 1) 1,838 2,914 3,220 5,837 10,972
% of net sales 9.7 13.2 8.3 13.4 13.0
Operating profit -2,898 2,914 3,822 5,837 7,718
% of net sales -15.3 13.2 9.9 13.4 9.1
Profit for
the period -3,117 2,215 3,395 4,380 4,832
Basic earnings
per share, euro -0.19 0.13 0.20 0.26 0.29
Net cash flow
from operating
activities 4,231 3,660 8,652 4,556 14,716
Net interest-
bearing
liabilities 12,382 3,826 12,382 3,826 2,283
Equity ratio, % 56.7 67.9 56.7 67.9 64.0
Average number
of personnel
during the period 387 412 387 392 394
1) New ESMA (European Securities and Markets Authority) guidelines on
Alternative Performance Measures (APMs) came into effect on 3 July 2016. Okmetic
presents APMs to reflect the underlying business performance and to enhance
comparability between financial periods. APMs should not be considered as a
substitute for measures of performance in accordance with the IFRS. As of Q2
2016, Okmetic relabels the previously referenced "without non-recurring items"
with "without items affecting comparability" (IAC).
MARKETS
Semiconductor industry
Semiconductor industry sales during the first quarter of 2016 were down by
around six percent from the levels of the first quarter of 2015, and are
estimated at 78 billion US dollars (WSTS). In 2016, the semiconductor sales are
projected to fall around two percents from 2015 (IDC, WSTS). Growth for 2017 is
projected at around two percents (WSTS).
Sensor industry
The sensor industry is projected to grow around eight percents in 2016 (WSTS,
Yole Développement).
Certain silicon-based microelectromechanical (MEMS) products within the sensor
segment have higher sales growth than the others. In spite of the slowing market
growth, the increasing amount of sensors in mobile devices has accelerated the
demand for e.g. pressure sensors and microphones. Silicon-On-Insulator (SOI)
technology is increasingly used in the manufacture of these products, among
others. Okmetic is a pioneering supplier of SOI wafers for the sensor industry.
Discrete semiconductor and analog circuits industries (Discrete & Analog)
The discrete semiconductor market is estimated to grow less than one percent
(WSTS) and analog circuits market around one percent in 2016 (Semi, SIA, WSTS).
Silicon wafer market
According to the estimate published by SMG, a group of silicon wafer suppliers
in SEMI (a global umbrella organisation for semiconductor materials and
equipment industry), the surface area of silicon wafer shipments declined around
three percents during the first quarter of 2016 compared to the level of
corresponding period in 2015. According to the company's own estimate, the
shipments of 100-200 mm silicon wafers, measured by surface area, were around
five percents lower in January-May 2016 than in the corresponding period in
2015 and around three percents lower than the 2015 average. According to SMG,
the value of silicon wafer market was 7.6 billion US dollars in 2015 and the
estimate for 2016 is 7.4 billion US dollars.
The key customer areas for Okmetic in the silicon wafer market
In line with its strategy, Okmetic seeks niches in the silicon wafer market,
where growth exceeds market average and in which the company has special
expertise. Okmetic supplies primarily 150 mm and 200 mm wafers.
The sensor/MEMS industry has been a key growth area for Okmetic already for a
long time. The use of sensors and their requirement level are expected to keep
growing owing to proliferation of sensor applications in the automotive
industry, industrial process control and in portable devices like smart phones,
cameras, game consoles, and wearable electronics. In future, a central growth
driver for the sensor industry will be the Internet of Things, which will
utilise sensor-produced data in communication between devices.
Another significant growth area is wafers used for the production of discrete
and power semiconductors as well as analog circuits. In these wafer markets,
areas for growth include, among others, components used in the production of
renewable energy, increasing automotive electronics, electric cars, portable
consumer products, as well as different solutions related to power supply and
efficiency improvement. Okmetic has launched new products for these areas.
SALES
In January-June, Okmetic's net sales amounted to 38.6 (43.7) million euro. Net
sales declined by 11.6 (21.0) percent compared to the corresponding period last
year. The decline in net sales resulted mainly from overall weakness of the
market and especially the decline of the net sales in North America compared to
the strong corresponding period. In the second quarter, net sales declined by
14.0 percent from the corresponding period last year. However, Okmetic's market
share remained stable in the product groups important to the company.
As of financial year started on 1 January 2016, the company reports the net
sales of its new customer segments, Sensor wafers and Discrete&Analog wafers
(D&A wafers), as well as net sales of its market areas instead of value of
deliveries.
Net sales per customer segment
1,000 euro 1 Apr- 1 Apr- 1 Jan- 1 Jan- 1 Jan-
30 Jun, 30 Jun, 30 Jun, 30 Jun, 31 Dec,
2016 2015 2016 2015 2015
Sensor wafers 9,530 11,233 19,750 22,024 41,202
D&A wafers 9,439 10,835 18,847 21,656 43,338
Total 18,969 22,068 38,597 43,680 84,540
Demand for both sensor wafers and D&A wafers declined in January-June compared
to the strong comparison period. The net sales of sensor wafers declined by
10.3 percents and the net sales of D&A wafers 13.0 percents compared to the
comparison period.
Net sales per market area
1,000 euro 1 Apr- 1 Apr- 1 Jan- 1 Jan- 1 Jan-
30 Jun, 30 Jun, 30 Jun, 30 Jun, 31 Dec,
2016 2015 2016 2015 2015
North America 7,636 9,833 15,859 19,880 38,344
Europe 6,423 7,759 13,202 15,061 28,641
Asia 4,910 4,476 9,536 8,739 17,555
Total 18,969 22,068 38,597 43,680 84,540
In January-June, the North American net sales decreased by 20.2 percent from the
strong comparison period. Europe's net sales declined by 12.3 percent. In
strategically important Asia the demand continued strong and net sales increased
by 9.1 percent from the comparison period.
PROFITABILITY
April-June
In April-June, operating profit was -2.9 (2.9) million euro corresponding to
-15.3 (13.2) percent of net sales. Operating profit includes expenses affecting
comparability of 4.2 million euro related to the tender offer of NSIG as well as
other expenses affecting comparability of 0.4 million euro.
Operating profit without items affecting comparability (IAC) was 1.8 (2.9)
million euro corresponding to 9.7 (13.2) percent of net sales. The weaker
operating profit is resulting mainly from decline in sales, weaker sales mix as
well as the increased yield costs of the production in Vantaa.
Profit for the period was -3.1 (2.2) million euro. Basic earnings per share was
-0.19 (0.13) euro. Diluted earnings per share was 0.19 (0.13) euro.
January-June
In January-June, operating profit was 3.8 (5.8) million euro corresponding to
9.9 (13.4) percent of net sales. Operating profit includes gain affecting
comparability of 6.0 million euro related to the sale of the US-based epi plant
announced on 1 April 2016 as well as expenses affecting comparability of 4.8
million euro related to the tender offer of NSIG and other expenses affecting
comparability of 0.4 million euro.
Operating profit without items affecting comparability (IAC) was 3.2 (5.8)
million euro corresponding to 8.3 (13.4) percent of net sales. The weaker
operating profit is resulting mainly from decline in sales, weaker sales mix as
well as the increased yield costs of the production in Vantaa.
Profit for the period was 3.4 (4.4) million euro. The low income tax expense
(0.4 million euro) in the financial period are explained by the Allen plant's
tax losses (approximately 5.7 million euro), which are deductible in full
against gain from the sale of the Allen plant. Basic earnings per share was
0.20 (0.26) euro. Diluted earnings per share was 0.20 (0.26) euro.
FINANCING
The company's financial position was moderate at the end of the period. In
January-June, net cash flow from operations amounted to 8.7 (4.6) million euro.
The company's interest-bearing liabilities amounted to 16.2 (13.1) million euro
on 30 June 2016. At the end of the period, cash and cash equivalents amounted to
3.8 (9.2) million euro. The company's net interest-bearing liabilities amounted
to 12.4 (3.8) million euro on 30 June 2016. The company has ensured liquidity
with committed credit facilities of 6.0 million euro of which all were in use on
30 June 2016.
Return on equity was 11.5 (14.0) percent and return on investment was 10.6
(15.4) percent. The company's equity ratio was 56.7 (67.9) percent. Equity per
share amounted to 2.97 (3.62) euro.
CAPITAL EXPENDITURE
In January-June, capital expenditure amounted to 4.9 (3.1) million euro. The
investments focused mainly on increasing capacity and capability for SOI and
200 mm wafers.
PRODUCT DEVELOPMENT
In January-June, the company expensed 1.4 (1.4) million euro in product
development projects, corresponding to 3.7 (3.2) percent of net sales. Product
development costs have not been capitalised.
During the first half of 2016, Okmetic's product development projects focused on
the development of new crystal technology and new SOI applications, deployment
of new processes to improve productivity, as well as process development for
sophisticated C-SOI wafers. As a result of sustained R&D efforts, the company
launched an enhanced SOI wafer, E-SOI, in March.
PERSONNEL
Okmetic employed on average 387 (387) people in January-June. At the end of the
period, Okmetic employed 401 (426) people, of which 388 worked in Finland, seven
in the US, five in Japan, and one in Hong Kong. As a result of the sale of the
Allen epi plant, the majority of the employees of Okmetic Inc., the US-based
subsidiary of Okmetic, transfered to the service of the new owner on 1 April
2016.
SHORT-TERM RISKS
There have been no significant changes in the company's near future risks and
uncertainties. However, changes in macro economy may indirectly have an
influence also on Okmetic's business.
Business is confronted by risks, which may arise from the company's operations
or changes in its operating environment. Risks that, if materialised, can have
an adverse effect on the company's operations and valuation are described below.
Silicon wafer sales are targeted at the sensor, discrete semiconductor and
analog circuit producers in the electronics industry. The demand of discrete
semiconductor and analog circuit industries is sensitive to economic
fluctuations, and changes in the market situation can be sudden and dramatic.
The demand for sensor wafers is more stable. The proliferation of sensors in
consumer electronics applications has, however, increased the susceptibility of
this market too to economic fluctuations. In addition, the consolidation of
customer companies might be a risk for the company's wafer sales.
Okmetic's share of the global silicon wafer market is around one percent, and
market prices have a notable effect on the price development of the company's
products. The company has considerable pricing power only with its own special
products. The pricing of other wafers is largely based on global market price.
Okmetic operates globally, and therefore the company's business is affected by
risks due to exchange rate fluctuations, consisting of cash flows from purchases
and sales. A significant part of sales is conducted in US dollars. Despite
hedging of the forecasted open currency position, the company remains exposed to
exchange rate fluctuations.
Substantial volumes of electricity are used in Okmetic's production. Despite
hedging, the company is exposed to fluctuations in the price of electricity.
SHARES AND SHAREHOLDERS
On 30 June 2016, Okmetic Oyj's paid-up share capital, as entered in the Finnish
Trade Register, was 11,821,250,00 euro. The number of shares was 17,287,500. The
shares have no nominal value attached. Each share entitles to one vote at
general meetings. The company has one class of shares. The company's shares are
included in the Finnish book-entry system.
Major shareholders 30 Jun, 2016
shares, pcs share, %
NSIG Finland S.à r.l. 16,218,195 93.81
Okmetic Oyj 406,129 2.35
FIM Fenno Mutual Fund 55,000 0.32
I.A. von Julins Sterbhus 50,000 0.29
Perisalo Asko Matti 41,583 0.24
VISIO Allocator Fund 27,011 0.16
Tollander Kristina 17,632 0.10
Bergqvist Jukka Tapani 15,000 0.09
Puolakka Kari Heikki Aukusti 10,000 0.06
Mannerheim-Ristin Ritarien Säätiö Sr 6,700 0.04
10 largest shareholders total 16,847,250 97.45
Nominee registered 124,551 0.72
Other shares 315,699 1.83
Total 17,287,500 100.00
SHARE PERFORMANCE AND TRADING
A total of 19.3 (3.4) million shares were traded between 1 January and 30 June
2016, representing 111.6 (19.9) percent of the weighted average of share total
of 17.3 (17.3) million during the period. The lowest quotation of the reporting
period was 6.66 (4.80) euro, and the highest 9.69 (7.70) euro, with the average
being 9.11 (6.19) euro. The closing quotation for the period on 30 June 2016 was
9.20 (7.05) euro. At the end of the period, market capitalisation amounted to
159.0 (121.9) million euro.
DIVIDENDS PAID
The annual general meeting decided, in accordance with the proposal of the board
of directors, to distribute a dividend of 0.65 euro per share (in total 11.0
million euro). In 2015, the company paid a total of 0.45 euro per share as
dividends (in total 7.6 million euro).
OWN SHARES
At the end of the period, the company held a total of 406,129 (406,129) own
shares, which is approximately 2.3 (2.3) percent of Okmetic's all shares and
votes.
OTHER EVENTS IN THE INTERIM PERIOD
Sale of the epi plant in Allen
In a stock exchange release published on 1 April 2016, Okmetic announced that
the company has sold its production plant focusing on epitaxial deposition of
silicon wafers, located in Allen in the United States, to American company
Epitek Silicon instead of the wind-down announced earlier. In line with the
agreement, Okmetic Inc. has transferred the plant to the buyer on 31 March 2016.
The purchase price was 9.5 million US dollars (around 8.5 million euro). The
financing conditions are as follows: 0.25 million US dollars were paid at the
signing of the agreement on 31 March 2016 and the rest of the purchase price is
financed by a vendor note. According to the agreement, 1.5 million US dollars of
the vendor note is paid back in parts on a monthly basis by the use of
inventories mostly or totally during 2016, 5.75 million US dollars in July
2016, 1.0 million US dollars will be paid 12 months after the signing of the
agreement and 1.0 million US dollars 24 months after the signing of the
agreement. Okmetic recorded a non-recurring gain of six million euro based on
the transaction.
As a result of the sale the business, production facility, equipment,
inventories as well as majority of the personnel of Okmetic's US-based
subsidiary Okmetic Inc. transferred to the buyer. Okmetic Inc. continues as a
North American sales office as announced earlier. Okmetic has agreed with Epitek
Silicon that Okmetic will deliver wafers for epitaxial deposition at least for
five years time after the transaction.
Tender offer
Okmetic Oyj announced on 1 April 2016 that Okmetic and National Silicon Industry
Group (NSIG) have entered into a Combination Agreement pursuant to which NSIG,
either directly or through a wholly-owned indirect subsidiary of NSIG, will make
a voluntary public tender offer to purchase all of the issued and outstanding
shares and option rights in Okmetic that are not owned by Okmetic or any of its
subsidiaries. NSIG Finland S.á r.l which is a wholly-owned indirect subsidiary
of NSIG, commenced the voluntary public tender offer on 22 April 2016. The
extended offer period expired on 14 June 2016.
In a press release published on 17 June 2016, NSIG announced the final result of
the tender offer. According to the result, the shares tendered in the tender
offer represent approximately 95.79 percent of all the shares and votes in
Okmetic (excluding the treasury shares held by Okmetic). In addition,
approximately 98.52 percent of the option rights have been tendered in the
tender offer, which implies, together with the tendered shares, a holding of
approximately 95.73 percent of all the shares and votes in Okmetic fully diluted
for the outstanding option rights and excluding the treasury shares held by
Okmetic.
The completion trades were settled and the offer consideration paid on 22 June
2016 to the shareholders and holders of option rights who have validly accepted
the tender offer in accordance with the terms and conditions of the tender
offer.
In order to allow the remaining shareholders and holders of option rights the
possibility to still accept the tender offer, NSIG decided to extend the tender
offer by a subsequent offer period in accordance with the terms and conditions
of the tender offer. The Subsequent Offer Period commenced on 20 June 2016 and
expired on 4 July 2016.
On 23 June 2016, NSIG Finland informed Okmetic that NSIG Finland holds more than
nine tenths (9/10) of all the shares and votes in Okmetic, and as a consequence
of exceeding the relevant ownership threshold, NSIG Finland has the right and
obligation, based on Chapter 18, Section 1 of the Finnish Companies Act, to
redeem the shares held by any other remaining Okmetic shareholders at fair
value.
Annual general meeting on 7 April 2016
The annual general meeting on 7 April 2016 adopted the annual accounts and the
consolidated annual accounts for the financial year 2015 and discharged the
company's management from liability. The annual general meeting decided, in
accordance with the proposal of the board of directors, to distribute a dividend
of 0.65 euro per share (in total 11.0 million euro). The dividend was paid on
18 April 2016.
The annual general meeting confirmed that the company's board of directors will
consist of five members. Mr. Jan Lång, Mr. Hannu Martola, Ms. Riitta Mynttinen,
Mr. Mikko Puolakka and Mr. Henri Österlund were re-elected as members of the
board of directors until the end of the next annual general meeting. The board
of directors elected Mr. Jan Lång as its chairman and Mr. Henri Österlund as its
vice chairman in its organisation meeting held immediately after the annual
general meeting.
Authorised Public Accountants PricewaterhouseCoopers Oy was re-elected as
auditor of the company. PricewaterhouseCoopers Oy has announced that APA, Mr.
Mikko Nieminen will be acting as principal auditor.
The decisions of the annual general meeting were published on 7 April 2016 in a
separate stock exchange release.
Financing
To ensure liquidity, the company has rearranged its credit facilities. The
company has negotiated new committed credit facilities of 6.0 million euro to
replace the 6.0 million euro uncommitted credit facilities. All of these new
committed credit facilities were in use on 30 June 2016.
Change in the executive management group
On 14 June 2016, Okmetic informed that Juha Jaatinen, Okmetic's Senior Vice
President, Finance, IT and Communications and member of the Executive Management
Group has resigned to assume a new position with another company. On 5 July
2016 the company announced that Tapio Hyvärinen, M.Sc. (Econ.), has been
appointed acting CFO and a member of Okmetic's Executive Management Group as of
15 August 2016.
EVENTS AFTER THE INTERIM PERIOD
Tender offer
NSIG published on 7 July 2016 a press release, according to which the Subsequent
Offer Period, the shares tendered during the Subsequent Offer Period represent
approximately 0.63 percent of all the shares and votes in Okmetic (excluding the
treasury shares held by Okmetic). No option rights were tendered during the
Subsequent Offer Period. Together with the shares tendered during the actual
offer period, the shares tendered in the Tender Offer represent approximately
96.41 percent of all the shares and votes in Okmetic (excluding the treasury
shares held by Okmetic).
Taking into account shares acquired through open market purchases, according to
the knowledge at the publication date of the press release NSIG Finland holds
approximately 96.78 percent of all the shares and votes in Okmetic (excluding
the treasury shares held by Okmetic) after the settlement of the sale and
purchase of the shares tendered during the Subsequent Offer Period. Together
with the option rights that were tendered in the Tender Offer during the actual
offer period (the approximately 98.52 percent of the option rights), this
implies a holding of approximately 96.72 percent of all the shares and votes in
Okmetic fully diluted for the outstanding option rights and excluding the
treasury shares held by Okmetic.
Extraordinary general meeting on 7 July 2016
NSIG Finland requested Okmetic's board of directors to convene an extraordinary
general meeting. Notice to the meeting was published on 13 June 2016 and the
extraordinary general meeting was held on 7 July 2016. According to NSIG
Finland's proposal, three members were elected to the board of directors
replacing all members of the board of directors elected in the annual general
meeting on 7 April 2016, for a term that expires at the end of the following
annual general meeting. Mr. Kai Seikku, President of Okmetic; Mr. Leo Ren (legal
name Weidong Ren), Managing Director of NSIG, and Mr. Jeffrey Wang (legal name
Qingyu Wang), CEO of Shanghai Simgui Technology were elected as members of the
board of directors. According to NSIG Finland's proposal, the general meeting
resolved that no remuneration shall be paid to the members of the board of
directors, but reasonable travel and other costs incurred by the board members
for attending in board work shall be compensated by the company.
CONDENSED FINANCIAL STATEMENTS AND TABLES 1 JANUARY - 30 June 2016 (unaudited)
ACCOUNTING POLICIES
These interim financial statements have been prepared in accordance with IAS
34, Interim Financial Reporting.
In preparing these interim financial statements, Okmetic has followed the same
accounting policies as in the financial statements for 2015 except for the
effect of changes required by the adoption of certain new or revised standards
and interpretations as of 1 January 2016, which have been described in financial
statements 2015. The adoption of the new and revised standards and
interpretations has not had an effect on the figures presented from the
reporting period.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
1,000 euro 1 Apr- 1 Apr- 1 Jan- 1 Jan- 1 Jan-
30 Jun, 30 Jun, 30 Jun, 30 Jun, 31 Dec,
2016 2015 2016 2015 2015
Net sales 18,969 22,068 38,597 43,680 84,540
Cost of sales -15,554 -16,434 -31,224 -32,312 -65,759
Gross profit 3,416 5,634 7,372 11,368 18,781
Other income
and expenses -6,313 -2,720 -3,550 -5,531 -11,063
Operating
profit -2,898 2,914 3,822 5,837 7,718
Financial
income and
expenses -107 -8 -45 -150 -370
Profit
before tax -3,004 2,906 3,778 5,687 7,348
Income tax -113 -691 -383 -1,308 -2,516
Profit for
the period -3,117 2,215 3,395 4,380 4,832
Other
comprehensive
income:
Items that may be
reclassified to profit or
loss in subsequent
periods
Cash flow hedges 25 -5 49 -7 20
Translation
differences 250 -295 -122 622 759
Other
comprehensive
income for the
period, net of
tax 275 -300 -73 614 779
Total
comprehensive
income for
the period -2,842 1,915 3,322 4,994 5,612
Profit for the
period
attributable
to:
Equity holders
of the parent
company -3,117 2,215 3,395 4,380 4,832
Total
comprehensive
income
attributable
to:
Equity holders
of the parent
company -2,842 1,915 3,322 4,994 5,612
Basic earnings
per share,
euro -0.19 0.13 0.20 0.26 0.29
Diluted
earnings per
share, euro -0.19 0.13 0.20 0.26 0.28
CONDENSED CONSOLIDATED BALANCE SHEET
1,000 euro 30 Jun, 30 Jun, 31 Dec,
2016 2015 2015
Assets
Non-current assets
Property, plant and
equipment 46,367 42,797 46,532
Intangible assets 164 493 329
Other receivables 1,971 615 164
Total non-current
assets 48,502 43,905 47,025
Current assets
Inventories 14,803 17,867 17,477
Receivables 21,175 19,424 16,156
Cash and cash
equivalents 3,847 9,231 9,468
Total current
assets 39,825 46,521 43,101
Total assets 88,327 90,426 90,127
Equity and liabilities
Equity
Equity attributable
to equity holders of
the parent company
Share capital 11,821 11,821 11,821
Other equity 38,242 49,337 45,787
Total equity 50,063 61,158 57,608
Liabilities
Non-current
liabilities 11,382 13,253 12,004
Current liabilities 26,882 16,016 20,514
Total liabilities 38,264 29,269 32,519
Total equity and
liabilities 88,327 90,426 90,127
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
1,000 euro 1 Jan- 1 Jan- 1 Jan-
30 Jun, 30 Jun, 31 Dec,
2016 2015 2015
Cash flows from operating
activities:
Profit before tax 3,778 5,687 7,348
Adjustments -2,260 3,528 8,082
Change in working capital 8,917 -3,650 1,102
Financial items -156 -551 -655
Tax paid -1,627 -458 -1,161
Net cash from
operating activities 8,652 4,556 14,716
Cash flows from investing
activities:
Purchases of property,
plant and equipment -7,208 -2,365 -7,579
Net cash used in
investing activities -7,208 -2,365 -7,579
Cash flows from financing
activities:
Proceeds from long-term
borrowings - 1,000 1,000
Payments of long-term
borrowings -1,000 -1,000 -2,000
Proceeds from short-term
borrowings 6,000 - -
Payments of finance
lease liabilities -522 -316 -641
Dividends paid -11,592 -7,592 -11,193
Net cash used in
financing activities -7,114 -7,908 -12,834
Increase (+) /
decrease (-) in cash
and cash equivalents -5,671 -5,717 -5,698
Exchange rate changes 49 512 730
Cash and cash
equivalents at
the beginning
of the period 9,468 14,436 14,436
Cash and cash
equivalents at
the end of the
period 3,847 9,231 9,468
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to equity holders of parent company
Share Share Reserve Other Retained Total
capital pre- for in- re- earnings
mium vested serves
1,000 euro unre- 1)
stricted
equity
Balance at
31 Dec, 2015 11,821 20,045 753 3,415 21,574 57,608
Profit for
the period 3,395 3,395
Other com-
prehensive
income, net
of tax:
Cash flow
hedges 49 49
Translation
differences -122 -122
Total com-
prehensive
income for
the period -73 3,395 3,322
Share-based
payments 105 105
Dividend
distribution -10,973 -10,973
Balance at
30 Jun, 2016 11,821 20,045 753 3,342 14,101 50,063
Balance at
31 Dec, 2014 11,821 20,045 753 2,636 28,372 63,627
Profit for
the period 4,380 4,380
Other com-
prehensive
income, net
of tax:
Cash flow
hedges -7 -7
Translation
differences 622 622
Total com-
prehensive
income for
the period 614 4,380 4,994
Share-based
payments 129 129
Dividend
distribution -7,592 -7,592
Balance at
30 Jun, 2015 11,821 20,045 753 3,250 25,288 61,158
1)"Other reserves" contains hedge reserve and translation differences.
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
1,000 euro 1 Jan- 1 Jan- 1 Jan-
30 Jun, 30 Jun, 31 Dec,
2016 2015 2015
Carrying amount at the beginning
of the period 46,532 42,538 42,538
Additions 4,882 3,116 10,834
Disposals -1,781 - -65
Depreciation and impairment
losses -3,182 -3,099 -7,070
Exchange differences -83 242 296
Carrying amount at the end of
the period 46,367 42,797 46,532
COMMITMENTS AND CONTINGENCIES
1,000 euro 30 Jun, 30 Jun, 31 Dec,
2016 2015 2015
Loans, secured with collaterals 11,000 7,000 6,000
Collaterals 15,110 15,110 15,110
Off-balance sheet
lease commitments 191 328 244
Capital commitments 2,337 3,881 5,336
Nominal values of
derivative contracts
Currency options, call - 1,088 528
Currency forward agreements 2,944 4,461 5,268
Electricity derivatives 177 717 351
Fair values of
derivative contracts
Currency options, call - 38 1
Currency forward agreements -23 -10 -93
Electricity derivatives -70 -249 -185
The contract price of the derivatives has been used as the nominal value of the
underlying asset.
HIERARCHY LEVELS OF DERIVATIVE CONTRACTS MEASURED AT FAIR VALUE
1,000 euro 30 Jun, 2016 30 Jun, 2015
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Financial assets
Derivative financial
instruments - 14 - - 85 -
Financial liabilities
Derivative financial
instruments 70 37 - 249 57 -
Fair value estimation
The group's financial instruments that are measured at fair value comprise
derivatives used for hedging and held for trading.
Fair values of level 1 instruments are based on quoted prices (unadjusted) in
active markets for identical assets or liabilities.
Fair values of level 2 instruments are based on other data than quoted prices in
active markets, but on the data from which the asset or liability is observable,
either directly (i.e. price) or indirectly (i.e. derived from the prices).
Electricity derivatives are classified as level 1, currency derivatives as level
2.
Fair value determination
The fair values of electricity derivatives are based on quoted market prices.
The fair values of currency forwards and options are determined on the basis of
market and contract prices of the agreements at the reporting date by applying
commonly used valuation techniques.
KEY FIGURES SHOWING FINANCIAL PERFORMANCE
1,000 euro 1 Jan- 1 Jan- 1 Jan-
30 Jun, 30 Jun, 31 Dec,
2016 2015 2015
Net sales 38,597 43,680 84,540
Change in net sales
compared to the previous
year's period, % -11.6 21.0 14.1
Export and foreign
operations share
of net sales, % 90.2 91.1 91.5
Operating profit before
depreciation (EBITDA) 7,169 9,101 15,115
% of net sales 18.6 20.8 17.9
Operating profit without items
affecting comparability (IAC) 3,220 5,837 10,972
% of net sales 8.3 13.4 13.0
Operating profit 3,822 5,837 7,718
% of net sales 9.9 13.4 9.1
Profit before tax 3,778 5,687 7,348
% of net sales 9.8 13.0 8.7
Return on equity, % 11.5 14.0 8.0
Return on investment, % 10.6 15.4 10.4
Non-interest-bearing
liabilities 22,035 16,212 20,768
Net interest-bearing
liabilities 12,382 3,826 2,283
Net gearing ratio, % 24.7 6.3 4.0
Equity ratio, % 56.7 67.9 64.0
Capital expenditure 4,882 3,116 10,834
% of net sales 12.6 7.1 12.8
Depreciation and impairment
losses 3,347 3,264 7,397
Research and development
expenditure 1,438 1,406 2,580
% of net sales 3.7 3.2 3.1
Average number of
personnel during
the period 387 392 394
Personnel at the
end of the period 401 426 387
KEY FIGURES PER SHARE
Euro 30 Jun, 30 Jun, 31 Dec,
2016 2015 2015
Basic earnings per share 0.20 0.26 0.29
Diluted earnings per share 0.20 0.26 0.28
Equity per share 2.97 3.62 3.41
Dividend per share - - 0.65
Dividends/earnings, % - - 224.1
Effective dividend yield, % - - 9.0
Price/earnings(P/E) - - 25.3
Share performance
(1 Jan-)
Average trading price 9.11 6.19 6.48
Lowest trading price 6.66 4.80 4.80
Highest trading price 9.69 7.70 7.70
Trading price at the
end of the period 9.20 7.05 7.24
Market capitalisation at the
end of the period, 1,000 euro 159,045 121,877 125,162
Trading volume (1 Jan-)
Trading volume,
transactions, 1,000 pcs 19,289 3,445 5,153
In relation to weighted
average number of shares, % 111.6 19.9 29.8
Trading volume, 1,000 euro 175,807 21,319 33,386
The weighted average number
of shares during the period
under review adjusted by the
share issue, 1,000 pcs 17,288 17,288 17,288
The number of shares at the
end of the period adjusted by
the share issue, 1,000 pcs 17,288 17,288 17,288
When calculating earnings per share and equity per share, Okmetic's own shares
are deducted from the total number of shares.
QUARTERLY KEY FIGURES
1,000 euro 10-12/ 7-9/ 4-6/ 1-3/
2016 2016 2016 2016
Net sales 18,969 19,628
Compared to previous quarter, % -3.4 -2.1
Compared to corresponding
period last year, % -14.0 -9.2
Operating profit without items
affecting comparability (IAC) 1,838 1,382
% of net sales 9.7 7.0
Operating profit -2,898 6,720
% of net sales -15.3 34.2
Profit before tax -3,004 6,782
% of net sales -15.8 34.6
Net cash flow generated from:
Operating activities 4,231 4,421
Investing activities -1,678 -5,530
Financing activities -5,334 -1,780
Increase/decrease in cash
and cash equivalents -2,782 -2,889
Personnel at the end of the period 401 389
1,000 euro 10-12/ 7-9/ 4-6/ 1-3/
2015 2015 2015 2015
Net sales 20,040 20,820 22,068 21,612
Compared to previous quarter, % -3.7 -5.7 2.1 15.7
Compared to corresponding
period last year, % 7.3 7.8 18.0 24.2
Operating profit without items
affecting comparability (IAC) 1,595 3,540 2,914 2,923
% of net sales 8.0 17.0 13.2 13.5
Operating profit -1,660 3,540 2,914 2,923
% of net sales -8.3 17.0 13.2 13.5
Profit before tax -1,816 3,477 2,906 2,781
% of net sales -9.1 16.7 13.2 12.9
Net cash flow generated from:
Operating activities 5,399 4,761 3,660 896
Investing activities -3,301 -1,913 -625 -1,740
Financing activities -3,767 -1,159 -2,687 -5,221
Increase/decrease in cash
and cash equivalents -1,669 1,688 348 -6,064
Personnel at the end of the period 387 384 426 375
RECONCILIATIONS OF KEY FINANCIAL FIGURES
New ESMA (European Securities and Markets Authority) guidelines on Alternative
Performance Measures (APMs) came into effect on 3 July 2016. Okmetic presents
APMs to reflect the underlying business performance and to enhance comparability
between financial periods. APMs should not be considered as a substitute for
measures of performance in accordance with the IFRS. As of Q2 2016, Okmetic
relabels the previously referenced "without non-recurring items" with "without
items affecting comparability" (IAC).
Exceptional transactions outside the normal business operations are treated as
items affecting comparability. Such items, as defined by Okmetic, are income or
expenses from discontinued operations and the restructuring of operations,
impairment of assets, expenses related to the NSIG tender offer, and any other
transactions management has excluded as non-operational.
Operating profit without items affecting comparability
1,000 euro 1-6/ 4-6/ 1-3/
2016 2016 2016
Operating profit 3,822 -2,898 6,720
Items affecting comparability (IAC)
Income and expenses related to the sale
of operations of the US-based epi plant 5,758 -130 5,888
Expenses related to tender offer by NSIG -4,796 -4,246 -550
Others -360 -360 -
Items affecting comparability (IAC)
total 602 -4,735 5,338
Operating profit without items
affecting comparability (IAC) 3,220 1,838 1,382
1,000 euro 1-12/ 10-12/ 7-9/ 4-6/ 1-3/
2015 2015 2015 2015 2015
Operating profit 7,718 -1,660 3,540 2,914 2,923
Items affecting comparability (IAC)
Expenses related to the reorganisation
of the epi plant in the US -3,255 -3,255 - - -
Operating profit without items
affecting comparability (IAC) 10,972 1,595 3,540 2,914 2,923
In addition to Alternative Performance Measures (APMs) presented above, Okmetic
also reports other performance measures that have not been defined in IFRS.
There have not been any changes in the definitions or labels of these measures,
and they have been published in the annual report 2015.
DEFINITIONS OF KEY FINANCIAL FIGURES
Operating profit before = Operating profit + depreciation +
depreciation (EBITDA) impairment losses
Items affecting comparability (IAC) = Exceptional items that are not related
to normal business operations
Return on equity (ROE), % = Profit/loss for the period x 100/
-----------------------------------------
Equity(average for the period)
Return on investment (ROI), % = (Profit/loss before tax + interest and
other financial expenses) x 100/
-----------------------------------------
Balance sheet total - non-interest
bearing liabilities(average for the
period)
Equity ratio, % = Equity x 100/
-----------------------------------------
Balance sheet total - advances received
Net interest-bearing liabilities = Interest-bearing liabilities - cash and
cash equivalents
Net gearing ratio, % = (Interest-bearing liabilities - cash and
cash equivalents) x 100/
-----------------------------------------
Equity
Basic earnings per share = Profit/loss for the period attributable
to equity holders of the parent
company/
-----------------------------------------
Adjusted weighted average number of
shares outstanding during the period
Equity per share = Equity attributable to equity holders of
the parent company/
-----------------------------------------
Adjusted number of shares at the end of
the period
Dividend per share = Dividend for the period/
-----------------------------------
Adjusted number of shares at the
end of the period
Effective dividend yield, % = Dividend per share x 100/
-----------------------------------
Trading price 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 trading price = Total traded amount in euro/
-----------------------------------
Adjusted number of shares traded
during the period
Market capitalisation at the end of the = Number of shares at the end of the
period 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.
The future estimates and forecasts in this interim report release are based on
the company management's current knowledge. Actual events and results may differ
from the estimates presented here.
OKMETIC OYJ
Board of directors
For further information, please contact:
Kai Seikku, President
Tel. +358 9 5028 0232, e-mail: kai.seikku@okmetic.com
Juha Jaatinen, Senior Vice President, Finance, IT and Communications
tel. +358 5028 0286, e-mail: juha.jaatinen@okmetic.com
Okmetic supplies tailored, high value-added silicon wafers to be used in the
manufacture of sensors as well as discrete semiconductors and analog circuits.
Okmetic's strategic objective is profitable growth driven by a product portfolio
designed to meet customers' current and future technology needs. The core of the
company's operations is being genuinely close to the customers and understanding
their needs and processes.
Okmetic's global sales network, extensive portfolio of high value-added
products, in-depth knowledge of crystal growing, long-term product development
projects, as well as efficient and flexible production create prerequisites for
achieving the strategic targets. The company's headquarters is located in
Finland, where the majority of the company's silicon wafers is manufactured. In
addition to in-house manufacture, Okmetic has contract manufacturing in Japan
and China. Okmetic's shares are listed on Nasdaq Helsinki Ltd under the code
OKM1V. For more information on the company, please visit our website at
www.okmetic.com.
NSIG is a limited liability company organized under the PRC laws. The registered
office of NSIG is in Shanghai, China.
Established in 2015, NSIG is a China-based holding group that is engaged in the
investment and development of semiconductor materials and equipment industry
with a registered capital of RMB 2 billion (approximately EUR 272 million).
NSIG's mission is to establish a major industrial player in the global
semiconductor sector (especially silicon and its ecosystems) through both PRC
domestic investments and outbound mergers and acquisitions.
[HUG#2029930]
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