TIDMPVCS
RNS Number : 7163G
PV Crystalox Solar PLC
19 March 2020
PV Crystalox Solar PLC
("PV Crystalox", the "Company" or the "Group")
Preliminary Results for the year ended 31 December 2019
PV Crystalox Solar a long established supplier to the global PV
industry now also providing slicing services for high technology
ceramics and optics industries in Germany i s pleased to announce
its preliminary results for the year to 31 December 2019 .
Highlights
-- Transforming business by applying our wire sawing expertise
to cutting of non-silicon materials
-- GBP38.5million capital returned in June 2019 (equivalent to
24 pence per share) for shareholders
-- Further capital return of up to GBP2 million via tender offer proposed for Q3 2020
Overview of results
l Revenues EUR0.5m (2018: EUR6.3m)
l (Loss) / earnings before tax of EUR(2.4)m (2018: EUR1.6m)
l Net cash EUR8.6m (2018: EUR54.0m)
Iain Dorrity, Chief Executive Officer commented
" As part of the continuing resolution of the Company's affairs
the Board will continue its endeavours to complete the
transformation of the manufacturing operation in Germany and to
resolve any potential challenge from tax authorities regarding the
distribution of payments received under the arbitration settlement
in 2018. "
Enquiries:
PV Crystalox Solar PLC +44 (0) 1235 437160
Iain Dorrity, Chief Executive Officer
Matthew Wethey, Chief Financial Officer
and Group Secretary
About PV Crystalox
PV Crystalox Solar a long established supplier to the global PV
industry now also providing slicing services for the high
technology ceramics and optics industries in Germany.
Chairman's introduction
Dear Shareholder
As a result of the dire PV industry environment which has
persisted since 2011, the Group had been operating in cash
conservation mode to protect shareholder value whilst preserving
the Group's core production capabilities. The Board made the
decision in 2017 to significantly reduce those capabilities and
closed the Group's production facilities in the United Kingdom.
Then in H1 2018 the Group terminated multicrystalline silicon wafer
production in Germany and restructured that operation to use its
existing capabilities to develop new business opportunities in the
cutting of non-silicon materials.
In November 2018 the Group received the final payment of a
EUR28.8 million settlement of all claims and obligations relating
to the wafer supply contract and arbitration award from a customer.
Subsequently the Group announced in February 2019 that following an
extensive review of the strategic options for the future of the
Group, the Board had concluded that returning a large proportion of
available cash, as part of an orderly resolution of the Group's
affairs, would be in the best interests of shareholders rather than
the pursuit of acquisitions
On 21 June 2019 the Group returned 24 pence per existing
ordinary share to shareholders on the register at that time, which
was implemented through a reduction of the capital reserves. The
reduction of the Company's share premium account and of the nominal
value of the ordinary shares enabled the Company to make a return
of capital to shareholders of GBP38.5 million (EUR43.4 million) in
aggregate. This was accompanied by a 1 for 22 share consolidation.
The value returned pursuant to the return of capital represented
93% of the Company's market capitalisation (based on the average
closing middle market price for the three business days prior to
the consolidation of 25.8 pence per existing ordinary share).
Following the share capital consolidation there are 7,285,408 new
ordinary shares.
Total revenues of EUR0.5 million were 92% lower than in the
prior year and in 2019 the loss before tax was EUR2.4 million which
compared to a profit before tax of EUR1.6 million in 2018. Year end
net cash of EUR8.6 million was EUR45.4 million lower than at the
beginning of the year, primarily as result of the return of
capital.
During the last two years the Board has explored various options
to maximise any value from the listing of the Group's shares on the
Official List but has been unable to identify any viable
opportunities. The Board has thus concluded that a further return
of capital would now be an appropriate course of action, following
which it intends to cancel the Company's listing on the Official
List. Contingent on receipt of the payment relating to the
settlement of a legacy wafer supply contract which is expected
before the end of H1, the intention is to return a maximum of GBP2
million to shareholders by way of a tender offer in Q3.
The Board remains mindful of the need to protect shareholder
value and believes that this will be best served by continuing the
transformation of the manufacturing operation in Germany and
resolving any challenge from tax authorities regarding the
distribution of payments received under the arbitration settlement
in 2018. A sale to a third party or a transfer of the business to
the existing management team remains the ultimate objective.
Meanwhile the Board is implementing measures to reduce head office
overheads.
John Sleeman
Chairman
18 March 2020
OPERATIONAL AND FINANCIAL REVIEW
Operational review of 2019
Extremely challenging PV market conditions have persisted since
2011 when overcapacity primarily in China caused a collapse in
pricing across the value chain. This difficult environment led
initially to the shutdown of Group's UK production and mass
redundancies in 2017 and eventually necessitated the Group's exit
from PV manufacturing. Major restructuring followed in Germany
during 2018 and the closure of the UK facilities was finally
completed in that year. Following an extensive review of the
strategic options for the future of the Group the Board advised in
March 2019 that returning a large proportion of available cash, as
part of an orderly resolution of the Group's affairs, would be in
the best interest of shareholders. A capital return of
EUR43.4million (GBP38.5million, which was the maximum under a
capital reorganisation) was duly completed in June 2019 following
approval at a General Meeting held in May. In parallel the Board
concluded the transformation of the manufacturing operation in
Germany would be preferable to closure and ultimately offers the
potential for a favourable outcome for all stakeholders through a
sale to a third party or a transfer of the business to the existing
management team.
As part of the programme to transform the business in Germany,
one of the two production buildings was vacated at the end of 2019
and the operational facilities downsized and consolidated into the
remaining building. Some silicon wafering capabilities have been
retained as limited contract wafering is periodically carried out
for a PV customer in Germany. The funded PV related research and
development activities for which grants of EUR0.4 million were
received in 2019 are continuing.
With around 20 employees now remaining in Germany we are
applying our wire sawing expertise to the cutting and slicing of a
variety of materials other than silicon and focusing on the
requirements of the optical, medical and semiconductor industries
in Germany. Successful trials have been carried out in the cutting
of glass, fused silica, alumina and other ceramics and have
demonstrated the benefits of wire sawing in improved cutting
yields. While some of these customer relationships have already
been consolidated into regular contracting business, the overall
financial performance has been below expectations. Progress has
been hampered to some extent by the global slowdown in the
notoriously cyclical semiconductor industry which in 2019 suffered
its worst downturn in almost two decades. The World Semiconductor
Trade Statistics organization projects growth of 5.9% in 2020 but
ongoing US-China trade tensions and the recent Covid-19 coronavirus
outbreak pose a threat to any recovery.
Wafer supply contracts
Group companies entered into a number of long-term wafer supply
contracts prior to 2010. While the Group responded to the
subsequent adverse market conditions by agreeing adjusted terms in
several cases, no agreement was possible with three customers which
either entered insolvency or defaulted on the contracts. The Group
has successfully recovered EUR129.5 million to date in compensation
from four customers as follows:
In 2012 the Group negotiated a settlement of EUR91 million for
termination of a supply contract with a customer which had elected
to exit the PV industry because of the challenging PV industry
environment.
Following a lengthy dispute which in 2015 had necessitated
filing for arbitration by the International Court of Arbitration of
the International Chamber of Commerce, an agreement was finally
concluded in 2018 with one customer whereby we received a payment
of EUR28.8 million in settlement of all claims and obligations
under a wafer supply contract.
The Group indicated in its 2019 Interim Results that further
receipts were expected relating to a historic settlement of a wafer
supply contract with another customer which did not fulfil its
obligations. Receipts of EUR8.5 million in aggregate have been
collected in 2014 and 2016 and further cash inflows of
approximately EUR1 million are anticipated during the next two
years with the bulk of the amount now expected before the end of H1
2020. As this receipt is not virtually certain to be received it
has not been recorded as a receivable in the financial statements
at 31 December 2019.
Receipts totaling EUR1.5 million were collected in 2016 and 2018
in resolution of the Group's other outstanding wafer supply
contract, where the customer had entered insolvency and shipments
stopped in 2012. A further final receipt is still expected at the
conclusion of the insolvency process although the timing is
uncertain and it is unlikely to be significant unless the
administrator is successful in a claim against the management board
whose members are covered by a D&O insurance policy.
Financial Review
In 2019 the Group has concentrated on slicing services for the
high technology ceramics and optics industries in Germany following
the restructure of German production operations and shutdown of
multicrystalline silicon wafer production at the end of H1. As a
result Group revenues in 2019 of EUR0.5 million were 92% lower than
in 2018 (EUR6.3 million).
The Group's loss before taxes was EUR2.4 million (2018: profit
of EUR1.6 million). This reduction in profitability was mainly
driven by a decrease in other income and a larger currency loss in
2019 than in 2018 which was partially offset by improved gross
margins, lower personnel costs, depreciation and impairment and
other expenses. Other income in 2019 was significantly below 2018
when other income was boosted by the receipt of EUR8.2 million from
a customer in settlement of a wafer supply contract .
Currency losses of EUR0.4 million in 2019, were EUR0.8 million
higher than in 2018, and arose mainly on converting euro balances
into sterling ahead of the return of capital.
Slicing services in 2019 delivered a gross profit of EUR0.1
million compared to a gross loss of EUR1.0 million in 2018.
Personnel costs of EUR1.5 million in 2019 were EUR3.1 million lower
than in 2018 following the restructuring in 2018 and the resulting
lower employee numbers in 2019. Depreciation and impairment charges
were negligible in 2019 but were EUR0.7 million in 2018 as a result
of an impairment charge of EUR0.6 million following the termination
of multicrystalline silicon wafer operations. Other expenses in
2019 were EUR0.8 million lower than in 2018.
The Group's net cash position at the end of the period was
EUR8.6 million, which was EUR45.4 million lower than the net
position of EUR54.0 million at the start of the year. This decrease
was primarily due to the capital return of EUR43.4 million to
shareholders.
Going concern
The Group's directors are required to make an assessment as to
whether it is appropriate to prepare the financial statements on a
going concern basis by considering the Group's ability and
intention to continue in business.
The Group has been operating a cash conservation strategy to
maximise cash held and to enable the Group to manage its operations
whilst market conditions remain difficult. A description of the
market conditions and the Group's plans are included in the
Strategic Report.
On 31 December 2019 there was a net cash balance of EUR8.6
million. As part of its normal business practice, the Group
regularly prepares both annual and longer-term plans which are
based on the directors' expectations concerning key assumptions.
Within these plans the directors have included returning a maximum
of GBP2 million to shareholders through a tender offer. The GBP2
million is dependent on receiving EUR0.9m from customers relating
to historic settlements that are not recorded in the balance sheet
as receivables at 31 December 2019. If the EUR0.9m is not received
then the return to shareholders will be reduced accordingly. The
directors, after careful consideration and after making appropriate
enquiries, are of the opinion that the levels of net cash outflows
remain low such that Group has sufficient cash to continue in
operational existence for at least twelve months from the date of
approval of the financial statements, in March 2020.
The Group intends to continue operations at PV Crystalox Solar
Silicon GmbH, in Germany which involve the cutting of silicon and
non-silicon materials together with a continued focus on research
and development activities. Once the Group has resolved the issues
surrounding the transfer pricing risks with the German tax
authorities a sale to a third party or a transfer of the business
to the existing management team remains our ultimate objective.
As a result of this assessment the directors have concluded that
the Group has the ability and the intention to continue in
business. It should be noted that whilst the Group and PV Crystalox
Solar Silicon GmbH have been prepared on a going concern basis the
operations at Crystalox Limited have not following the announcement
on 13 July 2017 that Group intended to cease United Kingdom
manufacturing operations in H2 2017.
Outlook
During the last two years the Board has explored various options
to maximise any value from the listing of the Group's shares on the
Official List but has been unable to identify any viable
opportunities. The Board has thus concluded that cancelling the
Company's listing on the Official List preceded by a further return
of capital would now be an appropriate course of action. Contingent
on receipt of the payment relating to the settlement of a legacy
wafer supply contract which is expected before the end of H1, the
intention is to return a maximum of GBP2 million to shareholders by
way of a tender offer. The Board will be recommending that the
shareholders approve the necessary measures at a general meeting
which should enable the cash return to be completed before the end
of Q3 2020. Further information will be provided in a circular to
shareholders in due course. Following the completion of the Tender
Offer the Board intends to cancel the Company's listing.
As part of the continuing resolution of the Company's affairs
the Board will continue its endeavours to complete the
transformation of the manufacturing operation in Germany and to
resolve any potential challenge from tax authorities regarding the
distribution of payments received under the arbitration settlement
in 2018. A sale of the German business to a third party or a
transfer to the existing management team remains the ultimate
objective and together with a resolution of the tax issues should
enable a further cash return to shareholders in due course. As our
ability to accelerate the liquidation process is limited and also
economic considerations make such action unfavourable, our focus is
on minimising the cash burn during the next 12-18 months while the
outstanding issues are resolved. Accordingly the Board is
implementing various measures to reduce overheads. Non-executive
director salaries were reduced by 50% from January 2020 and similar
reductions are planned for the CEO and CFO during the year along
with the closure of the UK office.
Iain Dorrity
Chief Executive Officer
18 March 2020
Consolidated statement of comprehensive income
For the year ended 31 December 2019
2019 2018
Notes EUR'000 EUR'000
------------------------------------------------------------------------------------------- ----- -------- --------
Revenues 2 531 6,308
Cost of materials and services 3 (387) (7,378)
Personnel expenses 4 (1,505) (4,567)
Depreciation and impairment of property, plant and equipment and amortisation of intangible
assets (25) (655)
Other income 5 559 9,556
Other expenses 6 (1,213) (2,025)
Currency (losses)/gains (444) 324
------------------------------------------------------------------------------------------- ----- -------- --------
(Loss)/profit before interest and taxes ("EBIT") (2,484) 1,563
Finance income 7 46 64
------------------------------------------------------------------------------------------- ----- -------- --------
(Loss)/profit before taxes ("EBT") (2,438) 1,627
Income taxes 8 158 (264)
------------------------------------------------------------------------------------------- ----- -------- --------
(Loss)/profit for the year attributable to owners of the parent (2,280) 1,363
------------------------------------------------------------------------------------------- ----- -------- --------
Other comprehensive (loss)/income
Items that may be reclassified subsequently to profit or loss:
Currency translation adjustment 681 (537)
Actuarial loss on defined benefit pension scheme 9 - (126)
------------------------------------------------------------------------------------------- ----- -------- --------
Total comprehensive (loss)/income
Attributable to owners of the parent (1,599) 700
------------------------------------------------------------------------------------------- ----- -------- --------
Basic and (loss)/diluted profit per share in Euro cents:
From (loss)/profit for the year - basic 10 (3.2) 0.9
From (loss)/profit for the year - diluted 10 (3.2) 0.9
------------------------------------------------------------------------------------------- ----- -------- --------
The accompanying notes form an integral part of these financial
statements.
Consolidated balance sheet
As at 31 December 2019
2019 2018
Notes EUR'000 EUR'000
---------------------------------- ----- -------- --------
Intangible assets 11 2 -
Property, plant and equipment 12 36 51
Total non-current assets 38 51
---------------------------------- ----- -------- --------
Cash and cash equivalents 13 8,608 53,964
Trade accounts receivable 14 27 40
Inventories 15 72 125
Income tax claims 16 158 -
Prepaid expenses and other assets 18 171 537
---------------------------------- ----- -------- --------
Total current assets 9,036 54,666
---------------------------------- ----- -------- --------
Total assets 9,074 54,717
---------------------------------- ----- -------- --------
Trade accounts payable 19 104 99
Accrued expenses 20 521 911
Current tax liabilities 21 943 1,348
Deferred tax liabilities 22 - -
Other current liabilities 23 13 21
---------------------------------- ----- -------- --------
Total current liabilities 1,581 2,379
---------------------------------- ----- -------- --------
Share capital 24 326 12,332
Share premium - 50,511
Other reserves - 25,096
Shares held by the EBT (61) (372)
Share-based payment reserve 125 162
Reverse acquisition reserve (3,601) (3,601)
Accumulated profits/(losses) 15,622 (7,194)
Currency translation reserve (4,918) (24,596)
---------------------------------- ----- -------- --------
Total equity 7,493 52,338
---------------------------------- ----- -------- --------
Total liabilities and equity 9,074 54,717
---------------------------------- ----- -------- --------
The accompanying notes form an integral part of these financial
statements.
The financial statements on pages 42 to 60 were approved by the
Board of Directors on 18 March 2020 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 2019
Shares
held Share-based Reverse Accumulated Currency
Share Share Other by the payment acquisition Profit/ translation Total
capital premium reserves EBT reserve reserve (losses) reserve equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
As at 1 January
2018 12,332 50,511 25,096 (372) 294 (3,601) (8,431) (24,059) 51,770
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Share-based
payment credit - - - - (132) - - - (132)
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Transactions
with owners - - - - (132) - - - (132)
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Profit for the
year - - - - - - 1,363 - 1,363
Currency
translation
adjustment - - - - - - - (537) (537)
Actuarial loss - - - - - - (126) - (126)
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Total
comprehensive
income - - - - - - 1,237 (537) 700
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
As at 31
December 2018 12,332 50,511 25,096 (372) 162 (3,601) (7,194) (24,596) 52,338
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
As at 1 January
2019 12,332 50,511 25,096 (372) 162 (3,601) (7,194) (24,596) 52,338
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Capital
reorganisation (12,006) (50,511) - - - - 43,423 19,094 -
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Capital
reorganisation - - (25,096) - - - 25,096 - -
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Capital return - - - 535 - - (43,423) - (42,888)
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Share-based
payment charge - - - (224) (37) - - (97) (358)
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Transactions
with owners (12,006) (50,511) (25,096) 311 (37) - 25,096 18,997 (43,246)
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Loss for the
year - - - - - - (2,280) - (2,280)
Currency
translation
adjustment - - - - - - - 681 681
Total
comprehensive
(loss)/income - - - - - - (2,280) 681 (1,599)
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
As at 31
December 2019 326 - - (61) 125 (3,601) 15,622 (4,918) 7,493
--------------- -------- -------- --------- -------- ----------- ----------- ----------- ----------- --------
Consolidated cash flow statement
For the year ended 31 December 2019
2019 2018
EUR'000 EUR'000
------------------------------------------------------------------------ -------- --------
(Loss)/profit before taxes (2,438) 1,627
Adjustments for:
Net interest income (46) (64)
Depreciation, impairment and amortisation 25 655
Inventory writedown - 591
Credit/(charge) for share-based payments (262) (132)
Change in provisions - (1,385)
Gain from the disposal of property, plant and equipment and intangibles (70) (27)
(Gains)/losses in foreign currency exchange (414) 145
------------------------------------------------------------------------ -------- --------
(3,205) 1,410
Changes in working capital
Decrease in inventories 53 3,197
Decrease in accounts receivables 13 1,000
Decrease in accounts payables and deferred income (375) (329)
Decrease in other assets 370 22,549
Decrease in other liabilities (8) (147)
------------------------------------------------------------------------ -------- --------
(3,152) 27,680
Income taxes paid (394) -
Interest received 46 64
------------------------------------------------------------------------ -------- --------
Net cash (used in)/generated from operating activities (3,500) 27,744
------------------------------------------------------------------------ -------- --------
Cash flow from investing activities
Proceeds from sale of property, plant and equipment 70 29
Payments to acquire property, plant and equipment and intangibles (12) (12)
------------------------------------------------------------------------ -------- --------
Net cash generated from/(used in) investing activities 58 17
------------------------------------------------------------------------ -------- --------
Cash flow from financing activities
Capital return to shareholders (43,423) -
EBT participation in capital return 535 -
------------------------------------------------------------------------ -------- --------
Net cash used in financing activities (42,888) -
------------------------------------------------------------------------ -------- --------
Cash (used in)/generated from operations (46,330) 27,761
Effects of foreign exchange rate changes on cash and cash equivalents 974 (678)
------------------------------------------------------------------------ -------- --------
Cash and cash equivalents at the beginning of the year 53,964 26,881
------------------------------------------------------------------------ -------- --------
Cash and cash equivalents at the end of the year 8,608 53,964
------------------------------------------------------------------------ -------- --------
The accompanying notes form an integral part of these financial
statements.
Notes to the consolidated financial statements
For the year ended 31 December 2019
1. Group accounting policies
Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union, IFRIC
interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS. The financial information has also been
prepared under the historical cost convention except that it has
been modified to include certain financial assets and liabilities
(including derivatives) at their fair value through profit and
loss. These policies have been consistently applied to all years
presented unless otherwise stated.
PV Crystalox Solar PLC is incorporated and domiciled in the
United Kingdom.
The address of the registered office is 11B(ii) Park House,
Milton Park, Abingdon, OX14 4RS.
The financial statements for the year ended 31 December 2019
were approved by the Board of Directors on 18 March 2020.
Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the "functional
currency"). The functional currency of the parent company is
Sterling. The financial information has been presented in Euros,
which is the Group's presentational currency. The Euro has been
selected as the Group's presentational currency as this is the
currency used in its significant contracts. The financial
statements are presented in round thousands.
Foreign currency translation
Transactions in foreign currencies are translated into the
functional currency of the respective entity at the foreign
exchange rate ruling at the date of the transactions. Monetary
assets and liabilities denominated in foreign currencies at the
balance sheet date are translated to the functional currency at the
foreign exchange rate ruling at that date. Non-monetary assets and
liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the date
of the transaction. Non-monetary assets and liabilities that are
stated at fair value are translated to the functional currency at
foreign exchange rates ruling at the date the fair value was
determined. Exchange gains and losses on monetary items are charged
to the Statement of Comprehensive Income.
The assets and liabilities of foreign operations are translated
to Euros at foreign exchange rates ruling at the balance sheet
date. The income and expenses of foreign operations are translated
into Euros at the average foreign exchange rates of the year that
the transactions occurred in. In the Consolidated Financial
Statements exchange rate differences arising on consolidation of
the net investments in subsidiaries are recognised in other
comprehensive income under "Currency translation adjustment".
Non-going concern entities
Subsidiary accounts for Crystalox Limited are no longer prepared
on a going concern basis and include an estimate of all related
costs either committed to or incurred in the period. Where the
Company continues to trade any losses incurred in so doing are
booked in the same period as revenue derived and therefore no
accrual is made for these. The preparation of these accounts
differs from that of going concern in that:
-- non-current assets/liabilities become current;
-- assets are written down to a recoverable amount; and
-- provision for wind-down costs is charged to the income statement.
Use of estimates and judgements - overview
The preparation of financial statements in conformity with
adopted IFRS requires management to make judgements and estimates
that affect the application of policies and reported amounts of
assets, liabilities, income, expenses and contingent assets and
liabilities. Estimates and assumptions mainly relate to the useful
life of non-current assets, the discounted cash flows used in
impairment testing, taxes, share-based payments and inventory
valuations. Estimates are based on historical experience and other
assumptions that are considered reasonable under the circumstances.
Actual values may vary from the estimates. The estimates and the
assumptions are under continuous review with particular attention
paid to the life of material plant.
Critical accounting and valuation policies and methods are those
that are both most important to the depiction of the Group's
financial position, results of operations and cash flows and that
require the application of subjective and complex judgements, often
as a result of the need to make estimates about the effects of
matters that are inherently uncertain and may change in subsequent
years. The critical accounting policies that the Group discloses
will not necessarily result in material changes to our financial
statements in any given year but rather contain a potential for
material change. The main accounting and valuation policies used by
the Group are outlined in the following notes. While not all of the
significant accounting policies require subjective or complex
judgements, the Group considers that the following accounting
policies should be considered critical accounting policies.
Use of estimates - deferred taxes
To compute provisions for taxes, judgements have to be
applied.
There is a risk that an intra-group compensation payment could
be challenged by tax authorities under transfer pricing rules
resulting in a higher tax liability. The Group believe this
likelihood is remote and have not recognised a provision.
Other estimates involve assessing the probability that deferred
tax assets resulting from deductible temporary differences and tax
losses can be utilised to offset taxable income in the future.
Due to the lack of certainty around future profits, all deferred
tax assets continue to be unrecognised in the year's balance
sheet.
Use of estimates - inventory valuation
Given the decline in market prices for silicon wafers to below
the Group's cost of production, the carrying amount of inventory is
recorded at net realisable value.
Net realisable value has been determined as estimated selling
price less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution.
Basis of consolidation
The Group financial statements consolidate those of the Group
and its subsidiary undertakings drawn up to 31 December 2019.
Subsidiaries are entities over which the Group has the power to
control the financial and operating policies so as to obtain
benefits from its activities. The Group obtains and exercises
control through voting rights.
The results of any subsidiary sold or acquired are included in
the Consolidated Statement of Comprehensive Income up to, or from,
the date control passes.
Consolidation is conducted by eliminating the investment in the
subsidiary with the parent's share of the net equity of the
subsidiary.
On acquisition of a subsidiary, all of the subsidiary's
separately identifiable assets and liabilities existing at the date
of acquisition are recorded at their fair value reflecting their
condition at that date. Goodwill arises where the fair value of the
consideration given for a business exceeds the fair value of such
net assets. So far no acquisitions have taken place since inception
of the Group.
Amounts reported in the financial statements of subsidiaries
have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group. All intra-group
transactions, balances, income and expenses are eliminated upon
consolidation.
Going concern
The Group's directors are required to make an assessment as to
whether it is appropriate to prepare the financial statements on a
going concern basis by considering the Group's ability and
intention to continue in business.
The Group has been operating a cash conservation strategy to
maximise cash held and to enable the Group to manage its operations
whilst market conditions remain difficult. A description of the
market conditions and the Group's plans are included in the
Strategic Report.
On 31 December 2019 there was a net cash balance of EUR8.6
million. As part of its normal business practice, the Group
regularly prepares both annual and longer-term plans which are
based on the directors' expectations concerning key assumptions.
Within these plans the directors have included returning a maximum
of GBP2 million to shareholders through a tender offer. The GBP2
million is dependent on receiving EUR0.9m from customers relating
to historic settlements that are not recorded in the balance sheet
as receivables at 31 December 2019. If the EUR0.9m is not received
then the return to shareholders will be reduced accordingly. The
directors, after careful consideration and after making appropriate
enquiries, are of the opinion that the levels of net cash outflows
remain low such that Group has sufficient cash to continue in
operational existence for at least twelve months from the date of
approval of the financial statements, in March 2020.
The Group intends to continue operations at PV Crystalox Solar
Silicon GmbH, in Germany which involve the cutting of silicon and
non-silicon materials together with a continued focus on research
and development activities. Once the Group has resolved the issues
surrounding the transfer pricing risks with the German tax
authorities a sale to a third party or a transfer of the business
to the existing management team remains our ultimate objective.
As a result of this assessment the directors have concluded that
the Group has the ability and the intention to continue in
business. It should be noted that whilst the Group and PV Crystalox
Solar Silicon GmbH have been prepared on a going concern basis the
operations at Crystalox Limited have not following the announcement
on 13 July 2017 that Group intended to cease United Kingdom
manufacturing operations in H2 2017.
Effects of new accounting pronouncements
Accounting standards, IFRICs and other guidance in effect or
applied for the first time in 2019
-- IFRS 16 'Leases'
-- IFRIC 23 'Uncertainty over income tax treatments'
IFRS 16 'Leases' and IFRIC 2315 'Uncertainty over income tax
treatments' are new accounting standards that are effective for the
year ended 31 December 2019. As explained, IFRS 16 and IFRIC 23
were adopted without restating comparative information. The new
accounting policies are set out in note 1.
a) IFRS 16 'Leases'
IFRS 16 replaces the provisions of IAS 17. The core principle of
the guidance is that leases are to be accounted for by recognising
a right-of-use asset and a lease liability except for leases of low
value assets and leases with a duration of 12 months or less. Where
this is the case it is permitted to expense lease payments over the
lease term without the requirement to recognise a
right-of-use-asset and a corresponding liability on the balance
sheet. The Group's property leases are all short term in nature and
other leases are low value assets. As a result the Group has taken
advantage of the permitted exemptions.
b) IFRIC 23 'Uncertainty over income tax treatments'
IFRIC 23 applies where there is uncertainty over the acceptable
income tax treatment of an item. For the Group this a risk that an
intra-group compensation payment made in 2018 could be challenged
by tax authorities under transfer pricing rules resulting in a
higher tax liability. The Directors consider it probable that their
position will ultimately be accepted by the tax authorities and
have therefore not recorded a provision. It is probable that the
Group will incur legal and professional fees as a result of
defending the position but, given the early stage of the dispute,
it is not possible to meaningfully quantify those costs that may be
incurred at the date the balance sheet.
The above have not made a material difference to the financial
statements.
In Issue, but not yet effective
-- Amendments to IFRS 3 - Definition of business
-- Amendments to IAS 1 and IAS 8 - Definition of material
The Group does not believe that any of these will have a
material impact on the Group's financial positions, results of
operations or cash flows, but will complete a full exercise
assessing their impact during 2020.
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
IFRS 16 replaces the provisions of IAS 17. It was adopted on 1
January 2019 but the Group has not restated comparatives for the
2019 reporting period, as permitted under the specific transition
provisions in the standard.
The objective of IFRS 16 is to report information that (a)
faithfully represents lease transactions and (b) provides a basis
for users of financial statements to assess the amount, timing and
uncertainty of cash flows arising from leases. To meet that
objective, a lessee should recognise assets and liabilities arising
from a lease.
IFRS 16 introduces a single lessee accounting model and requires
a lessee to recognise assets and liabilities for all leases with a
term of more than 12 months, unless the underlying asset is of low
value. A lessee is required to recognise a right-of-use asset
representing its right to use the underlying leased asset and a
lease liability representing its obligation to make lease
payments.
Where the lessee elects not to apply the requirements in
paragraphs 22-49 to either short-term leases or leases for which
the underlying asset is of low value, the lessee shall recognise
the lease payments associated with those leases as an expense on a
straight-line basis over the lease term.
For the reporting year all leases were short-term or low value
so expenses for these leases have been recognised on a straight
line basis over the lease term. The impact to the Group at 1
January 2019 was immaterial and therefore no adjustment was
recorded to equity for the adoption of IFRS 16 at that date.
Other income
Income other than that from sale of silicon products and slicing
services is recognised at the point of entitlement to receipt and
shown as other income.
Financial instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument. Financial instruments are
recorded initially at fair value net of transaction costs.
Subsequent measurement depends on the designation of the
instrument, as follows:
Amortised cost
-- short-term borrowing, overdrafts and long-term loans are held at amortised cost; and
-- accounts payable which are not interest bearing are
recognised initially at fair value and thereafter at amortised cost
under the effective interest method.
Loans and receivables
-- Trade receivables are amounts due from customers for goods
sold or services performed in the ordinary course of business.
Trade receivables are recognised initially at the amount of
consideration that is unconditional. The group holds the trade
receivables with the objective of collecting the contractual cash
flows, and so it measures them subsequently at amortised cost using
the effective interest method.
-- 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 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.
Accruals
Accruals are recognised when an obligation to meet an outflow of
economic benefit in the future arises at the balance sheet
date.
Accruals are initially recognised at fair value and subsequently
at amortised cost using the effective interest method.
Revenue recognition
Revenue is recognised in according with the requirements of IFRS
15 'Revenue from Contracts with Customers'. The Company recognises
revenue to depict the transfer of promised goods and services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. This core principle is delivered in a five-step model
framework:
1. Identify the contract(s) with the customer;
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to the performance obligations in the contract; and
5. Recognise revenue when (or as) the entity satisfy a performance obligation.
Revenue is recognised when control of the products have been
transferred to the customer. Control is considered to have
transferred once products have been received by the customer unless
shipping terms dictate any different. Revenues exclude intra-group
sales and value added taxes and represent net invoice value less
estimated rebates, returns and settlement discounts. The net
invoice value is measured by reference to the fair value of
consideration received or receivable by the Group for goods
supplied.
Finance income and costs
Net financing costs comprise interest payable on borrowings
calculated using the effective interest rate method, interest
receivable on funds invested, dividend income and gains and
financial income and costs relating to the defined benefit pension
scheme.
Interest income is recognised in the Consolidated Statement of
Comprehensive Income as it accrues, using the effective interest
method.
Defined contribution pension plan
For defined contribution plans, the Group pays contributions to
pension insurance plans on a contractual basis. The Group has no
further payment obligations once the contributions have been paid.
The contributions are recognised as employee benefit expenses when
they are incurred.
Employee Benefit Trust
All assets and liabilities of the Employee Benefit Trust ("EBT")
have been consolidated in these financial statements as the Group
has de facto control over the trust's net assets as the parent of
its sponsoring company.
Share-based payments
The Group has applied the requirements of IFRS 2, 'Share-based
Payments'. The Group issues equity-settled share-based payments to
certain employees. These are measured at their fair value at the
date of the grant using an appropriate option pricing model and are
expensed over the vesting year, based on the Group's estimate of
the number of shares that will eventually vest. Grants of shares
made during 2008 and 2007 are not subject to performance criteria
and were valued at the date of the grant at market value. During
2011 awards were granted under the Performance Share Plan to
employees. The share options granted are subject to performance
criteria required for the option to vest and are considered in the
method of measuring fair value. Fair value is assessed using the
Black-Scholes method.
Charges made to the Consolidated Statement of Comprehensive
Income in respect of share-based payments are credited to the
share-based payment reserve.
Shareholders' equity
Shareholders' equity is comprised of the following balances:
-- share capital is comprised of 7,285,408 ordinary shares of 3.0206 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, following the capital reorganisation in
May 2019 the value of share premium at 31 December 2019 is
EURnil;
-- other reserves arising from the issue and redemption of B
shares in 2013, following the capital reorganisation in May 2019
the value of other reserves at 31 December 2019 is EURnil;
-- investment in own shares is the Group's shares held by the
EBT that are held in trust for the benefit of employees;
-- share-based payment reserve is the amount charged to the
Consolidated Statement of Comprehensive Income in respect of shares
already granted or options outstanding relative to the vesting date
or option exercise date;
-- the reverse acquisition reserve is the difference between the
value of the assets acquired and the consideration paid by way of a
share for share exchange on 5 January 2007;
-- accumulated losses is the cumulative loss retained by the Group; and
-- currency translation reserve represents the differences
arising from the currency translation of the net assets in
subsidiaries.
2. Segment reporting
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance, has been identified
as the Group Board. The Group is organised around the production
and supply of wafers from silicon and non-silicon materials.
Accordingly, the Board reviews the performance of the Group as a
whole and there is only one operating segment. Disclosure of
reportable segments under IFRS 8 is therefore not made.
Geographical information 2019
United Rest of Rest of
Taiwan Germany Kingdom Europe world Group
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------------------------- -------- -------- -------- -------- -------- --------
Revenues
By entity's country of domicile - 531 - - - 531
By country from which derived - 426 - - 105 531
--------------------------------- -------- -------- -------- -------- -------- --------
Non-current assets([) *(])
By entity's country of domicile - 38 - - - 38
--------------------------------- -------- -------- -------- -------- -------- --------
Four customers accounted for more than 10% of Group revenue and
sales to the customers based in Germany were EUR171,000, EUR90,000
and EUR69,000 with sales to one customer based in Korea of
EUR105,000.
Geographical information 2018
Rest
Taiwan United of Rest of
Germany Kingdom Europe world Group
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------------------------- -------- -------- -------- -------- -------- --------
Revenues
By entity's country of domicile - 350 5,958 - - 6,308
By country from which derived 5,958 274 - - 76 6,308
--------------------------------- -------- -------- -------- -------- -------- --------
Non-current assets*
By entity's country of domicile - 51 - - - 51
--------------------------------- -------- -------- -------- -------- -------- --------
One customer in Taiwan accounted for more than 10% of Group
revenue, with sales to this customer of EUR5,958 (figures in
EUR'000).
3. Cost of materials and services
The cost of materials is attributable to the consumption of
silicon, ingots, wafers, chemicals and other consumables as well as
the purchase of merchandise.
2019 2018
EUR'000 EUR'000
---------------------------------------------------------- -------- --------
Cost of raw materials, supplies and purchased merchandise 117 3,904
Change in unfinished and finished goods 48 2,939
Purchased services 222 535
---------------------------------------------------------- -------- --------
Cost of materials and services 387 7,378
---------------------------------------------------------- -------- --------
4. Personnel expenses
2019 2018
EUR'000 EUR'000
------------------------------------------ -------- --------
Staff costs for the Group during the year
Wages and salaries 1,497 3,952
Social security costs 247 517
Other pension costs 42 56
Employee share schemes (281) 42
Total 1,505 4,567
------------------------------------------ -------- --------
Employees
The Group employed a monthly average of 23 employees during the
year ended 31 December 2019 (2018: 64).
2019 2018
Number Number
--------------- ------- -------
Germany 20 60
United Kingdom 3 4
--------------- ------- -------
23 64
--------------- ------- -------
2019 2018
Number Number
--------------- ------- -------
Production 16 28
Administration 7 36
--------------- ------- -------
23 64
--------------- ------- -------
The Group employed 22 employees at 31 December 2019 (31 December
2018: 24).
The remuneration of the Board of Directors, including
appropriations to pension accruals, is shown in the Directors'
Remuneration Report.
5. Other income
2019 2018
EUR'000 EUR'000
----------------------------------------------------------- -------- --------
Customer compensations - 8,161
Gain on disposals of assets held for sale/ property, plant
and equipment 70 369
Sale of uncapitalised assets - 339
Research and development grants 372 382
Miscellaneous 117 305
----------------------------------------------------------- -------- --------
559 9,556
----------------------------------------------------------- -------- --------
Customer compensations relate to the realisation of payments
received in respect of unfulfilled customer purchase obligations
and includes EURnil million (2018: EUR8.2 million) in relation to
the arbitration award/settlement agreement.
6. Other expenses
2019 2018
EUR'000 EUR'000
----------------------------------------------- -------- --------
Lease expenses 419 426
Repairs and maintenance 30 47
Technical consulting, research and development 61 68
Legal costs 143 530
Other professional services 383 517
Insurance premiums 59 99
Travel and advertising expenses 22 44
Staff related costs 21 29
Other 75 265
----------------------------------------------- -------- --------
1,213 2,025
----------------------------------------------- -------- --------
Amounts payable to the Group's auditors
2019 2018
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 88 83
Fees payable to the Company's auditors and their associates
for other services:
- The audit of the Company's subsidiaries pursuant to legislation 43 45
- Other assurance services - 4
------------------------------------------------------------------ -------- --------
131 132
------------------------------------------------------------------ -------- --------
7. Finance income
Finance income and costs are derived/incurred on financial
assets/liabilities and recognised under the effective interest
method.
2019 2018
EUR'000 EUR'000
--------------- -------- --------
Finance income 46 64
--------------- -------- --------
8. Income taxes
2019 2018
EUR'000 EUR'000
------------------------------------------ -------- --------
Current tax:
Current tax on (loss)/profit for the year (158) (140)
Adjustment in respect of prior years - 404
------------------------------------------ -------- --------
Total current tax (158) 264
------------------------------------------ -------- --------
Deferred tax (note 22):
Total deferred tax - -
------------------------------------------ -------- --------
Total tax (credit)/charge (158) 264
------------------------------------------ -------- --------
The total tax rate for the German companies is 32.275% (2018:
32.275%). The total tax rate in the United Kingdom was 19% (2018:
19.0%). These rates are based on the legal regulations applicable
or adopted at the balance sheet date.
The rate of corporation tax in the United Kingdom and Germany
rate will be unchanged in 2020. The impact of these changes is not
expected to be material.
The tax on the Group's results before tax differs from the
theoretical amount that would arise using the effective UK tax rate
applicable to the losses of the consolidated entities as
follows:
2019 2018
EUR'000 EUR'000
--------------------------------------------------------- -------- --------
(Loss)/profit before tax (2,438) 1,627
--------------------------------------------------------- -------- --------
Expected income tax charge at United Kingdom tax rate of
19.00% (2017: 19.25%) (463) 309
Adjustments for foreign tax rates (159) -
Unrecognised adjustments to deferred tax 563 (395)
Adjustment in respect of prior years - 264
Utilisation of tax losses and other deductions (158) -
Expenses not deductible for tax 59 86
--------------------------------------------------------- -------- --------
Total tax (credit) / charge (158) 264
--------------------------------------------------------- -------- --------
9. Actuarial gains on defined benefit scheme
Actuarial losses represent the net of movements in the defined
benefit obligation and the asset value of the Group's defined
benefit pension scheme.
Following the transfer of the last remaining pension obligation
to an insurance company there was loss of EUR126k being a EUR791k
release of benefit obligation and EUR917k decrease in value of the
plan assets in the year ending 31 December 2018.
10. Earnings per share
Net earnings per share is computed by dividing the net profit
for the year attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year.
Diluted net earnings per share is computed by dividing the net
profit for the year by the weighted average number of ordinary
shares outstanding and, when dilutive, adjusted for the effect of
all potentially dilutive shares, including share options.
2019 2018
----------------------------------------------- ---------- -----------
Basic shares (average) 72,054,280 158,305,912
Basic (loss)/earnings per share (Euro cents) (3.2) 0.9
Diluted shares (average) 72,079,013 159,250,047
Diluted (loss)/earnings per share (Euro cents) (3.2) 0.9
----------------------------------------------- ---------- -----------
Basic shares and diluted shares for this calculation can be
reconciled to the number of issued shares (see note 24) as
follows:
2019 2018
------------------------------------------------------------ ------------ -----------
Shares in issue (see note 24) 160,278,975 160,278,975
Share consolidation (including EBT shares) (87,324,900) -
Weighted average number of EBT shares held (899,795) (1,973,063)
------------------------------------------------------------ ------------ -----------
Weighted average number of shares for basic EPS calculation 72,054,280 158,305,912
Dilutive share options 24,733 944,135
------------------------------------------------------------ ------------ -----------
Weighted average number of shares for fully diluted
EPS calculation 72,079,013 159,250,047
------------------------------------------------------------ ------------ -----------
11. Intangible assets
Intangible assets relate to software licences.
Total
EUR'000
------------------------- -----------
Cost
At 1 January 2019 801
Additions 2
------------------------- -----------
Disposals (3)
------------------------- -----------
At 31 December 2019 800
------------------------- -----------
Accumulated amortisation
At 1 January 2019 801
Charge for the year -
Disposals (3)
------------------------- -----------
At 31 December 2019 798
------------------------- -----------
Net book amount
------------------------- -----------
At 31 December 2019 2
------------------------- -----------
At 31 December 2018 -
------------------------- -----------
Total
EUR'000
-------------------------- ---------
Cost
At 1 January 2018 824
Disposals (23)
At 31 December 2018 801
-------------------------- ---------
Accumulated amortisation
At 1 January 2018 818
Charge for the year 4
Impairment 2
Disposals (23)
At 31 December 2018 801
-------------------------- ---------
Net book amount
At 31 December 2018 -
-------------------------- ---------
At 31 December 2017 6
-------------------------- ---------
12. Property, plant and equipment ("PPE")
Other
Plant and furniture and
machinery equipment Total
EUR'000 EUR'000 EUR'000
--------------------------------- ---------- --------------- ----------
Cost
At 1 January 2019 20,423 2,805 23,228
Additions - 10 10
Disposals (8,642) (220) (8,862)
Reclassification 49 (49) -
--------------------------------- ---------- --------------- ----------
At 31 December 2019 11,830 2,546 14,376
--------------------------------- ---------- --------------- ----------
Accumulated depreciation
At 1 January 2019 20,392 2,785 23,177
Depreciation charge for the year 17 8 25
Reclassification 40 (40) -
On disposals (8,642) (220) (8,862)
--------------------------------- ---------- --------------- ----------
At 31 December 2019 11,807 2,533 14,340
--------------------------------- ---------- --------------- ----------
Net book amount
--------------------------------- ---------- --------------- ----------
At 31 December 2019 23 13 36
--------------------------------- ---------- --------------- ----------
At 31 December 2018 31 20 51
--------------------------------- ---------- --------------- ----------
Other
Plant and furniture and
machinery equipment Total
EUR'000 EUR'000 EUR'000
---------------------------------- ---------- --------------- --------
Cost
At 1 January 2018 25,270 2,890 28,160
Additions 6 47 53
Disposals (4,853) (132) (4,985)
At 31 December 2018 20,423 2,805 23,228
---------------------------------- ---------- --------------- --------
Accumulated depreciation
At 1 January 2018 24,802 2,707 27,509
Depreciation charge for the year 43 29 72
Impairment charge for the year 400 179 579
On disposals (4,853) (130) (4,983)
At 31 December 2018 20,392 2,785 23,177
---------------------------------- ---------- --------------- --------
Net book amount
At 31 December 2018 31 20 51
---------------------------------- ---------- --------------- --------
At 31 December 2017 468 183 651
---------------------------------- ---------- --------------- --------
13. 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
-------------------
2019 2018
EUR'000 EUR'000
------------------------- --------- --------
Cash at bank and in hand 8,608 53,964
------------------------- --------- --------
8,608 53,964
------------------------- --------- --------
14. Trade accounts receivable
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
-------- --------- --------
Germany 27 40
-------- --------- --------
27 40
-------- --------- --------
All receivables have short-term maturity. During the year
receivables of EURnil were written off (2018: EURnil).
All amounts outstanding as at 31 December 2019 and due at date
of signing had been received, consequently there is no provision
for doubtful debts (2018: EURnil).
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.
15. Inventories
Inventories include finished goods as well as production
supplies. The change in inventories is included in the Consolidated
Statement of Comprehensive Income in the line "Cost of
materials".
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
------------------ --------- --------
Finished products 3 53
Work in progress 2 -
Raw materials 67 72
------------------ --------- --------
72 125
------------------ --------- --------
EURnil of inventory write downs are included in cost of
materials in 2019 (2018: EUR591,000).
16. Income tax claims
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
-------- --------- --------
Germany 158 -
-------- --------- --------
158 -
-------- --------- --------
Income tax recoverable relates to carry back of 2019 losses
against 2018 taxable profits.
17. Assets held for sale
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
--------------- --------- --------
At 1 January - 390
Sold - (390)
--------------- --------- --------
At 31 December - -
--------------- --------- --------
The brought forward assets held for sale had an estimated fair
value of EURNil (2018:EUR586,000).
18. Prepaid expenses and other assets
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
--------------------- --------- --------
VAT 21 36
Prepaid expenses 62 59
Energy tax claims 33 26
Other current assets 55 416
--------------------- --------- --------
171 537
--------------------- --------- --------
Other current assets in 2018 include EUR0.3 million in relation
to the sale of the insurance asset. The payment for this was
received in January 2019.
19. Trade accounts payable
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
--------------- --------- --------
United Kingdom 22 18
Germany 82 81
--------------- --------- --------
104 99
--------------- --------- --------
20. Accrued expenses
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
------------------------------- --------- --------
Rents and ancillary rent costs 134 129
Salary related costs 30 183
Other accrued expenses 357 599
------------------------------- --------- --------
521 911
------------------------------- --------- --------
21. Current taxes liabilities
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
--------------- --------- --------
United Kingdom - 405
Germany 943 943
--------------- --------- --------
943 1,348
--------------- --------- --------
Current tax liabilities comprises corporation and other non-tax
liabilities, calculated or estimated by the Group companies, as
well as corresponding taxes abroad due to local tax laws, including
probable amounts arising on completed or current tax audits.
In the prior years, other income was received into PV Crystalox
Solar Silicon (PVCSS), the German subsidiary company, from its
customer in settlement of all claims and obligations relating to
the wafer supply contract and arbitration award. As a result of
this contractual breach and the fact that physical delivery of
wafers was foregone, PVCSS did not purchase the agreed silicon
block quantities from Crystalox Limited. As compensation for the
shortfall in block volumes a settlement was paid to Crystalox
Limited. The group is in discussions with the German tax
authorities regarding this onward settlement and it is possible
that this will result in a higher tax liability, up to a maximum of
EUR1.9 million, due to different tax rates in the two jurisdictions
and tax attributes available for offset. Management consider it
probable that their position will ultimately be accepted by the tax
authorities and have therefore not recorded a provision. It is
probable that the group will incur legal and professional fees as a
result of defending the position but, given the early stage of the
dispute, it is not possible to meaningfully quantify those costs
that may be incurred at the date of the financial statements.
22. Deferred tax liabilities
Deferred tax assets arising as a result of losses are recognised
where, based on the Group's budget, they are expected to be
realised in the foreseeable future.
As at 31 December 2019 there were unrecognised potential
deferred tax assets in respect of losses of EUR46.8 million (2018:
EUR43.8 million).
Deferred tax liabilities
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
-------------- -------- ---------
United Kingdom - -
Germany - -
-------------- -------- ---------
- -
-------------- -------- ---------
Deferred tax liabilities, calculated or estimated by the Group
companies, comprise taxes payable due to local tax laws, including
probable amounts arising on completed or current tax audits.
Movement in the year is shown below.
2019 2018
EUR'000 EUR'000
---------------------------- -------- --------
As at 1 January - 1,084
Charged to income statement - (1,084)
---------------------------- -------- --------
As at 31 December - -
---------------------------- -------- --------
23. Other current liabilities
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
-------------------- --------- --------
Payroll liabilities 13 21
-------------------- --------- --------
13 21
-------------------- --------- --------
As at 31 December
-------------------
2019 2018
EUR'000 EUR'000
----------- --------- --------
Short term 13 21
13 21
----------- --------- --------
24. Share capital
2019 2018
EUR'000 EUR'000
------------------------------------------------------------------ -------- --------
Allotted, called up and fully paid
7,285,408 ordinary shares of 3.0206 pence each (2018: 160,278,975
ordinary shares of 5.2 pence each) 326 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 2019, 89,684 ordinary shares of 3.0206 pence were
held by the EBT (2018: 1,973,063). The market value of these shares
was EUR66,000 (2018: EUR550,000). Additionally, the cash balance
held by the EBT on 31 December 2019 was EUR1,192,000 (2018:
EUR595,000).
As at 31 December
------------------------------------------------------------ ----------------------
2017 2018
Shares held by the EBT Number Number
------------------------------------------------------------ ----------- ---------
Opening balance 1,973,063 1,973,063
Share consolidation (1,883,379) -
Closing balance of shares at 3.0206 pence (2017: 5.2 pence) 89,684 1,973,063
------------------------------------------------------------ ----------- ---------
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.
During the year the Group had two share incentive plans in
operation which are satisfied by grants from the EBT.
PV Crystalox Solar PLC Executive Directors' Deferred Share Plan
("EDDSP")
At the AGM on 28 May 2009 a bonus plan (with deferred share
element) for executive directors was approved by the Company's
shareholders in the context of bringing the arrangements more in
line with market practice and aligning executive directors' pay
more closely with the interests of the Company's shareholders. Half
of each bonus was to be payable in cash and the other half deferred
and payable in shares under the EDDSP, which vests three years
after the award date. Awards of deferred shares under the EDDSP are
to be satisfied on vesting by the transfer of shares from the
existing PV Crystalox Solar PLC Employee Benefit Trust.
On 31 March 2017 awards over 544,135 shares were made to Iain
Dorrity, as detailed in the Directors' Remuneration Report. No
awards were made during 2018 or 2019. As a result of the share
consolidation the number of shares subject to the award were
reduced by 519,402 to 24,733.
Market Value Option ("MVO")
An MVO is an option with an exercise price per share equal to
the market value of a share on the date of grant. The vesting
period of each award is three years from the date of grant and the
award must be exercised no later than ten years following the date
of grant.
On 24 November 2008 an MVO over 200,000 ordinary shares was
granted to a senior employee and this option was exercisable from
24 November 2011 at GBP1.00 per share subject to agreed performance
criteria. This option was forfeited when the employee left the
Group in May 2018.
On 26 March 2009 an MVO over 200,000 ordinary shares was granted
to a senior employee and this option is exercisable from 26 March
2012 at 76.0 pence per share subject to agreed performance
criteria, and on 25 September 2009 MVO awards over 1,200,000
ordinary shares were granted to key senior employees and these
options are exercisable from 25 September 2012 at 76.9 pence per
share subject to agreed performance criteria.
One of the employees to whom an award over 200,000 ordinary
shares was issued on 25 September 2009 left the Group after the
closure of PV Crystalox Solar KK during 2016 and the award was
forfeited. Two employees to whom awards over 400,000 ordinary
shares were issued on 25 September 2009 left the Group after being
made redundant from Crystalox Limited during in April and May 2018
and the awards were forfeited. One of the employees to whom an
award over 200,000 ordinary shares was issued on 25 September 2009
left the Group to pursue other career opportunities during October
2018 and the award was forfeited.
Awards over 400,000 shares were forfeited in 2019 (2018:
800,000). There were two awards exercisable at 1 January 2019: one
over 200,000 shares at an exercise price of 76.0 pence per share
expired on 26 March 2019; the other over 200,000 shares at an
exercise price of 76.9 pence per share expired on 25 September
2009.
The Group recognised a total credit before tax of EUR37,000
(2018: EUR132,000) related to equity-settled share-based payment
transactions during the year.
The number of share options and weighted average exercise price
("WAEP") for each of the schemes is set out as follows:
MVO WAEP
EDDSP* MVO price
Number Number Pence
---------------------------------------- --------- --------- --------
Share grants and options outstanding
at 1 January 2018 544,135 1,200,000 79.7
Share grants and options granted during - - -
the year
Share grants and options forfeited
during the year - (800,000) -
------------------------------------------ --------- --------- --------
Share grants and options outstanding
at 31 December 2018 544,135 400,000 76.5
------------------------------------------ --------- --------- --------
Exercisable at 31 December 2018 - 400,000 76.5
------------------------------------------ --------- --------- --------
Share grants and options granted during - - -
the year
Share grants and options expired during
the year - (400,000) -
Impact of share consolidation (519,402) - -
Options exercised during the year - - -
---------------------------------------- --------- --------- --------
Share grants and options outstanding
at 31 December 2019 24,733 - -
------------------------------------------ --------- --------- --------
Exercisable at 31 December 2019 - - -
------------------------------------------ --------- --------- --------
* The weighted average exercise price for the EDDSP 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
Credit risk arises from cash and cash equivalents, as well as
credit exposure to customers including outstanding receivables. The
main credit risk arises from accounts receivable. All trade
receivables are of a short-term nature, with maximum payment terms
of 60 days, although the majority of customers currently have
payment terms of 45 days. In order to manage credit risk, local
management defines limits for customers based on a combination of
payment history and customer reputation. Credit limits are reviewed
by local management on a regular basis. Where appropriate, the
Group requests payment or part payment in advance of shipment,
which generally covers the cost of the goods. Different forms of
retention of title are used for security depending on local
restrictions prevalent on the respective markets. The maximum
credit risk to the Group is the total of trade accounts receivable
details of which can be seen in note 14.
Cash is not considered to be a high credit risk due to all funds
being immediately available, consideration being given to the
institution in which it is deposited and the setting of
counterparty limits. All institutions used have a minimum Moody's
credit rating of A3.
Exchange rate fluctuation risks
Significant cash funds are denominated in currencies other than
the presentational currency of the Group. Excess cash funds not
needed for local sourcing are exposed to exchange rate and
associated interest fluctuation risks, particularly so in the
United Kingdom. The exchange rate risk is based on assets held in
currencies other than Euros.
The following exchange rates were used to translate individual
companies' financial information into the Group's presentational
currency:
Average Year-end
rate rate
--------------- ------- --------
Euro:US Dollar 1.1194 1.1215
Sterling:Euro 1.1414 1.1755
--------------- ------- --------
During 2019 the net loss on foreign currency adjustments was
EUR0.4 million (2018: gain of EUR0.3 million).
In addition to the above, upon translation of net assets in the
consolidation, there was a Positive impact in 2019 of EUR0.7
million (2018: negative impact of EUR0.5 million) recording as a
currency translation adjustment which is shown in the Consolidated
Statement of Comprehensive Income as "other comprehensive
income".
Interest rate risk
The Group has limited exposure to interest rate fluctuation
risks, since the Group does not have any borrowings.
Sensitivity analysis of the accruals and loans outstanding at
the year end has not been disclosed as these are all current and
paid in line with standard payment terms.
The Group had a cash balance at the end of 2019 of EUR8.6
million (2018: EUR54.0 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 EURnil in the year
(2018: EUR0.1 million). The Group is cash positive and current
interest rates are low. The risk of interest rates falling is
considered small and in any case would have a small impact on the
Group's income statement and cash flows. Group management considers
that in the medium term it is more likely that interest rates might
rise. The impact of interest rate rises would positively impact the
Group's profits and cash flow.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
On 31 December 2019 the Group had a net cash balance of EUR8.6
million (2018: EUR54.0 million) and this together with cash flow
projections from the cash conservation plan indicate, assuming the
projections are broadly correct, that the Group will have adequate
cash reserves until at least twelve months beyond the signing of
the accounts.
Financial assets and liabilities
Fair value of financial instruments
There is no significant difference between the book values and
fair values of the financial assets and liabilities of the Group
and the latter are reviewed on a regular basis to ensure that no
such exposure arises or, if it does, to enable the Group to take
action to mitigate or eliminate any such potential loss. The
carrying value of financial assets and liabilities is summarised in
the table below:
2019 2018
EUR'000 EUR'000
--------------------------------------------- -------- --------
Financial assets measured at amortised cost:
Cash and cash equivalents 8,608 53,964
Accounts receivable 27 40
Prepaid expenses and other assets 171 537
Current tax asset 158 -
-------- --------
8,964 54,541
--------------------------------------------- -------- --------
Financial assets measured at amortised cost:
Accounts payable trade (104) (99)
Accrued expenses (521) (911)
(625) (1,010)
--------------------------------------------- -------- --------
Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns to shareholders and other stakeholders and to
maintain an optimal capital structure that strikes the appropriate
balance between risk and the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
debt.
The Group defines capital as all elements of equity.
The Group's capital (plus its cash and cash equivalents) is set
out in the following table. The Group is not subject to any
externally imposed capital requirements.
2019 2018
EUR'000 EUR'000
---------------------------------------- -------- --------
Cash and cash equivalents (see note 13) 8,608 53,964
Total net cash 8,608 53,964
---------------------------------------- -------- --------
Total equity 7,493 52,338
---------------------------------------- -------- --------
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.
In the prior years, other income was received into PV Crystalox
Solar Silicon (PVCSS), the German subsidiary company, from its
customer in settlement of all claims and obligations relating to
the wafer supply contract and arbitration award. As a result of
this contractual breach and the fact that physical delivery of
wafers was foregone, PVCSS did not purchase the agreed silicon
block quantities from Crystalox Limited. As compensation for the
shortfall in block volumes a settlement was paid to Crystalox
Limited. The group is in discussions with the German tax
authorities regarding this onward settlement and it is possible
that this will result in a higher tax liability, up to a maximum of
EUR1.9 million, due to different tax rates in the two jurisdictions
and tax attributes available for offset. Management consider it
probable that their position will ultimately be accepted by the tax
authorities and have therefore not recorded a provision. It is
probable that the group will incur legal and professional fees as a
result of defending the position but, given the early stage of the
dispute, it is not possible to meaningfully quantify those costs
that may be incurred at the date of the financial statements.
29. Other financial obligations
Lease agreements
The leases primarily relate to rented buildings and have terms
of less than 12 months.
Payments associated with short term leases and all low value
assets are recognised on a straight line basis as an expense in
profit and loss. Low value assets mainly comprise vehicles leased
in Germany.
The Income statement shows the following amounts relating to
leases
2019 2018
EUR'000 EUR'000
---------- -------- --------
Buildings 412 414
Vehicles 6 12
---------- -------- --------
419 426
---------- -------- --------
The future minimum lease payments are as follows:
As at 31 December
----------------------- -------------------
2019 2018
EUR'000 EUR'000
----------------------- --------- --------
Less than one year 286 392
Two to five years - -
Longer than five years - -
----------------------- --------- --------
286 392
----------------------- --------- --------
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. Capital reorganisation, return of capital and dividends
paid
Following approval by shareholders at a general meeting in May
2019 the Group reorganised its capital structure by reducing the
share premium account and nominal value of the ordinary shares. In
June 2019 a return of this capital was made to all shareholders of
5.2 pence ordinary shares which gave shareholders a return of 22
pence per 5.2 pence ordinary share. The total shareholder return
was EUR43.423 million. The return of capital was accompanied by a 1
for 22 share consolidation. The return of capital was approved by
shareholders at a general meeting on 14 May 2019.
No dividends were paid in 2019 (2018: EURnil).
32. Post-balance sheet events
There are no significant post-balance sheet events.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UWRURROUOAUR
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