Interim / Quarterly Report • Oct 27, 2014
Interim / Quarterly Report
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| CONSOLIDATED STATEMENT OF PROFIT OR LOSS | Unit | H1 2014/15 | H1 2013/14 |
|---|---|---|---|
| Revenue | € in thousands | 302,077 | 299,933 |
| thereof produced in Asia | % | 76% | 75% |
| thereof produced in Europe | % | 24% | 25% |
| EBITDA | € in thousands | 72,297 | 65,412 |
| EBITDA margin | % | 23.9% | 21.8% |
| EBIT | € in thousands | 39,928 | 30,567 |
| EBIT margin | % | 13.2% | 10.2% |
| Profit for the period | € in thousands | 28,445 | 21,957 |
| attributable to owners of the parent company | € in thousands | 28,416 | 21,940 |
| Cash earnings | € in thousands | 60,785 | 56,785 |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | 30 Sep 2014 | 31 Mar 2014 | |
| Total assets | € in thousands | 1,057,190 | 916,059 |
| Total equity | € in thousands | 465,141 | 390,680 |
| Equity attributable to owners of the parent company | € in thousands | 465,101 | 390,682 |
| Net debt | € in thousands | 179,989 | 110,874 |
| Net gearing | % | 38.7% | 28.4% |
| Net working capital | € in thousands | 126,226 | 91,722 |
| Net working capital per revenues | % | 20.9% | 15.6% |
| Equity ratio | % | 44.0% | 42.7% |
| CONSOLIDATED STATEMENT OF CASH FLOWS | H1 2014/15 | H1 2013/14 | |
| Net cash generated from operating activities (OCF) | € in thousands | 33,650 | 40,327 |
| CAPEX, net | € in thousands | 88,699 | 39,992 |
| GENERAL INFORMATION | 30 Sep 2014 | 31 Mar 2014 | |
| Employees (incl. leased personnel), end of reporting period | – | 7,618 | 7,129 |
| Employees (incl. leased personnel), average | – | 7,385 | 7,027 |
| KEY STOCK FIGURES | H1 2014/15 | H1 2013/14 | |
| Shares outstanding, end of reporting period | – | 38,850,000 | 26,690,059 |
| Weighted average number of shares outstanding | – | 38,850,000 | 23,432,997 |
| Earnings per shares outstanding end of reporting period | € | 0.73 | 0.82 |
| Earnings per average number of shares outstanding 1) | € | 0.73 | 0.94 |
| Cash earnings per average number of shares 1) | € | 1.56 | 2.42 |
| Market capitalisation, end of reporting period | € in thousands | 355,478 | 183,895 |
| Market capitalisation per equity 2) | % | 76.4% | 58.1% |
| KEY FINANCIAL FIGURES | H1 2014/15 | H1 2013/14 | |
| ROE (Return on equity) 3) | % | 13.3% | 15.1% |
| ROCE (Return on capital employed) 3) | % | 10.7% | 11.4% |
| ROS (Return on sales) | % | 9.4% | 7.3% |
1) 2014/15: Lower result substantially due to issue of new shares. 2) Equity attributable to owners of the parent company. 3) Calculated on the basis of average values.
Thanks to high demand in both the Mobile Devices & Substrates and the Industrial & Automotive (incl. Medical) Business Units, as well as strong capacity utilisation, we were able to hold revenue at € 302.1 million, which was in line with the high level of € 299.9 million reported in the first half of 2013/14.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 10.5% to € 72.3 million due to no non-recurring items and a one-time profit from a compensation payment, high capacity utilisation, continuous improvements of the product mix and the results from efficiency improvement activities.
The EBITDA margin reached 23.9%, one of the highest levels ever. Profit for the period for the first half of the year was € 28.4 million, up some 29.5% on the same period a year earlier.
Cash flows from operating activities of € 33.6 million were around € 6.7 million lower than in the same period last year, chiefly due to the increase in net working capital. Net cash used in investing activities increased year on year to € -88.7 million in the first half of 2014/15, in line with expectations. Main investments were made in technology upgrades at existing facilities and in the Chongqing plant which is currently under construction.
Consolidated equity amounted to € 465.1 million at the end of September 2014. The € 74.5 million rise in equity compared with 31 March 2014 reflected the improvement in consolidated net profit as well as positive exchange differences of € 55.8 million. The equity ratio was 44.0%.
Net debt at the end of the reporting period was € 180.0 million (31 March 2014: € 110.9 million), corresponding to a gearing ratio of 38.7%.
Key indicators for the first six months of the financial year 2014/15 are as follows:
FINANCING The maturities of the total financial liabilities of € 402.1 million were as follows:
| Less than 1 year: | € 49.5 million |
|---|---|
| 1–5 years: | € 302.4 million |
| More than 5 years: | € 50.2 million |
STABLE The Business Unit Mobile Devices & Substrates reached revenue of € 156.7 million, almost in line with last year's number. The change of -4.8% compared to the first half year of 2013/14 is mainly due to increased capacity consumption by high end product mix; production was operating at full capacity. Demand for mobile communications applications was one of the drivers for the continuous success of this Business Unit. With this development AT&S confirms its strong position in the market of high-end mobile devices.
GROWTH IN BUSINESS UNIT INDUSTRIAL & AUTO-MOTIVE (INCL. MEDICAL) The consequent and strategic development of the customer and product portfolio for the Business Unit Industrial & Automotive (incl. Medical) resulted to a revenue increase of 8.8% to € 144.3 million in the reporting period. The main reasons behind this are the increased use of innovative electronics in passenger cars (e.g. driver assistance system, safety features and energy efficiency systems), as well as higher demand for industrial applications used in machine-to-machine communication, industrial automation and LED. In medical applications, revenue gains were primarily attributable to increased demand for therapeutic applications.
IC SUBSTRATE PLANT IN CHONGQING The setup of the Chongqing plant with a strategic focus on integrated circuit (IC) substrates business is proceeding according to plan. Installation and internal qualification of the first production line has been completed, equipment characterisation and certification and production of samples has started. Investment in Chongqing, since the start of the project until 30 September 2014, amounted to € 163.1 million. Start of production is scheduled for calendar year 2016. The project is fully financed thanks to positive cash flows and the equity and financing transactions carried out (secondary public offering, corporate bond and bonded loans).
OUTLOOK Based on the strong demand in the second half of the calendar year 2014 – particularly in the mobile devices segment – and the low visibility in respect to the first quarter of the calendar year 2015 we are assuming that, provided the macro-economic environment remains stable and considering todays foreign exchange rates, the business will continue the positive trend. For the full year 2014/15 we expect revenues in line with prior year and an EBITDA margin on the upper level of our target corridor of 18-20%.
We would like to extend our thanks to all of our shareholders and employees for their support over the past six months.
With best regards
Andreas Gerstenmayer Chairman of the Board
Karl Asamer Member of the Board
Heinz Moitzi Member of the Board
MANAGEMENT BOARD REMUNERATION After wideranging preparations, a long-term incentive (LTI) programme based on stock appreciation rights (SARs) was implemented by resolution of the Supervisory Board on 3 July 2014. This replaced the stock option plan put in place for members of the Management Board and other senior managers, which expired on 1 April when the last allocation was made under the scheme. SARs are based on share price developments over a given period. As with the stock option scheme, beneficiaries only receive financial remuneration under the plan if the share price goes up, without having shares transferred to them or options for such a transfer being granted. Requirements include long-term, multi-year performance criteria, a minimum holding period of three years (followed by an exercise period of up to two years), a minimum personal investment and an upper limit on the maximum potential financial gain:
The earnings per share (EPS) indicator determines how many of the SARs allocated to an individual may be exercised upon expiry of the holding period. The target value is the EPS specified in the mid-term plan for the end of the reporting period of the third year after allocation. If the actual value is less than 50% of the target EPS, then the allocated SARs expire without compensation. If the actual value amounts to 100% of the EPS value or exceeds it, the allocated SARs are exercised in full. The SARs may be exercised on a pro rata (straight-line) basis in the case of target achievement of between 50% and 100%.
Personal investment is a mandatory requirement for the exercise of SARs. This is a one-off equity investment equivalent to 20% of the SARs allocated for the year, acquired in shares (e.g. in the case of 5,000 SARs the personal investment amounts to 1,000 shares). If the personal investment has not been made in full by the end of the holding period (i.e. after the end of three years), all of the SARs relating to the allocation expire. The personal investment must be held for the full duration of the participation in the LTI programme.
The exercise price is determined on the allocation date and corresponds to the average closing price of AT&S stock on the Vienna Stock Exchange during the six calendar months preceding the allocation date.
The share price performance determines the amount paid to participants in the LTI programme: the difference between the exercise price of a particular virtual allocation and the closing price of AT&S stock on the Vienna Stock Exchange on the exercise date is multiplied by the number of SARs. The exercise price is not subject to any premium. Any payout is made in cash. If the share performs exceptionally well, the payout per SAR is restricted to 200% of the respective exercise price (e.g. if the exercise price is € 8, the maximum payout per SAR is restricted to € 16; a closing price of more than € 24 does not result in a higher value per SAR).
A total of three allocation tranches have been set for the 2014-2016 LTI programme spread across the three financial years (2014/15, 2015/16 und 2016/17). The following numbers of SARs have been allocated to the members of the Management Board per financial year.
DIRECTORS' DEALINGS On 30 September 2014 the Androsch Private Foundation acquired 110,742 shares in AT & S Austria Technologie & Systemtechnik Aktiengesellschaft from AIC Androsch International Management Consulting GmbH at a price of EUR 9.03 per share. It was noted that the acquisition of the shares by the Androsch Private Foundation merely represented a transfer in ownership from its wholly owned subsidiary AIC Androsch International Management Consulting GmbH to the Androsch Private Foundation; the total equity holding of the Androsch Private Foundation remains unchanged at about 16.32%.
Karl Asamer, Chief Financial Officer (CFO) of AT & S Austria Technologie & Systemtechnik Aktiengesellschaft, acquired 4,000 shares at a price of EUR 9.01 per share on 1 October 2014, after the end of the reporting period. As a result, Karl Asamer holds a total of 4,000 shares in the Company, which represents roughly 0.01% of the 38,850,000 shares in issue.
The relevant reports on directors' dealings and other details can be viewed and downloaded in the FMA Directors' Dealings Database, at http://www.fma.gv.at/en/companies/issuers/directorsdealings/directorsdealings-database.html.
NEW INVESTOR RELATIONS CONTACT Elke Koch was appointed Director IR & PR on 15 September 2014, making her the new investor relations contact for AT & S Austria Technologie & Systemtechnik Aktiengesellschaft. She can be reached by:
Her contact details are available on our website at: http://www.ats.net/investors/contact/
International financial markets continued to be shaped by the uncertain wider economic environment and were highly volatile as a result. Events were influenced by the weak growth outlook for the Eurozone, the escalation of the political situation in Ukraine, the resulting fall in the value of the euro against the majority of world currencies, interest rate adjustments, and the announcement by European Central Bank that it was stepping up its purchases of distressed government bonds. The situation on European stock markets began to deteriorate after the summer, with Vienna's lead index, the ATX, reaching a high of 2,285 points in June 2014 only to fall to 2,202 points by 30 September.
AT&S stock was also affected by the volatility on the exchange. The share price rose steadily up until mid-July, peaking at 10.44 € on 23 July. The stock closed at 9.15 € on 30 September. The average daily trading volume on the Vienna Stock Exchange amounted to 58,600 shares (single count).
Against this backdrop, AT&S management intensified its communications activities, with countless roadshows and face-to-face meetings with investors and analysts in a bid to generate the kind of upbeat sentiment that better reflected the company's operational performance. In the first six months of the financial year 2014/15 AT&S held meetings with institutional investors and financial analysts in Munich, Düsseldorf, Zürs, Warsaw, Shanghai and New York. The company also met with various private investors at its Leoben Hinterberg facility as part of the Vienna Stock Exchange's Private Investor Day in May.
AT&S stock is currently being covered by eight analysts, seven of whom rate it "buy" and the other "hold".
| 30 September 2014 | 30 September 2013 | |
|---|---|---|
| Earnings per share | 0.73 | 0.94 |
| High | 10.44 | 8.40 |
| Low | 8.01 | 6.21 |
| Close | 9.15 | 6.89 |
| Vienna Stock Exchange | |
|---|---|
| Security ID number | 969985 |
| ISIN-Code | AT0000969985 |
| Symbol | ATS |
| Reuters RIC | ATSV.VI |
| Bloomberg | ATS AV |
| Indexes | ATX Prime, WBI SME |
| 27 January 2015 | Publication of results for third quarter 2014/15 |
|---|---|
| 07 May 2015 | Publication of annual results 2014/15 |
| 02 July 2015 | 21st Annual General Meeting |
Phone: +43 (0) 3842 200 5925 [email protected]
| 01 July - 30 September | 01 April - 30 September | |||
|---|---|---|---|---|
| € in thousands | 2014 | 2013 | 2014 | 2013 |
| Revenue | 160,767 | 157,392 | 302,077 | 299,933 |
| Cost of sales | (123,090) | (123,693) | (235,856) | (239,474) |
| Gross profit | 37,677 | 33,699 | 66,221 | 60,459 |
| Distribution costs | (7,631) | (7,647) | (14,768) | (15,037) |
| General and administrative costs | (6,633) | (5,964) | (13,495) | (11,119) |
| Other operating result | 3,192 | 39 | 1,970 | (732) |
| Non-recurring items | – | – | – | (3,004) |
| Operating result | 26,605 | 20,127 | 39,928 | 30,567 |
| Finance income | 3,476 | 96 | 3,810 | 114 |
| Finance costs | (3,174) | (3,002) | (6,173) | (6,361) |
| Finance income/(costs) - net | 302 | (2,906) | (2,363) | (6,247) |
| Profit before tax | 26,907 | 17,221 | 37,565 | 24,320 |
| Income taxes | (6,041) | (1,876) | (9,120) | (2,363) |
| Profit for the period | 20,866 | 15,345 | 28,445 | 21,957 |
| Attributable to owners of the parent company | 20,847 | 15,334 | 28,416 | 21,940 |
| Attributable to non-controlling interests | 19 | 11 | 29 | 17 |
| Earnings per share attributable to equity holders of the parent company (in € per share): |
||||
| - basic | 0.54 | 0.65 | 0.73 | 0.94 |
| - diluted | 0.54 | 0.60 | 0.73 | 0.90 |
| Weighted average number of shares outstanding - basic (in thousands) |
38,850 | 23,542 | 38,850 | 23,433 |
| Weighted average number of shares outstanding - diluted (in thousands) |
38,850 | 25,517 | 38,850 | 24,426 |
| 01 July - 30 September | 01 April - 30 September | |||
|---|---|---|---|---|
| € in thousands | 2014 | 2013 | 2014 | 2013 |
| Profit for the period | 20,866 | 15,345 | 28,445 | 21,957 |
| Items to be reclassified: | ||||
| Currency translation differences | 50,103 | (21,834) | 55,753 | (26,596) |
| Gains/(losses) from the fair value measurement of hedging instruments for cash flow hedges, net of tax |
(667) | 23 | (1,967) | 56 |
| Other comprehensive income for the period | 49,436 | (21,811) | 53,786 | (26,540) |
| Total comprehensive income for the period | 70,302 | (6,466) | 82,231 | (4,583) |
| Attributable to owners of the parent company | 70,277 | (6,478) | 82,189 | (4,599) |
| Attributable to non-controlling interests | 25 | 12 | 42 | 16 |
| 30 September | 31 March | |
|---|---|---|
| € in thousands | 2014 | 2014 |
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment | 532,100 | 435,103 |
| Intangible assets | 19,723 | 9,145 |
| Financial assets | 96 | 96 |
| Deferred tax assets | 28,873 | 25,538 |
| Other non-current assets | 22,757 | 13,976 |
| 603,549 | 483,858 | |
| Current assets | ||
| Inventories | 78,970 | 59,434 |
| Trade and other receivables | 151,807 | 110,999 |
| Financial assets | 822 | 836 |
| Current income tax receivables | 854 | 799 |
| Cash and cash equivalents | 221,188 | 260,133 |
| 453,641 | 432,201 | |
| Total assets | 1,057,190 | 916,059 |
| EQUITY | ||
| Share capital | 141,846 | 141,846 |
| Other reserves | 52,476 | (1,297) |
| Retained earnings | 270,779 | 250,133 |
| Equity attributable to owners of the parent company | 465,101 | 390,682 |
| Non-controlling interests | 40 | (2) |
| Total equity | 465,141 | 390,680 |
| LIABILITIES | ||
| Non-current liabilities | ||
| Financial liabilities | 352,555 | 325,863 |
| Provisions for employee benefits | 25,958 | 24,755 |
| Other provisions | 9,371 | 9,736 |
| Deferred tax liabilities | 7,439 | 6,738 |
| Other liabilities | 3,378 | 3,244 |
| 398,701 | 370,336 | |
| Current liabilities | ||
| Trade and other payables | 133,767 | 101,908 |
| Financial liabilities | 49,540 | 46,076 |
| Current income tax payables | 6,145 | 3,986 |
| Other provisions | 3,896 | 3,073 |
| 193,348 | 155,043 | |
| Total liabilities | 592,049 | 525,379 |
| Total equity and liabilities | 1,057,190 | 916,059 |
| € in thousands 2014 2013 Cash flows from operating activities Profit for the period 28,445 21,957 Adjustments to reconcile profit for the period to cash generated from operating activities: Depreciation, amortisation and impairment of property, plant and equipment and intangible assets 32,369 34,844 Changes in non-current provisions 567 571 Income taxes 9,120 2,363 Finance costs/income 2,363 6,247 Gains/losses from the sale of fixed assets 67 18 Release from government grants (610) (756) Other non-cash expense/(income), net 4,573 425 Changes in working capital: - Inventories (14,776) (8,565) - Trade and other receivables (39,786) (23,730) - Trade and other payables 18,770 12,400 - Other provisions 685 3,928 Cash generated from operating activities 41,787 49,702 Interest paid (2,941) (6,500) Interest and dividends received 1,396 107 Income taxes paid (6,592) (2,982) Net cash generated from operating activities 33,650 40,327 Cash flows from investing activities Capital expenditure for property, plant and equipment and intangible assets (88,859) (40,143) Proceeds from the sale of property, plant and equipment and intangible assets 160 151 Capital expenditure for financial assets – (114) Proceeds from the sale of financial assets – 27 Net cash used in investing activities (88,699) (40,079) Cash flows from financing activities Changes in other financial liabilities 20,061 7,341 Proceeds from government grants 327 737 Dividends paid (7,770) (4,665) Proceeds from capital increase – 20,833 Net cash generated from financing activities 12,618 24,246 Net increase/(decrease) in cash and cash equivalents (42,431) 24,494 Cash and cash equivalents at beginning of the year 260,133 80,226 Exchange gains/(losses) on cash and cash equivalents 3,486 (2,789) Cash and cash equivalents at end of the period 221,188 101,931 |
01 April - 30 September | |
|---|---|---|
| Equity | ||||||
|---|---|---|---|---|---|---|
| attributable | ||||||
| to owners | Non | |||||
| Share | Other | Retained | of the parent | controlling | Total | |
| € in thousands | capital | reserves | earnings | company | interests | equity |
| 31 March 2013 1) | 45,914 | 42,351 | 216,630 | 304,895 | (51) | 304,844 |
| Profit for the period | – | – | 21,940 | 21,940 | 17 | 21,957 |
| Other comprehensive income for the period | – | (26,539) | – | (26,539) | (1) | (26,540) |
| thereof currency translation differences | – | (26,595) | – | (26,595) | (1) | (26,596) |
| thereof change in hedging instruments for cash flow hedges, net of tax |
– | 56 | – | 56 | – | 56 |
| Total comprehensive income for the period | – | (26,539) | 21,940 | (4,599) | 16 | (4,583) |
| Dividend relating to 2012/13 | – | – | (4,665) | (4,665) | – | (4,665) |
| Capital increase | 20,833 | – | – | 20,833 | – | 20,833 |
| 30 September 2013 | 66,747 | 15,812 | 233,905 | 316,464 | (35) | 316,429 |
| 31 March 2014 | 141,846 | (1,297) | 250,133 | 390,682 | (2) | 390,680 |
| Profit for the period | – | – | 28,416 | 28,416 | 29 | 28,445 |
| Other comprehensive income for the period | – | 53,773 | – | 53,773 | 13 | 53,786 |
| thereof currency translation differences | – | 55,740 | – | 55,740 | 13 | 55,753 |
| thereof change in hedging instruments for cash flow hedges, net of tax |
– | (1,967) | – | (1,967) | – | (1,967) |
| Total comprehensive income for the period | – | 53,773 | 28,416 | 82,189 | 42 | 82,231 |
| Dividend relating to 2013/14 | – | – | (7,770) | (7,770) | – | (7,770) |
| 30 September 2014 | 141,846 | 52,476 | 270,779 | 465,101 | 40 | 465,141 |
1) Adjusted taking into account IAS 19 revised
| Mobile Devices & | Industrial & | Elimination/ | |||
|---|---|---|---|---|---|
| € in thousands | Substrates | Automotive | Others | Consolidation | Group |
| Segment revenue | 194,836 | 151,902 | 3,885 | (48,546) | 302,077 |
| Intersegment revenue | (38,134) | (7,601) | (2,811) | 48,546 | – |
| Revenue from external customers | 156,702 | 144,301 | 1,074 | – | 302,077 |
| Operating result | 24,316 | 13,685 | 1,883 | 44 | 39,928 |
| Finance costs - net | (2,363) | ||||
| Profit before tax | 37,565 | ||||
| Income taxes | (9,120) | ||||
| Profit for the period | 28,445 | ||||
| Property, plant and equipment and intangible assets |
480,416 | 60,447 | 10,960 | – | 551,823 |
| Investments | 77,384 | 15,004 | 1,562 | – | 93,950 |
| Depreciation/amortisation | 27,648 | 4,078 | 643 | – | 32,369 |
| Non-recurring items | – | – | – | – | – |
| Mobile Devices & | Industrial & | Elimination/ | |||
|---|---|---|---|---|---|
| € in thousands | Substrates | Automotive | Others | Consolidation | Group |
| Segment revenue | 190,689 | 135,493 | 3,396 | (29,645) | 299,933 |
| Intersegment revenue | (26,122) | (2,870) | (653) | 29,645 | – |
| Revenue from external customers | 164,567 | 132,623 | 2,743 | – | 299,933 |
| Operating result | 27,309 | 4,204 | (965) | 19 | 30,567 |
| Finance costs - net | (6,247) | ||||
| Profit before tax | 24,320 | ||||
| Income taxes | (2,363) | ||||
| Profit for the period | 21,957 | ||||
| Property, plant and equipment and intangible assets *) |
386,319 | 47,888 | 10,041 | – | 444,248 |
| Investments | 41,934 | 2,696 | 8,062 | – | 52,692 |
| Depreciation/amortisation | 30,036 | 4,155 | 653 | – | 34,844 |
| Non-recurring items | – | 3,004 | – | – | 3,004 |
*) Value as of 31 March 2014
Revenues broken down by customer region, based on ship-to-region:
Property, plant and equipment and intangible assets broken down by domicile:
| 01 April - 30 September | |||
|---|---|---|---|
| € in thousands | 2014 | 2013 | |
| Austria | 11,859 | 10,049 | |
| Germany | 68,628 | 64,630 | |
| Other European countries | 41,672 | 36,106 | |
| Asia | 166,690 | 143,528 | |
| Americas | 13,228 | 45,620 | |
| 302,077 | 299,933 |
| € in thousands | 30 Sep 2014 | 31 Mar 2014 |
|---|---|---|
| Austria | 45,495 | 33,473 |
| China | 480,377 | 386,279 |
| Others | 25,951 | 24,496 |
| 551,823 | 444,248 |
ACCOUNTING AND MEASUREMENT POLICIES The interim report for the six months ended 30 September 2014 has been prepared in accordance with the standards (IFRS and IAS) and interpretations (IFRIC and SIC) of the International Accounting Standards Board (IASB), taking IAS 34 into account, as adopted by the European Union.
The interim consolidated financial statements do not include all the information contained in the annual consolidated financial statements and should be read in conjunction with the consolidated annual financial statements for the year ended 31 March 2014.
Following AT&S's entry into IC substrate manufacturing and allocation of the new business to the Mobile Devices Business Unit, that unit has been renamed as the Mobile Devices & Substrates Business Unit. Both mobile applications and substrates have an appropriate organisational structure, but the management reporting continues to be for the Mobile Devices & Substrates segment as a whole.
The interim consolidated statements for the six months ended 30 September 2014 are unaudited and have not been the subject of external audit review.
REVENUE Group revenue in the first half of the current financial year of € 302.1 million is above the € 299.9 million achieved in the same period last year.
The Business Unit Mobile Devices & Substrates reached revenue of € 156.7 million, almost in line with last years number. The change of -4.8% compared to the first half year of 2013/14 is mainly due to increased capacity consumption by high end product mix; production was operating at full capacity. Demand for mobile communications applications was one of the drivers for the continuous success of this Business Unit. With this development AT&S confirms its strong position in the market of high-end mobile devices. The consequent and strategic development of the customer and product portfolio for the Business Unit Industrial & Automotive (incl. Medical) resulted to a revenue increase of 8.8% to € 144.3 million in the reporting period. The main reasons behind this are the increased use of innovative electronics in passenger cars (e.g. driver assistance system, safety features and energy efficiency systems), as well as higher demand for industrial applications used in machine-to-machine communication, industrial automation and LED. In medical applications, revenue gains were primarily attributable to increased demand for therapeutic applications.
The break down by customer regions shows continuously increasing sales in our Asian markets as well as in European markets. Only deliveries in America were lower.
The geographic distribution of production volumes – 76% in Asia and 24% in Europe – showed a further shift towards Asia in comparison with the same period last year, when the split was 75% to 25%.
GROSS PROFIT The gross profit for the first six months of the current financial year of € 66.2 million was considerably higher than the € 60.5 million achieved in the same period last year. This highly satisfactory outcome results from good capacity utilisation and continuous efficency improvement programs.
While the Business Unit Industrial & Automotive increased its gross profit margin from last year's 16% to 18%, Mobile Devices & Substrates maintained its gross profit margin at last year's level of 20%.
OPERATING RESULT On the basis of the improved gross profit, no non-recurring items and a one-time profit from a compensation payment, AT&S was able to improve its consolidated operating result to € 39.9 million or 13.2% of revenue.
FINANCE COSTS - NET Financial expenses of € 6.2 million were on last year level. The financial income from investment of free cash and gains from foreign exchange were € 3.8 million.The net finance costs of € 2.4 million were € 3.8 million lower than in the same period last year.
INCOME TAXES The change of the effective tax rate on consolidated level compared with the same period last year is resulting from the expected ending of a tax relief of AT&S (China) Company Limited (we continue to work on a return to last years tax regime) as well as the variation of proportions of Group earnings contributed by individual companies with different tax rates.
Income taxes are also significantly affected by the measurement of deferred taxation: for a large part of the tax loss carryforwards arising, no deferred tax assets have been recognised, since the likelihood of their being realisable in the foreseeable future is low.
CURRENCY TRANSLATION DIFFERENCES The increase in the foreign currency translation reserve in the first half of the current financial year (€ 55.8 million) was the result of the changes in exchange rates of the Group's functional currencies, the Chinese renminbi, the Hong Kong dollar, the US dollar, the Indian rupee and the South Korean won against the Group reporting currency, the euro.
NOTES TO THE STATEMENT OF FINANCIAL POSITION ASSETS AND FINANCES Net debt of € 180.0 million increased versus the € 110.9 million outstanding at 31 March 2014. Main reasons are investments in the new facility in Chongqing and the increase in net working capital. Net working capital of € 91.7 million as at 31 March 2014 increased to € 126.2 million mainly due to increased business acitivities. The net gearing ratio was 38.7% compared to the 28.4% at 31 March 2014.
The financial instruments valued at fair value at the end of the reporting period at the three valuation levels were as follows:
| Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|
| 822 | – | – | 822 |
| – | 96 | – | 96 |
| – | 3,043 | – | 3,043 |
| Level 1 | Level 2 | Level 3 | Total |
| 836 | – | – | 836 |
| – | 96 | – | 96 |
| – | 420 | – | 420 |
Bonds, export loans, government loans and other bank borrowings amounting to € 399.1 million (31 March 2014: € 371.5 million) are measured at amortised cost. The fair value of these liabilities was € 400.3 million (31 March 2014: € 377.6 million).
OTHER FINANCIAL COMMITMENTS At 30 September 2014 the Group had other financial commitments amounting to € 40.7 million, in connection with contractually binding investment commitments, the greater part of which related to the continuing construction of the new factory in Chongqing and investments in the Shanghai and Leoben plants. As at 31 March 2014 other financial commitments stood at € 59.5 million.
EQUITY Consolidated equity increased from € 390.7 million at 31 March 2014 to € 465.1 million. The good consolidated profit for the period of € 28.4 million as well as positive impacts from currency translation differences contributed mainly to the consolidated total comprehensive income of € 82.2 million.
In the 20th Annual General Meeting on 3 July 2014 the Management Board was authorised until 2 July 2019, and subject to the approval of the Supervisory Board, to increase the share capital of the Company by up to € 21,367,500 by the issue of up to 19,425,000 no par value bearer shares, for contributions in cash or kind, in one or more tranches, including issue by means of an indirect share offering via banks in accordance with section 153 para 6 Austrian Companies Act (AktG). The Management Board was authorised, subject to the approval of the Supervisory Board, to determine the detailed terms and conditions of issue (in particular, issue price, nature of contributions in kind, rights attaching to shares, exclusion of subscription rights, etc.). The Supervisory Board was authorised to approve changes in the Articles of Association required by the issue of shares out of authorised capital. The Annual General Meeting approved a resolution amending Section 4 (Nominal Capital) of the Articles of Association to reflect this change.
In addition, in the 20th Annual General Meeting of 3 July 2014 the resolution of the Annual General Meeting of 7 July 2010 authorising the issue of convertible loan stock was rescinded and at the same time the Management Board was authorised until 2 July 2019, and with the approval of the Supervisory Board, to issue up to a maximum nominal value of € 150,000,000 of bearer convertible loan stock in one or more tranches, and to grant the holders of the loan stock subscription and/or conversion rights for up to 19,425,000 new no par value bearer shares in the Company in accordance with the terms and conditions of the convertible loan stock to be determined by the Management Board. For this purpose, in accordance with section 159 para 2 item 1 AktG, the share capital of the Company was also conditionally increased by up to € 21,367,500 in the form of up to 19,425,000 new no par value bearer shares. This capital increase will only take place to the extent that holders of convertible loan stock exercise their conversion or subscription rights in accordance with the resolution of the Annual General Meeting of 3 July 2014. The Management Board was also authorised, subject to the approval of the Supervisory Board, to determine further details of the conditional capital increase (in particular, the amount of the issue and the rights attaching to shares).
With respect to the authorised share capital increase and/or the conditional capital increase, the following restrictions on the amounts of the increases are to be observed, as required under the resolutions of the Annual General Meeting of 3 July 2014: The total of (i) the number of new shares actually issued or potentially issuable out of conditional capital under the terms and conditions of the convertible bonds, and (ii) the number of shares issued out of authorised capital may not exceed 19,425,000.
TREASURY SHARES In the 19th Annual General Meeting of 4 July 2013 the Management Board was again authorised for a period of 30 months from the date of the resolution to acquire and retire the Company's own shares up to a maximum amount of 10% of the share capital. The Management Board was also again authorised – for a period of five years (i.e., until 3 July 2018) and subject to the approval of the Supervisory Board – to dispose of treasury shares otherwise than through the stock exchange or by means of public offerings, and in particular for the purpose of enabling the exercise of employee stock options or the conversion of convertible bonds, or as consideration for the acquisition of businesses or other assets, or for any other legally permissible purpose.
On 30 September 2014, the Group held no treasury shares.
NOTES TO THE STATEMENT OF CASH FLOWS Net cash inflows generated by operating activities amounted to € 33.6 million compared with € 40.3 million in the same period last year. The reduction is mainly due to the increase in net working capital.
The net cash used for capital expenditure was € 88.7 million, which is significantly higher than the € 40.1 million in the same period last year. This year's capital expenditures are predominantly in the new factory in Chongqing as well as technology upgrades in the other plants.
Cash inflows from financing activities amounted to € 12.6 million.
DIVIDENDS The Annual General Meeting of 3 July 2014 in the first half of the current financial year resolved on the payment of a dividend of € 0.20 per share out of retained earnings as at 31 March 2014. The dividend distribution of € 7.8 million took place on 24 July 2014.
RELATED PARTY TRANSACTIONS In connection with various projects, in the first quarter of the current financial year consultancy fees were payable as follows: € 189,000 to AIC Androsch International Management Consulting GmbH, € 5,000 to Dörflinger Management & Beteiligungs GmbH, and € 3,000 to Frotz Riedl Rechtsanwälte.
Leoben-Hinterberg, 27 October 2014
Management Board
Andreas Gerstenmayer m.p. Karl Asamer m.p. Heinz Moitzi m.p.
with the last financial year, we were also able to close the first half of 2014/15 very successfully. Automotive, Industrial and Medical Technology reported higher sales, and Mobile Devices was largely able to make up for a sharp drop in demand from one particular customer.
All AT&S plants reported good capacity utilisation in the first half of the current financial year.
MATERIAL EVENTS AFTER THE END OF THE REPORT-ING PERIOD There were no material events after the end of the interim reporting period.
SIGNIFICANT RISKS, UNCERTAINTIES AND OPPOR-TUNITIES There were no material differences in the categories of risk exposure in the course of the first half of the financial year 2014/15 compared with those described in detail in section 5, "Risk and opportunities management", of the Group Management Report of the 2013/14 consolidated financial statements.
AT&S's liquidity is excellent. The issue of a five-year € 100 million bond in November 2011, the provision of a long-term loan by Oesterreichische Kontrollbank in April 2012, and the issue of a € 158 million promissory loan note in January 2014 mean that ample long-term funds are available. Sufficient short-term credit facilities are also available to cover working capital requirements. In addition to this, on the basis of the authorisation conferred in the Annual General Meeting of 3 July 2014, the Management Board, with the agreement of the Supervisory Board, also has the option of issuing up to 19,425,000 new shares out of authorised capital and issuing convertible bonds up to a nominal value of € 150 million. All opportunities to optimise the financing of the investment in Chongqing are under constant review.
In the first half of the current financial year there was a significant positive cash flow from operating activities. On the basis of expected continuing net cash inflows from operating activities and the extensive financing options, enough liquidity is available to cover all currently planned investments.
For more information on the use of financial instruments, please refer to note 20 in the notes to the consolidated annual financial statements for the financial year 2013/14. Changes in the exchange rates of functional currencies against the reporting currency, the euro, are mainly recognised directly in equity without affecting profit or loss.
Net gearing of 38.7% at 30 September 2014 was at a higher level than at the end of the financial year 2013/14. Favourable exchange translation differences caused by the weakness of the euro against the Chinese renminbi, the Hong Kong dollar, the US dollar, the Indian rupee and the South Korean won led to an increase in equity.
With respect to the opportunities and risks related to developments in the external environment for the financial year 2014/15 as a whole, the assumption is still that total sales of the printed circuit board industry worldwide will increase.
OUTLOOK Based on the strong demand in the second half of the calendar year 2014 – particularly in the mobile devices segment – and the low visibility in respect to the first quarter of the calendar year 2015 we are assuming that, provided the macro-economic environment remains stable and considering todays foreign exchange rates, the business will continue the positive trend. For the full year 2014/15 we expect revenues in line with prior year and an EBITDA margin on the upper level of our target corridor of 18-20%.
Leoben-Hinterberg, 27 October 2014
Management Board
Andreas Gerstenmayer m.p. Karl Asamer m.p. Heinz Moitzi m.p.
We confirm to the best of our knowledge that the interim financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group as required by the applicable accounting standards and that the group interim management report gives a true and fair view of important events that have occurred during the first six months of the financial year and their impact on the interim financial statements, of the principal risks and uncertainties for the remaining six months of the financial year and of the major related party transactions to be disclosed.
Leoben-Hinterberg, 27 October 2014
The Management Board
Andreas Gerstenmayer Chairman of the Board
Karl Asamer Member of the Board
Heinz Moitzi Member of the Board
AT & S Austria Technologie & Systemtechnik Aktiengesellschaft Fabriksgasse 13 A-8700 Leoben Austria Tel: +43 (0) 3842 200-0 www.ats.net
Elke Koch Phone +43 (0) 3842 200-5925 [email protected]
AT & S Austria Technologie & Systemtechnik Aktiengesellschaft Fabriksgasse 13 A-8700 Leoben Austria www.ats.net
Helmut Jokesch, Fotostudio Jokesch, Graz Werbeagentur DMP, Maria Enzersdorf
LULU*/carolineseidler.com
This report contains forward-looking statements which were made on the basis of the information available at the time of publication. These can be identified by the use of such expressions as "expects", "plans", "anticipates", "intends", "could", "will", "aim" and "estimation" or other similar words. These statements are based on current expectations and assumptions. Such statements are by their very nature subject to known and unknown risks and uncertainties. As a result, actual developments may vary significantly from the forward-looking statements made in this report. Recipients of this report are expressly cautioned not to place undue reliance on such statements. Neither AT&S nor any other entity accept any responsibility for the correctness and completeness of the forward-looking statements contained in this report. AT&S undertakes no obligation to update or revise any forward-looking statements, whether as a result of changed assumptions or expectations, new information or future events.
Percentages and individual items presented in this report are rounded which may result in rounding differences.
Formulations attributable to people are to be understood as gender-neutral.
This report in no way represents an invitation or recommendation to buy or sell shares in AT&S.
The report is published in German and English. In case of doubt, the German version is binding.
No responsibility accepted for errors or omissions.
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