PVA TePla AG — Interim / Quarterly Report 2016

May 13, 2016

Interim announcement as of March 31, 2016

Important consolidated figures at a glace

in EUR '000	1. Quarter 2016	1. Quarter 2015
Sales Revenues	17,028	16,672
Industrial Systems	8,583	8,071
Semiconductor Systems	8,445	8,601
Gross profit	3,290	3,218
in % sales revenues	19.3	19.3
R&D expenses	566	385
Operating result (EBIT)	-735	-755
in % sales revenues	-4.3	-4.5
Net result before tax	-958	-957
in % sales revenues	-5.6	-5.7
Consolidated net result	-1,230	-511
in % sales revenues	-7.2	-3.1
Earnings per Share (EPS) in EUR1	-0.06	-0.02
Capital expenditure	313	205
Total assets	89,649	88,279²
Shareholders equity	36,640	37,941²
Equity ratio in %	40.9	43.0²
Employees as of 31.03.	366	355
Incoming orders	17,941	22,206
Order backlog	68,742	43,844
Book-to-bill-Ratio	1.05	1.33
Cash Flow from operating activities	-3,703	662
Working-Capital-Ratio	33	28²
Net financial position	-7,271	-3,377²
1) Circulating shares on average 21.749.988
2) As of December, 31

Interim announcement of PVA TePla AG as of March 31, 2016

SALES REVENUES

In the first three months of 2016, the PVA TePla Group generated sales revenues of EUR 17.0 million, showing a slight increase from the previous year at EUR 16.7 million which is largely in line with internal budget figures for the first quarter. The lower sales revenues compared to order backlog is primarily the result of weak incoming orders in the first two months of 2015 and the lack of sales revenues contributions based on the PoC method. During the course of the year, sales revenues are expected to improve significantly on the back of robust order backlog.

The Industrial Systems division generated sales revenues of EUR 8.6 million (previous year: EUR 8.1 million). Sales revenues in the Semiconductor Systems division amounted to EUR 8.4 million (previous year: EUR 8.6 million).

Sales revenues	Q1 2016	Q1 2015
By division	EUR '000	EUR '000
Industrial Systems	8,583	8,071
Semiconductor Systems	8,445	8,601
Total sales revenues	17,028	16,672

INCOMING ORDERS

Incoming orders for the PVA TePla Group came to EUR 17.9 million in the first three months of 2016, which was down on the previous year's figure of EUR 22.2 million. Incoming orders in the first quarter of 2016 have not yet been adjusted to include two orders totaling a combined EUR 2.7 million. These were signed in the first quarter, but as no advance payments have been received to date, they are therefore not reported. The book-to-bill-ratio amounts to 1.1 (prior year: 1.3).

Incoming orders in the Industrial Systems division amounted to EUR 8.1 million in the first three months of 2016 and were down compared to the previous year (previous year: EUR 11.5 million). Heat treatment systems, especially for the Chinese market, accounted for the majority of orders. Incoming orders in plasma nitriding systems were once again higher than expected. The Semiconductor Systems division generated sales revenues of EUR 9.8 million (previous year: EUR 10.7 million). Orders for plasma and metrology systems accounted for the majority of incoming orders in this division.

ORDER BACKLOG

The order backlog, consolidated and net of sales recognized according to the percentage of completion method (PoC), came to EUR 68.7 million as of March 31, 2016, which is considerably higher than the previous year's EUR 43.8 million. The order backlog in the Industrial Systems division as of March 31, 2016 stood at EUR 34.9 million (previous year: EUR 24.0 million). In the Semiconductor Systems division, the order backlog was EUR 33.8 million, compared to the previous year's figure of EUR 19.9 million.

GROSS MARGIN and EBIT

Based on consolidated sales revenues of EUR 17.0 million (previous year: EUR 16.7 million), gross profit amounted to EUR 3.3 million (previous year: EUR 3.2 million) and the gross margin stood at 19.3% (previous year: 19.3%). The low gross margin, compared to budget expectations, is due to below-average capacity utilization at both divisions as well as the sales revenue mix which indicates a higher share generated by Industrial Systems compared to the previous year.

At the end of February, PVA TePla AG resolved that it would relocate its subsidiary PVA Metrology & Plasma Solutions GmbH (PVA MPS) from Kirchheim near Munich to the headquarters in Wettenberg in fiscal year 2016. The operating result (EBIT) of EUR -0.7 million (March 31, 2015 [previous year]: EUR-0.8 million) was generated in the first three months of 2016 due to the related restructuring costs – reported under operating expenses – of EUR 0.5 million. The EBIT margin amounted to -4.3% (previous year: -4.5%).

NET PROFIT/LOSS FOR THE PERIOD

The net balance of interest income and interest expenses came to a total of EUR -0.2 million (previous year: EUR -0.2 million). The net result before taxes amounted to EUR -1.0 million (previous year: EUR -1.0 million) and net loss for the period amounted to EUR -1.2 million (previous year: net loss of EUR -0.5 million). Return on sales amounted to -7.2% (previous year: -3.1%). The higher net loss compared to the previous year is attributable to the deferred tax liabilities in income taxes relating to the higher receivables from construction contracts totaling EUR -0.3 million. In the previous year, the tax result included a tax refund of EUR 0.1 million and positive tax effects from deferred taxes of EUR 0.3 million.

SHAREHOLDERS' EQUITY AND TOTAL ASSETS

Shareholders' equity declined to EUR 36.6 million due to the net loss for the period (December 31, 2015: EUR 37.9 million). Total assets amounted to EUR 89.7 million as of March 31, 2016 (December 31, 2015: EUR 88.3 million). The increase in total assets is largely due to the prefinancing of the high order backlog, which led to an increase in inventories, future receivables from construction contracts, trade receivables and other receivables compared to December 31, 2015, and which involved capital being tied up.

LIQUIDITY

The increase in tied-up capital to prefinance the order backlog lifted the working capital ratio from 28% to 33%. As a result, operating cash flow amounted to EUR -3.7 million (Q1 2015 [previous year]: EUR +0.7 million). This figure fluctuates heavily in the vacuum systems and crystal growing systems business units from one reporting date to the next due to the project structure of orders. We receive considerable advance payments at the beginning of a project, which influence net cash flow positively if there are large orders. Cash flow is negative during order processing, whereas near the delivery date, the remaining amount due is paid, except for a small residual installment. Cash flow from investing activities amounted to EUR -0.3 million (prior year: EUR -0.2 million). Cash flow from financing activities was EUR -0.5 million (prior year: EUR -0.7 million). Total cash flow in the first three months of 2016, including exchange rate differences, amounted to EUR -4.3 million (previous year: EUR -0.1 million). The liquidity position of PVA TePla Group is positive. The net financial position (surplus of current and non-current financial liabilities beyond cash and cash equivalents) amounted to EUR -7.3 million (December 31, 2015: EUR -3.4 million).

Employees

As of March 31, 2016, the Group employed 366 people (December 31, 2015: 361 employees; March 31, 2015: 355 employees).

Assessment of opportunities and risks

During the first quarter of fiscal year 2016, there were no significant changes to the opportunities and risks presented in the Annual Report 2015.

Forecast

In view of the order backlog of EUR 68.7 million as at March 31, 2016 and the expectation that orders received in the first half of 2016 will already be recognized in sales revenues and the result, the Management Board of PVA TePla AG confirms its forecast for business development in 2016 of consolidated sales revenues of between EUR 80 million and EUR 90 million, EBITDA between EUR 4 million and EUR 6 million and an operating result (EBIT) of between EUR 2 million and EUR 4 million.