Quarterly Report • Nov 6, 2007
Quarterly Report
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Consolidated Statements IFRS for the Third Quarter and First Nine Months of Fiscal 2007 as of September 30, 2007 (unaudited)
The SINGULUS TECHNOLOGIES Group (SINGULUS) was able to enter the market of the dynamically growing area of solar technology in the 3rd quarter. With the acquisition of the majority of the STANGL Semiconductor Equipment AG (STANGL) on August 1, 2007, the immediate access to a new market was achieved, which promises a long-term positive trend with high double-digit growth rates.
With the purchase of STANGL the entry to new technologic areas in the solar industry were realized at the same time. SINGULUS is planning to introduce its own solar coating machine in 2008 already, which will be based on the knowhow acquired in the core segment of Optical Disc. In addition, the expertise and market intelligence of STANGL will be drawn upon.
With the application of our company's know-how to neighboring technologic areas and the tapping of new sales markets we were already able to partially
STANG CIS/CIGS-Process system for wet chemical treatment for the thin film solar technique
STANGL wet chemical systems, processed as "vertical batch systems", represent the foundation of an effective and competitive mass production of mono- and multi-crystalline wafers
off-set the decline in our core work area. Examples are the sales in the segment Nano Deposition Technologies and APE as well as initial sales in the division Decorative Coating.
In the first nine months of 2007 SINGULUS achieved sales in the amount of € 170.2 million (previous year: € 184.9 million excluding the in the meantime deconsolidated companies BESS and ETA-Optik). Amongst others, the decline in sales is due to the deconsolidation of various parts of the Group, which SINGULUS sold because of strategic reasons. Despite the decline in sales a positive EBIT of € 0.8 million (previous year: € 7.9 million excluding BESS and ETA) was achieved. Our portfolio optimization coincided with additional efficiency improvements: with the deconsolidation of the abovementioned subsidiaries in the Group, the gross margin rose from 22.9 % to 27 %.
The order intake amounted to € 59 million in the 3rd quarter (previous year: € 64.7 million, excluding BESS and ETA). Compared with the 2nd quarter 2007 the order intake increased slightly in the 3rd quarter 2007 again.
The international solar market is expanding rapidly. According to the Photon Consulting study (based on Michael Rogol) the expected capacity of the global new installations for photovoltaic modules is set to nearly quadruple from 4 GW (gigawatt) in 2007 to 15 GW in 2010. Germany will continue to be in the top position. Here, crystalline silicon solar cells represent the majority of the market. In view of these growth rates in the next couple of years, a tremendous boost for investment in plant and equipment for new solar factories is expected.
SINGULUS was able to realize an immediate market access with the acquisition of an established equipment supplier. It was announced on August 1, 2007 that SINGULUS acquires 51 % of the shares in the STANGL Semiconductor Equipment AG (STANGL) based in Eichenau near Munich. A purchase price of € 43.8 million was agreed for 51 % of the shares, which will be paid in cash and shares. The shares will be issued from the authorized capital. The resulting increase of the subscribed capital in the amount of € 2.0 million was recorded in the Commercial Register on September 28, 2007. For the remaining 49 % of the shares in STANGL, SINGULUS holds a buy option exercisable from 2010. Accordingly, the number of SINGULUS shares outstanding increased by 2,004,478 to 36,946,407 shares. An announcement pursuant to Art. 30 Para. 1 Sent. 1 No. 2 WpHG was published in the electronic German Federal Gazette on October 10, 2007.
For 2007 STANGL expects a 50 % growth rate and sales of about € 30 million compared with the same period one year ago. We also project double-digit growth rates in the next couple of years. STANGL generates more than 80 % of its sales with equipment for the solar industry and is therefore a globally leading supplier of machines for wet-chemical processes. STANGL operates in two areas: the silicon solar technology and the thin-film solar technology. STANGL's results were consolidated within the scope of the SINGULUS Group for the first time from September 1, 2007.
SINGULUS develops own equipment for silicon solar technology A major part of the current business activities of STANGL focuses on the market of cell production in the crystalline silicon solar technology, which still represents the majority of the overall module market. STANGL has global customer relationships with all major solar cell producers and is participating in many turnkey projects in Europe and Asia. STANGL operates as a partner for suppliers for turnkey lines.
SINGULUS itself will present in Kahl its own vacuum coating machine for the coating of anti-reflective layers in the silicon solar technology in 2008. Combined with the equipment from STANGL the SINGULUS Group will then be able to offer two important machine groups with wet-chemical and vacuum coating processes for a production line for crystalline silicon solar cells. The goal is to advance to a globally leading position for production equipment for crystalline solar cells in the next couple of years.
Thin-film solar cells currently represent about 15 % of the global market for solar cells (85 % crystalline silicon). However, the market share of the thin-film solar cells is expanding at a significantly higher rate than the overall global silicon market. At the most recent market presentations at the trade fair EuroPV in Milan and the Solar Power fair in Long Beach, USA, a strong trend of new projects towards the area of thin-film solar technology was visible.
STANGL also offers a wet-chemical production process for the production of thin-film solar cells with its patented equipment technology for CIS/CIGS (CIS=Copper-Indium-Diselenide/CIGS=Copper-Indium-Gallium-Deselenide). The CIS/CIGS technology currently already shows energy generation figures at a high level comparable to traditional silicon solar technology. Therefore, the CIS/CIGS technology has the biggest potential for market leadership in the thin-film solar technology.
Thin film solar modules
TV with full-hd with a resolution of 1920 x 1080 pixel
In Germany, CIS equipment from STANGL is used by Würth Solar for example. The CIS/CIGS technology was also supplied to the Johanna Solar Technology GmbH. In the course of these projects STANGL installed the CIS/CIGS process equipment.
STANGL and SINGULUS will consistently expand the solar activities. Both companies perfectly complement each other in order to be able to offer a broad product range of machines and equipment for the photovoltaics industry in the next couple of years. While STANGL focuses on wet-chemical processes, SINGULUS' core competence is physical coating technology such as sputtering and PECVD (Plasma Enhanced Chemical Vapor Deposition) as well as the integration of different processing steps in complete, predominantly automated production lines.
In order to make solar power competitive and to achieve the break-through in the mass market, new machine concepts with a high degree of automation are required. In particular the machine integration know-how, which SINGULUS has proven to possess in the automation of CD and DVD production lines, is an optimum starting point for the development of highly-profitable, fully-automated production lines.
We expect the work area Solar to become the most important driver of growth in the SINGULUS Group.
The new disc formats HD DVD and Blu-ray as well as the new TV-sets with Full-HD with a resolution of 1920 x 1080 pixels were one of the focal points of this year's international consumer electronics trade fair IFA in Berlin. The market launch of HD DVD and Blu-ray also gains considerable momentum in Germany and Europe. According to Nuremberg-based consumer research company Gesellschaft für Konsumforschung (GfK), for the first time significant revenues of the high-definition formats HD DVD and Blu-ray were recorded as of the end of the 1st half of 2007. The industry expects substantial growth in this area. In particular due to the IFA 2007 and the subsequent Christmas sales, a strong impulse for the sale of high-definition formats with double-digit million sales is still expected for 2007 according to GfK. The selling price for the Playstation 3 was reduced to less than € 400.
According to analysis by Home Media Research, US, the Blu-ray format recorded twice the level of sales of HD DVD in the US. The majority of the big US studios such as for example Sony, MGM, Fox, Disney and Lionsgate has opted for Blu-ray.
SINGULUS TECHNOLOGIES is excellently positioned in this market.
Production line BLULINE – First sales for Blu-ray – Additional orders received – Ready for Dual Layer Blu-ray discs
SINGULUS has commissioned the first four Blu-ray machines and recognized them as sales in the 3rd quarter. In the US the disc producers are operating at ever increasing utilization rates in the daily Blu-ray disc production. Nonetheless, first orders for Blu-ray disc production equipment from the BLULINE range were also received from customers in Europe and Asia. The increasing demand from Europe and Asia shows that Blu-ray does not only play a more important role in the former main market US, but that Blu-ray is also beginning to become increasingly accepted in other markets.
SINGULUS upgraded its Blu-ray disc equipment and is therefore also prepared for the production of the upcoming 50 GB dual layer Blu-ray disc. SINGULUS will still start the first dual layer Blu-ray production modules this year.
SINGULUS TECHNOLOGIES and the HamaTech AG agreed upon the merger of the HamaTech AG to the SINGULUS TECHNOLOGIES Aktiengesellschaft and the relevant share exchange ratio. An announcement regarding the agreement was published on November 1, 2007 pursuant to Art. 15 WpHG.
Accordingly, the shareholders of the HamaTech AG will receive two SINGULUS shares for nine HamaTech shares.
The merger agreement will be presented for approval by the extraordinary shareholder meeting of the HamaTech AG on December 17, 2007.
In the 3rd quarter 2007 sales amounted to € 58.0 million, which was below previous year's level (Q3 2006: € 80.1 million, excluding BESS and ETA). Sales for the first nine months totaling € 170.2 million were also below previous year's sales (€ 184.9 million excluding the deconsolidated companies BESS and ETA-Optik). This decline is mainly due to the transition to the next format generation.
The regional breakdown of sales during the first nine months was as follows: Asia 34.2 % (previous year 37.4 %), Europe 27.7 % (previous year 32.6 %), North and South America 35.3 % (previous year 28.8 %), Africa and Australia 2.8 % (previous year 1.2 %).
As of September 30, 2007 SINGULUS generated a share of sales of 61.2 % (previous year: 69.4 %) from the production and selling of equipment for the production of optical discs. The share of sales with other equipment, replacement parts, upgrades and services amounted to 38.8 % as of September 30, 2007 (previous year: 30.6 %).
In the 3rd quarter the sales share of Optical Disc amounted to 56.4 %, Others accounted for 43.6 %.
Playstation 3 from Sony: Game-Console, Blu-ray disc player and internet station in one unit
Booth of the SINGULUS NANO DEPOSITION GmbH at the Semicon West 2007/USA
In the first nine months of the year the order intake declined to 167.6 million from € 232.5 million in the same period one year ago (excluding BESS and ETA-Optik). The transition towards Blu-ray and HD DVD is only starting, while the demand for equipment for the current format generation has already weakened. The order intake in the 3rd quarter 2007 amounted to € 59.1 million. Adjusted for the deconsolidated companies a prior-year level in the amount of € 64.7 million results.
As of September 30, 2007 the order backlog was below previous year's level and stood at € 78.9 million (previous year: 105.8 million excluding BESS and ETA-Optik).
The earnings before interest and taxes (EBIT) were slightly positive at € 0.1 million in the 3rd quarter (previous year: € 2.6 million). For the first nine months of 2007 SINGULUS achieved a positive EBIT in the amount of € 0.8 million (previous year: € 7.9 million). The earnings before interest and taxes in the previous year included extraordinary effects in connection with the first-time consolidation of HamaTech. These one-offs on balance improved previous year's earnings in the first nine months by € 13.8 million.
The earnings after taxes came in at € 0.3 million in the 3rd quarter 2007, which was below previous year's level (€ 0.8 million). During the first nine months of 2007 the earnings after taxes declined by € 6.9 million to € 1.2 million compared with the previous year.
The operating cash flow of € 23.6 million during the first nine months of 2007 was significantly higher than the previous year (€ 11.1 million).
With effect of September 14, 2007 the SINGULUS TECHNOLOGIES AG acquired 51 % of the shares in the STANGL Semiconductor Equipment AG (STANGL), based in Eichenau near Munich, at a purchase price of € 43.8 million. The purchase price was paid by € 25.0 million in cash. The remaining amount of € 18.8 million was paid in shares. In addition, replacement investments totaling € 0.4 million were made in the 3rd quarter.
As of September 30, 2006 the SINGULUS Group employed 1,182 people. Due to the sale of subsidiaries and staff adjustments, the headcount dropped to 649 employees as of September 30, 2007. For the first time 113 employees at STANGL were included. Correspondingly, the headcount in the SINGULUS Group amounted to 762 people in total as of September 30, 2007.
The average number of employees in the Group amounted to 702 employees as of September 30, 2007 (previous year: 1,219).
From our point of view the selling prices developed as planned in the 3rd quarter of the business year 2007. The amount of cost of materials and personnel expenses was also within the range of our projections.
At € 17.6 million, overall the expenses for R & D as of September 30, 2007 were below previous year's level (€ 19.2 million) and included € 3.9 million from HamaTech.
The optical disc market is still governed by the slow introduction of the next format generation. This has an impact on the capital spending of customers and on the realization of our sales. We forecast a range of sales for the SINGULUS TECHNOLOGIES Group from € 215 million to € 235 million for 2007.
The acquisition of STANGL Semiconductor Equipment AG, Eichenau, is one of the most important steps in our company's history. SINGULUS has bought a highly-profitable company with the STANGL Semiconductor Equipment AG, which enables the strategically important market access to the solar industry.
Accordingly, SINGULUS' broad range of know-how in coating technology will be combined with STANGL's know-how of wet-chemical processes to broaden the production chain for solar equipment even further together.
Solar will continue to expand rapidly internationally. SINGULUS and STANGL will together participate in this growth and grow with the market.
Information booth of SINGULUS at a Optical Disc Conference in China in September 2007
SINGULUS Participation on the association booth of the MEDIA-TECH in Dubai in September 2007 In the work area Optical Disc the Blu-ray disc era will commence in 2008. According to Understanding & Solutions the disc production will triple. Inexpensive players and blockbuster movies from Hollywood in HD quality will increase disc sales rapidly and require capital spending on part of our customers for new equipment technology. We expect a substantial double-digit growth for the Blu-ray activities in 2008.
Along with the promising work area of Solar technology and the expected upturn in the core activities of Optical Disc we are confident for the year 2008. We will resolutely continue our portfolio optimization.
Yours sincerely,
SINGULUS TECHNOLOGIES AG
The Executive Board
| Sept. 30, 2007 | Dec. 31, 2006 | ||
|---|---|---|---|
| K€ | K€ | ||
| Cash and cash equivalents | 38,208 | 56,216 | |
| Trade receivables | 69,276 | 69,881 | |
| Other receivables and assets | 26,827 | 24,394 | |
| Total receivables | 96,103 | 94,275 | |
| Raw materials, consumables and supplies | 28,745 | 46,181 | |
| Work in process | 66,410 | 59,501 | |
| Total inventories | 95,155 | 105,682 | |
| Total current assets | 229,466 | 256,173 | |
| Non-current trade receivables | 8,437 | 11,031 | |
| Property, plant and equipment | 21,029 | 22,326 | |
| Investment property | 8,744 | 8,770 | |
| Capitalized development costs | 44,432 | 38,949 | |
| Goodwill | 84,829 | 31,249 | |
| Other intangible assets | 54,447 | 13,330 | |
| Deferred tax assets | 9,209 | 10,545 | |
| Total non-current assets | 231,127 | 136,200 | |
| Non-current assets classified | |||
| as held for sale | 0 | 5,224 | |
| Total assets | 460,593 | 397,597 | |
| Trade payables | 22,577 | 20,042 | |
| Current bank liabilities | 15,674 | 9,850 | |
| Other current liabilities | 19,533 | 22,940 | |
| Advance payments received | 15,378 | 21,493 | |
| Tax provisions | 1,771 | 3,645 | |
| Other provisions | 3,179 | 6,492 | |
| Total current liabilities | 78,112 | 84,462 | |
| Non-current bank liabilities | 6,036 | 10,352 | |
| Other non-current liabilities | 45,999 | 3,069 | |
| Pension provisions | 6,340 | 6,115 | |
| Deferred tax liabilities | 30,568 | 17,376 | |
| Total non-current liabilities | 88,943 | 36,912 | |
| Liabilities in connection with assets held for sale |
0 | 1,479 | |
| Total liabilities | 167,055 | 122,853 | |
| Share capital | 36,946 | 34,942 | |
| Capital reserve | 47,262 | 29,879 | |
| Other reserves | -3,388 | -2,514 | |
| Accumulated profit | 205,364 | 205,538 | |
| Equity attributable to the shareholders of the | |||
| SINGULUS TECHNOLOGIES AG | 286,184 | 267,845 | |
| Minority interests | 7,354 | 6,899 | |
| Total equity | 293,538 | 274,744 | |
| Total liabilities and equity | 460,593 | 397,597 |
| 3rd Quarter | First 9 Months | |||
|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |
| K€ | K€ | K€ | K€ | |
| Revenues (gross) | 57,951 | 96,648 | 170,201 | 213,123 |
| Sales Deductions & Direct Distribution Costs | -1,384 | -3,247 | -4,601 | -7,750 |
| Net Revenues | 56,567 | 93,401 | 165,600 | 205,373 |
| Cost of Goods Sold | -41,286 | -72,031 | -119,788 | -156,202 |
| Gross Profit | 15,281 | 21,370 | 45,812 | 49,171 |
| Research and Development | -4,285 | -4,071 | -12,178 | -15,079 |
| Sales and Customer Service | -5,042 | -5,639 | -15,077 | -18,019 |
| General Management and Administration | -4,606 | -5,620 | -14,780 | -16,542 |
| Other Operating Income (+) / Expenses (-) | -1,247 | -3,256 | -2,937 | -5,505 |
| Restructuring costs | 0 | 0 | 0 | -20,092 |
| Badwill through acquisition of STEAG HamaTech AG | 0 | -145 | 0 | 33,936 |
| Total Operating Expenses | -15,180 | -18,731 | -44,972 | -41,301 |
| Operating Result (EBIT) | 101 | 2.639 | 840 | 7.870 |
| Interest Income (+) / Expenses (-) | -240 | -210 | 320 | 425 |
| Profit Before Tax | -139 | 2,429 | 1,160 | 8,295 |
| Income Taxes | 426 | -1,590 | -1 | -162 |
| Balancing item shares of other shareholders | ||||
| Net Income | 287 | 839 | 1,159 | 8,133 |
| Davon entfallen auf: | ||||
| Shareholders of the mother company | -446 | 1,206 | -174 | 9,649 |
| Minority interests | 733 | -367 | 1,333 | -1,516 |
| Net Income per share (basic), EUR | -0.01 | 0.03 | 0.00 | 0.28 |
| Net Income per share (diluted), EUR | -0.01 | 0.03 | 0.00 | 0.28 |
| Weighted average shares outstanding (basic) | 35,008,745 | 34,941,929 | 34,964,201 | 34,941,929 |
| Weighted average shares outstanding (diluted) | 35,573,619 | 34,941,929 | 35,484,531 | 34,941,929 |
| First 9 Months | |||
|---|---|---|---|
| 2007 | 2006 | ||
| K€ | K€ | ||
| Net Income | 1,159 | 8,133 | |
| Depreciation and amortization | 15,261 | 22,261 | |
| Change in pension accruals | 225 | 712 | |
| Change in deferred taxes | 2,080 | -5,403 | |
| Change in Working Capital* | 4,921 | -14,567 | |
| Cash flow from operating activities | 23,646 | 11,136 | |
| Change in Property, Plant & Equipment | -4,661 | -21,226 | |
| Change in goodwill | 3,745 | 5,221 | |
| Change in other intangible assets | -14,140 | -22,730 | |
| Change in other long-term liabilities | -39.939 | 2,281 | |
| Changes in long-term bank loans | -4,294 | 4,441 | |
| Changes in minority interests | -878 | 7.725 | |
| Capital increase, capital reduction | 19,387 | 727 | |
| Currency Translation | -874 | -202 | |
| Change in Cash & Liquid Funds | -18,008 | -12,627 | |
| Cash & Cash equivalents at beginning of period | 56,216 | 67,719 | |
| Cash & Cash equivalents at end of period | 38,208 | 55,092 | |
*including long-term accounts receivable
| Share | Capital- | Other | Accumu- | Minority | |
|---|---|---|---|---|---|
| capital | reserves | reserve | lated profit | interests | Equity |
| K€ | K€ | K€ | K€ | K€ | K€ |
| 34,942 | 29,879 | -2,514 | 205,538 | 6,899 | 274,744 |
| -878 | -878 | ||||
| 2,004 | 16,796 | 18,800 | |||
| 0 | |||||
| 587 | 587 | ||||
| -874 | -874 | ||||
| -174 | 1,333 | 1,159 | |||
| 36,946 | 47,262 | -3,388 | 205,364 | 7,354 | 293,538 |
| 34,942 | 29,398 | -2,214 | 193,356 | 0 | 255,482 |
| 7,725 | 7,725 | ||||
| 375 | 375 | ||||
| 0 | |||||
| 352 | 352 | ||||
| -202 | -202 | ||||
| 9,649 | -1,517 | 8,132 | |||
| 34,942 | 30,125 | -2,416 | 203,005 | 6,208 | 271,864 |
| for comparison the figures of the same period the year before |
March 28, 2008 Annual Press Conference March 28, 2008 Annual Analysts' Conference May 08, 2008 Q1/2008 Report June 06, 2008 Annual Shareholders Meeting August 05, 2008 Q2/2008 Report November 05, 2008 Q3/2008 Report
Shareholdings as of September 30, 2007: shares with a nominal value of € 1: Stefan A. Baustert, CEO 2,000 shares Dr. Ing. Anton Pawlakowitsch, Member of the Board 2,500 shares WG Roland Lacher GbR 394,472 shares William Slee 49,520 shares Thomas Geitner 1,500 shares
Granted stock options (€ 1 nominal value) through convertible and stock options as of September 30, 2007: Stefan Baustert 320,000 shares Dr. Ing. Anton Pawlakowitsch 80,000 shares Employees 1,039,980 shares
| 2005 IFRS |
2006 IFRS |
2007 IFRS |
||
|---|---|---|---|---|
| Sales | million € | 73.5 | 96.6 | 58.0 |
| Order intake | million € | 65.1 | 78.1 | 59.1 |
| EBIT | million € | 4.5 | 2.6 | 0.1 |
| Earnings before taxes | million € | 4.7 | 2.4 | -0.1 |
| Net profit | million € | 3.2 | 0.8 | 0.3 |
| Research & Development | million € | 3.8 | 6.7 | 7.2 |
| 2005 IFRS |
2006 IFRS |
2007 IFRS |
||
|---|---|---|---|---|
| Sales | million € | 172.6 | 213.1 | 170.2 |
| Order intake | million € | 178.2 | 272.4 | 167.6 |
| Order backlog (September 30) | million € | 62.2 | 120.2 | 78.9 |
| EBIT | million € | 5.7 | 7.9 | 0.8 |
| Earnings before taxes | million € | 6.7 | 8.3 | 1.2 |
| Net profit | million € | 4.4 | 8.1 | 1.2 |
| Operating cash flow | million € | 4.0 | 11.1 | 23.6 |
| Shareholders' equity | million € | 250.9 | 271.9 | 293.5 |
| Balance sheet total | million € | 367.0 | 435.9 | 460.6 |
| Research & Development | million € | 12.0 | 19.2 | 17.6 |
| Employees (September 30) | 641 | 1,182 | 702 | |
| Weighted average shares | 35,103,098 | 34.941,929 | 34,964,201 | |
| outstanding, basic | ||||
| Earnings per share, basic | € | 0.13 | 0.23 | 0.00 |
This report contains future-oriented statements based on the current expectations, assessments and forecasts of the Executive Board as well as on the currently available information to them. Known as well as unknown risks, uncertainties and impacts could cause the actual results, the financial situation or the development to differ from the statements made in this report. We assume no obligation to update the future-oriented statements made in this report.
Hanauer Landstraße 103 D-63796 Kahl Tel.: +49-6188-440-0 Fax : +49-6188-440-110 Investor Relations: Maren Schuster Tel.: +49-6188-440-612 Fax : +49-6188-440-110
SINGULUS TECHNOLOGIES AG Mail: [email protected] Web: www.singulus.de
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