Q03 Report Third Quarter 2010
Consolidated Statements IFRS for the Third Quarter and First Nine Months of Fiscal 2010 as of September 30, 2010 (unaudited)
Optical Disc Solar
Balance Sheet Adjustments and Delayed Solar Orders Impact Financial Results _ Executive Board reevaluates balance sheet assets _ Further consolidation: Optical Disc activities centralized in Kahl _ Cost base improves _ Order intake above prior-year level _ Blu-ray sales significantly expanded _ Favorable outlook for Blu-ray in 2011 _ Pick-up of Solar expected for 2011
Business Trends and Situation of the SINGULUS TECHNOLOGIES Group
High-resolution TVs with 3D Technology are conquering the world
The SINGULUS TECHNOLOGIES AG (SINGULUS) generated sales of € 81.0 million in the first nine months of the current business year (previous year: € 95.9 million). On this basis and an insufficient order intake in the Solar segment the Executive Board is not expecting to achieve the full-year targets with respect to sales (forecast: € 130-135 million) and earnings (breaking even). The Executive Board of SINGULUS announced this in an adhoc announcement pursuant to § 15 WpHG on October 26, 2010 and adjusted the sales forecast for 2010 to a range from € 118 to 125 million. In addition, an operating loss will be incurred for the full year. The reason for the lower order intake is the continuing restraint for new investments into thin-film solar technology. In particular the business activities for equipment for wet-chemical processes are still negatively impacted by the late effects of the international financial and economic crisis. In addition, orders for planned complete systems for the production of silicon-based solar cells are still lagging behind. In the 3rd quarter 2010 sales of € 31.6 million increased slightly compared with the € 28.8 million realized in the same quarter one year ago. Cumulated sales in the first nine months of 2010 amounted to € 81.0 million (previous year: € 95.9 million). The order intake of € 29.9 million in the 3rd quarter 2010 was significantly higher than in the previous year (€ 15.2 million). As a result the order intake in the first nine months of 2010 also rose to € 97.3 million (previous year: € 56.0 million). The order backlog as of September 30, 2010 increased significantly to € 43.7 million (previous year: € 30.3 million).
02 03
Further consolidation planned, cost structure improves Against the backdrop of current developments, the resolved repositioning of the business activities as well as current market information, the Executive Board reviewed the respective values of all balance sheet items and accordingly in the course of its meeting on October 25, 2010 agreed to recognize value adjustments and write-offs in the balance sheet as well as restructuring measures amounting to € 67.8 million (extraordinary charges) in total. This includes adjustments of tangible and intangible assets from earlier acquisitions in the amount of € 40.7 million, capitalized development expenses in the amount of € 7.5 million as well as of receivables and inventories totaling € 17.3 million. These value adjustments are not tied to an outflow of liquid funds. Furthermore, restructuring charges in the amount of € 2.3 million were recognized. In this connection all Optical Disc activities will be centralized in Kahl to realize further cost reductions. First steps were already implemented with the integration of the injection molding activities in Kahl. Now, essential parts of the mastering activities will be relocated from Eindhoven to Kahl.
SINGULUS booth at Intersolar 2010, USA
The operating result (before extraordinary expenses) amounted to - € 13.1 million in the first nine months (previous year: - € 13.9 million). In the 3rd quarter 2010 a negative result (before extraordinary expenses) in the amount of - € 5.0 million (previous year: - € 6.2 million) was realized.
Optical Disc segment: Blu-ray market grows rapidly SINGULUS is the only supplier worldwide to offer production lines for optical storage media spanning the entire value-added chain for the production of all optical disc formats. The built-up of currently highly-utilized production capacities at our customers will correspondingly result in additional order intake for us. Our Blu-ray machines by SINGULUS are “3D ready” and a safe investment for the future of optical disc production. In the past couple of weeks SINGULUS received new BLULINE orders from numerous independent disc producers. The BLULINE and also our mastering system CRYSTALLINE have established themselves internationally. We also have ongoing projects for Recordable Blu-ray, i.e. for Blu-ray Discs to record movies. Overall, the Blu-ray market will expand substantially in the next years. 3D as driver of growth for Blu-ray All market figures reflect the rapid growth of Blu-ray: The market research institute GFK International reported an increase in Blu-ray Disc sales of 67 % in Europe in the 3rd quarter compared with 2009. For the US the Digital Entertainment Group (DEG) announced a rise in sales for Blu-ray Discs as of September 30, 2010 by 80 % compared with 2009. The number of sold Blu-ray players in the first nine months of 2010 also increased by 104 % compared with the same period one year ago. There are currently 21.1 million households in the US owning Blu-ray players and Playstation 3 consoles, respectively. The market research institute ABI Research, US, expects significant growth of 3DTVs in 2011 - deliveries are expected to exceed 62.5 million devices worldwide. ABI Research forecasts that the continuing popularity of 3D box office movies together with the 3D Blu-ray Discs will cause the market for 3DTVs to grow sharply. The Blu-ray Disc with its storage volume of 50 gigabyte is the most suitable medium for the sales of these movies. We will reach our key targets for Blu-ray in 2010 and are very optimistic for 2011 due to the rapidly increasing penetration of the format.
Q03
Report Third Quarter 2010
Solar activities will develop favorably in 2011 The business trend in our Solar division is slower than expected. The reason is the continuing restraint for new investments for the thin-film solar technology. In particular the business activities at SINGULUS STANGL SOLAR (SINGULUS STANGL) are still impacted by the late effects of the international financial and economic crisis. In the Solar division SINGULUS offers modern stand-alone machines for the silicon and also thin-film solar technology. SINGULUS takes advantage of its coating know-how as well as its competence in the automation technology and is actively offering complete production systems for crystalline silicon solar cells since the beginning of 2010. The further development of the company's strategy towards a system provider has given SINGULUS access to additional projects and extensive order potential. This suggests an increase in order intake in the next couple of months. SINGULUS’ goal is to become a leader for the introduction of new process technologies and machine concepts in both the silicon and thin-film solar technology. The Executive Board is confident that the company will succeed in expanding the business activities in the Solar segment as planned. Semiconductor The final sales agreement for the disposal of the HamaTech APE GmbH & Co. KG, Sternenfels (“APE”) to the SÜSS MicroTec AG (“SÜSS”), Garching, was signed by both parties on January 12, 2010. SÜSS continued to employ all employees of APE at the Sternenfels site and the international subsidiaries. Today’s activities in the area of nano deposition are part of our core know-how in the coating technology. This is required for different applications in the semi-conductor and solar sectors. At Nano Deposition three TIMARIS coating machines were booked as orders as of September 30, 2010. The total order volume for these three machines exceeds € 8 million.
Key financial figures Order backlog and order intake The order intake of € 29.9 million in the 3rd quarter 2010 was significantly higher than in the previous year (Q3 2009: € 15.2 million). The order intake in the first nine months of 2010 also rose to € 97.3 million (previous year: € 56.0 million). The order backlog as of September 30, 2010 increased significantly to € 43.7 million (previous year: € 30.3 million).
Sales Sales of € 31.6 million in the 3rd quarter 2010 were slightly higher than in the previous year (Q3 2009: € 28.8 million). Sales in the first nine months amounted to € 81.0 million, less than the € 95.9 million achieved in the same period one year ago.
SINGULUS booth at 25th EU PVSEC in Valencia exhibiting a VITRUM inline system and a SINGULAR AR coating system
The regional breakdown of sales during the first nine months was as follows: Asia 41.9 % (previous year: 42.5 %), North and South America 29.8 % (previous year: 23.5 %), Europe 22.2 % (previous year: 32.5 %), Africa and Australia 6.1 % (previous year: 1.5 %). The percentage regional breakdown of sales for the 3rd quarter 2010 was as follows: Asia 35.1 % (previous year: 47.5 %), North and South America 29.0 % (previous year: 14.1 %), Europe 25.8 % (previous year: 38.4 %), Africa and Australia 10.1 % (previous year: 0.0 %).
04 05
Gross margin The gross profit margin in the 3rd quarter was impacted by the low utilization of parts of the solar segment as well as extraordinary measures. Excluding these extraordinary value adjustments the gross margin still amounted to 24.3 % in the quarter under review, including the one-off measures the gross margin stood at 13.1 %. The prioryear level came to 28.3 %. In the first nine months of the business year 2010 a gross margin in the amount of 22.7 % (previous year: 31.6 %) was achieved. Excluding extraordinary effects the margin amounts to 27.0 %.
Operating expenses The operating expenses come to € 76.9 million in the 3rd quarter of the business year 2010 (previous year: € 50.7 million). During the first nine months of the year under review the operating expenses totaled € 99.0 million (previous year: € 83.2 million).
SINGULUS booth at Solar Power 2010 in Los Angeles, USA
The operating expenses in the quarter under review include one-time charges from write-offs on accounts receivable totaling € 7.4 million. Furthermore, they include extraordinary charges from write-offs on capitalized development expenses in the amount of € 3.1 million. In addition, due to impairments and restructurings charges totaling € 53.8 million were recognized in the 3rd quarter 2010. Specifically, they concern charges from write-offs on goodwill at SINGULUS MASTERING BV, Eindhoven, in the amount of € 20.8 million. Moreover, within this subsidiary write-offs on capitalized development expenses totaling € 2.9 million were recognized. The restructuring charges mainly result from the gradual relocation of the SINGULUS MASTERING activities to Kahl am Main. This causes charges in the amount of € 1.8 million. The customer base capitalized in the course of the first-time consolidation of the majority of the former Stangl Semiconductor Equipment AG, Fürstenfeldbruck, was written off extraordinarily by € 16.7 million as well as the acquired brand by € 2.3 million. In addition, within the restructuring expenses value adjustment on inventories amounting to € 6.4 million were recognized in the Group. Adjusted for these one-time charges the operating expenses in the quarter under review came to € 12.6 million in total. In the prior-year period – adjusted for extraordinary items – operating expenses in the amount of € 14.2 million were reported. For the first nine months of the business year 2010 operating expenses adjusted for extraordinary items stood at € 34.6 million in total (previous year: € 43.7 million).
Earnings The earnings before interest and taxes (EBIT) before the consideration of extraordinary charges in the first nine months of 2010 were negative at - € 13.1 million (previous year: - € 13.9 million). Taking into account the extraordinary items a negative EBIT in the amount of - € 80.9 million results (previous year: - € 53.3 million). In the quarter under review the EBIT before one-time charges amounted to - € 5.0 million (previous year: - € 6.2 million). Including the extraordinary expenses SINGULUS posted a negative EBIT totaling - € 72.9 million in the 3rd quarter (previous year: - € 42.7 million). In detail, the break-down of sales and the operating result are split between the segments as follows:
Q03
Report Third Quarter 2010
SEGMENT REPORTING Segment
Segment
Segment
Segment
Optical Disc
Solar
Semiconductor
Coating
Other
SINGULUS Group
09/30/10
09/30/09
09/30/10
09/30/09
09/30/10
09/30/09
09/30/10
09/30/09
30.09.10
09/30/09
09/30/10
09/30/09
[K€]
[K€]
[K€]
[K€]
[K€]
[K€]
[K€]
[in T€]
[in T€]
[K€]
[K€]
[K€]
64,574
54,135
13,470
34,282
2,923
7,509
0
0
0
0
80,967
95,926
direct selling costs
-1,033
-1,072
-207
-350
-17
-38
0
0
0
0
-1,257
-1,460
Net revenue
63,541
53,063
13,263
33,932
2,906
7,471
0
0
0
0
79,710
94,466
Gross revenue Sales deduction and
Restructuring costs/ 33,875
-12,319
19,000
-400
300
-8,566
0
-621
635
0
53,810
-21,906
Operating income (EBIT)
Impairment
-49,600
-43,022
-30,037
865
-1,442
-10,569
0
-621
184
0
-80,895
-53,347
EBITDA
-14,237
-22,353
-4,796
3,948
-1,409
-9,581
0
-621
424
0
-20,018
-28,607
Balance sheet and liquidity The long-term assets amounted to € 78.1 million and were therefore significantly below previous year's level (previous year: € 139.6 million). Specifically, the other capitalized intangible assets declined by € 23.4 million, the goodwill dropped by € 20.8 million and the capitalized development expenses decreased by € 9.7 million. The decline of these intangible assets is mainly due to the extraordinary write-offs performed in the quarter under review. The position “Investment Properties” declined by € 6.8 million in the course of the planned disposal of the real estate in the Slovakia. In this connection, the fair value of these assets in the amount of € 5.4 million was reclassified to the position "Assets held for disposal". Property, plant and equipment amounted to € 11.6 million and were therefore slightly below previous year's level (previous year: € 12.3 million). The capital expenditure in property, plant and equipment amounted to € 0.9 million in the 3rd quarter of 2010 (previous year: € 0.1 million). Most of the spending was used for lease machines and replacement investments. Current assets declined by € 13.2 million during the period under review. Specifically, inventories declined by € 9.9 million compared with the previous year, the accounts receivable and other assets were reduced by € 1.4 million. Liquid funds declined by € 2.0 million as of the end of the period under review and amounted to € 13.2 million as of September 30, 2010. The net debt as of September 30, 2010 was negative at € 15.5 million. Compared with the previous year the short-term liabilities decreased by € 19.1 million. Specifically, the short-term bank loans declined by € 7.9 million in connection with the repayment of a loan and bank liabilities in the amount of € 2.9 million were regrouped from short-term to long-term liabilities after the restructuring of the syndicated loan facility. Moreover, short-term bank loans increased by € 1.3 million in connection with the grant of a KfW loan. Overall, the company received € 10.0 million from this loan. This cash inflow was used for the payment of the remaining purchase price from the acquisition of the outstanding 49 % of the shares of Stangl Semiconductor Equipment AG. In this connection, the other short-term liabilities declined by € 10.0 million. Compared with the previous year the prepayments received decreased by € 3.1 million. In contrast, accounts payable rose by € 8.5 million.
06 07
% households
3D Blu-ray player 3DTV receiver
Compared with the previous year the long-term liabilities increased by € 2.6 million. This results from opposing effects. The bank liabilities increased due to the grant of the KfW loan by € 8.7 million as well as in connection with the aforementioned regrouping by € 2.9 million. In contrast, the other long-term liabilities declined by € 1.5 million. Moreover, deferred tax liabilities declined by € 7.8 million mainly in connection with the write-off of intangible assets.
Shareholders’ equity Playstation
Source: Futuresource Consulting, 2010
The shareholders' equity in the Group of € 105.7 million as of September 30, 2010 was significantly lower than the level of year-end 2009 (€ 165.7 million) due to the negative result. Equity in the amount of € 103.1 million is attributable to the shareholders of the parent company and € 2.6 million to minorities. Accordingly, the equity ratio amounted to 57.3 % (previous year: 62.9 %).
Cash flow
3DTV is a growth driver for Blu-ray Disc and Blu-ray Player
Blu-ray Disc Sales
Blu-ray Player Sales Growth
million units
million units
In the first nine months of the year under review the operating cash flow in the Group was negative at - € 9.7 million (previous year: - € 1.7 million). Overall, the liquid funds declined by € 2.0 million in the period under review.
Risk report During the first nine months of the business year 2010 there were no changes regarding the risks depicted in the Annual Report for the year 2009. A valuation of the risks within the different business units resulted in extraordinary charges in the total amount of € 67.8 million.
Development of costs and prices From our point of view the sales prices developed as planned during the first nine months of the business year. Material and personnel expenses developed as planned. Blu-ray Disc
PS3 Blu-ray Player
Source: Futuresource Consulting, 2010 Sales development for Blu-ray Disc and Blu-ray Player
Employees The headcount in the SINGULUS Group as of September 30, 2010 amounted to 454 employees overall (previous year: 633 employees including the HamaTech APE GmbH & Co. KG, Sternenfels).
The SINGULUS Stock The SINGULUS TECHNOLOGIES shares started the 3rd quarter 2010 at € 4.79. Following a downtrend until the end of August the shares traded in a range between € 3.70 and € 4.20. Due to the insufficient order intake and the consequent missing of the annual forecast as well as the extraordinary charges in this connection, the stock price dropped to € 3.10 to recover around € 3.60 during the days before this quarterly report.
Changes in the Executive and Supervisory Boards With effect from April 19, 2010, Dipl.-Oec. Markus Ehret was appointed as Chief Financial Officer. Dipl.-Ing. Roland Lacher handed over the Chief Executive Officer position to Dr.-Ing. Stefan Rinck as per April 1, 2010. After the six month appointment to the Executive Board Roland Lacher again assumed the position as Chairman of the Supervisory Board from April 1, 2010. At the same time Mr. Jürgen Lauer left the Supervisory Board. No additional changes in the members of the Executive and Supervisory Boards took place until September 30, 2010.
Q03
Report Third Quarter 2010
Research and development (R&D) GW
n) GR tio CA roduc % P 43 e – 12 09-
(20
In the last couple of months the finalization of the first diffusion oven for the thinfilm solar technology was in the focus of our development and construction efforts. In the area of crystalline silicon solar cells we are intensively cooperating with key customers and also research institutes for the development of highly efficient solar cells. The SINGULAR is particular suitable for the deployment of new coating processes and layer systems due to its modular construction design. In the Optical Disc segment we see a new market developing for once-recordable and rewritable Blu-ray Discs and are currently developing new machine concepts. First orders were already received for this in the current year. At € 5.2 million the expenses for R & D in the first nine months of 2010 were 35 % below the prior-year level (previous year: € 8.0 million).
C-Si Cell Production Thin Film Production
Source: Bank Sarasin, December 2009
Outlook - still unchanged favorable prospects for 2011 SINGULUS TECHNOLOGIES still reaffirms its goals for the upcoming years even after the adjustments of the prospects for 2010. The Executive Board expects the company to generate stable and positive earnings in the future as the No. 1 player in the Blu-ray market. The Executive Board is still confident for the business activities in the Solar segment to expand as planned and to contribute positively to the Group’s results sustainably. We are working very hard to achieve the projected turnaround in the year 2011. In this connection we see the following points confirming this:
Optical Disc segment _ Only global one-stop supplier and No. 1 for Blu-ray equipment _ Strong growth for Blu-ray in the next years expected _ Profitable products _ Product offer for rewritable/once-recordable Blu-ray (BD-RE/BD-R)
Solar segment _ Projects for complete systems in negotiations _ Position in attractive, rapidly growing solar market _ SINGULUS AR coating technology establishing itself _ Expansion of sales & marketing in Asia _ Solar segment expected to break-even in 2011 Dear shareholders of the SINGULUS TECHNOLOGIES AG, dear Ladies and Gentlemen! We kindly ask you to stick with our company and to follow us on this way. Thank you for your patience and trust. Yours sincerely,
The Executive Board SINGULUS TECHNOLOGIES AG
08 09
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009 (IFRS UNAUDITED) ASSETS
Cash and cash equivalents
09/30/2010
12/31/2009
[Kâ‚Ź]
[Kâ‚Ź]
13,210
15,185
34,102
34,420
Trade receivables
Other receivables and assets
5,926
6,986
Total receivables and other assets
40,028
41,406
Raw materials, consumables and supplies
16,394
25,996
Work in process
31,449
31,735
Total inventories
47,843
57,731
101,081
114,322
Total current assets
Non-current trade receivables
4,225
4,575
Property, plant and equipment
11,630
12,268
Investment property
0
6,814
Capitalized development costs
16,857
26,534
Goodwill
21,703
42,542
Other intangible assets
22,091
45,485
Deferred tax assets
1,611
1,358
Total non-current assets
78,117
139,576
5,350
9,699
184,548
263,597
Non-current assets held for sale
Total assets
Q03
Report Third Quarter 2010
LIABILITIES
09/30/2010
12/31/2009
[K€]
[K€]
Trade payables
16,153
7,612
Current bank liabilities
16,999
26,749
Prepayments
1,746
4,825
Other current liabilities
15,260
27,875
Tax provisions
369
1,966
Other provisions
2,808
3,432
Total current liabilities
53,335
72,459
Non-current bank liabilities
11,702
87
Other non-current liabilities
1,019
2,482
Pension provisions
7,194
6,973
Deferred tax liabilities
5,637
13,416
Total non-current liabilities
25,552
22,958
0
2.431
78,887
97,848
Subscribed capital
41,050
37,355
Capital reserves
60,287
48,690
Other reserves
-1,868
- 2,700
Retained earnings
3,635
79,835
Minority interests
2,557
2,569
Total equity
105,661
165,749
Total equity and liabilities
184,548
263,597
Liabilities from assets classified as held for sale Total liabilities Equity attributable to equity holders of the parent
10 11
CONSOLIDATED INCOME STATEMENTS AS OF SEPTEMBER 30, 2010 AND 2009 (IFRS UNAUDITED) 3. Quarter
Revenue (gross)
Sales deductions and direct selling costs
Revenue (net)
Cost of sales
Gross profit on sales
9 Months
2010
2009
2010
2009
[K€]
[K€]
[K€]
[K€]
31,620
28,846
80,967
95,926
-603
-536
-1,257
-1,460
31,017
28,310
79,710
94,466
-26,969
-20,298
-61,645
-64,586
4,048
8,012
18,065
29,880
Research and development
-5,974
-3,877
-12,340
-11,548
Sales and customer service
-5,013
-5,153
-14,290
-16,145
General administration
-3,105
-3,572
-10,201
-11,671
Other operating expenses/income
-9,012
-19,212
-8,319
-21,957
Restructuring expenses
-53,810
-18,931
-53,810
-21,906
Total operating expenses
-76,914
-50,745
-98,960
-83,227
EBIT
-72,866
-42,733
-80,895
-53,347
-1,102
-2,209
-3,342
-4,475
-73,968
-44,942
-84,237
-57,822
5,699
3,489
8,025
2,446
-68,269
-41,453
-76,212
-55,376
-68,387
-41,469
-76,200
-55,470
118
16
-12
94
Basic earnings per share (in €)
-1.71
-1.11
-1.90
-1.49
Diluted earnings per share (in €)
-1.71
-1.11*
-1.90
-1.49*
Weighted number of shares, basic
40,092,241
37,232,752
40,092,241
37,232,752
Weighted number of shares, diluted
40,092,241
37,232,752*
40,092,241
37,232,752*
Finance costs/income
EBT
Tax income/costs
Profit or loss for the period
Thereof attributable to:
Equity holders of the parents
Minority interests
* previous year adjusted
Q03
Report Third Quarter 2010
STATEMENT OF CHANGES IN CONSOLIDATED EQUITY AS OF SEPTEMBER 30, 2010 AND 2009 (IFRS UNAUDITED) Subnetes capital [K€] As of 1 January 2010
Capital reserves
Other reserves
Retained earnings
Minority interests
Equity
[K€]
[K€]
[K€]
[K€]
[K€]
37,355
48,690
3,695
11,453
-2,700
79,835
2,569
Minority interests Capital increase
165,749 0 15,148
Capital payback
0
Dividends paid
0
Share-based payment
144
Foreign currency translation adjustments
144 832
Net profit for the period
832 -76,200
-12
-76,212
As of September 30, 2010
41,050
60,287
-1,868
3,635
2,557
105,661
The same period of the previous year: As of 1 January 2009 Minority interests
36,946
48,782
-2,717
158,441
4,005 -56
245,457 -56
409
405
-1,109
-295
Capital increase Capital payback
0
Dividends paid
0
Share-based payment
646
646
Derivative financial instruments
0
Foreign currency translation adjustments
-1,805*
Net profit for the period As of September 30, 2009
37,355
49,833
-4,522
-1,805 -55,376
94
-55,282
103,065
2,934
188,665
CONSOLIDATED CASH FLOW STATEMENTS AS OF SEPTEMBER 30, 2010 AND 2009 (IFRS UNAUDITED) 9 months
Net income
2010
2009
[K€]
[K€]
-76,212
-55,376
60,877
24,740
221
221
Amortization of non-current assets
Change of pension provisions
Change of deferred taxes
-8,032
-6,506
Change of Netto current assets*
13,466
35,231
Cash flows from operating activities
-9,680
-1,690
Change of fixed assets
-1,579
-699
Change of financial assets and shareholdings
0
-900
Change of immaterial assets
-4,510
3,170
Other long-term liabilities
-1,463
-2,000
Liabilities to banks Cash paid for the acquisition of 49 % of the shares in STANGL Semiconductor Equipment AG Changes in assets and liabilities classified as held for sale
1,865
-6,245
-10.000
0
Change of minority interests
Capital increase, capital payback
Changes conditioned by currency translation
7,268
0
0
-56
15,292
1,460
832
-1,920**
Changes of liquid assets
-1,975
-8,880
Liquid assets at the beginng of the period
15,185
40,143
Liquid assets at the end of the period
13,210
31,263
* including long-term accounts receivables * previous year adjusted
12 13
Notes to the interim results (unaudited)
the merger. The listing of the former shares of the HamaTech AG on the Regulated Market of the Frankfurt Stock Exchange (General Standard) was The SINGULUS TECHNOLOGIES Aktiengesellschaft (hereinafter also “SINGULUS” terminated with effect from February 25, 2009. or the “Company”) is a stock listed stock corporation domiciled in Germany. The consolidated financial accounts presented for the interim reporting of the On September 7, 2009 the merger of the NANO DEPOSITION TECHNOLOGIES SINGULUS TECHNOLOGIES AG and its subsidiaries (the "Group") for the first GmbH, Kahl am Main, as the company to be merged, to the SINGULUS three quarters of the business year 2010 were approved for publication by TECHNOLOGIES AG, Kahl am Main, as the acquiring company, became effective decision of the Executive Board as of November 4, 2010. with the entry of the merger into the Commercial Register at the domicile of the SINGULUS TECHNOLOGIES AG. Therefore, the assets of this company including Accounting and valuation principles its liabilities have been transferred to the SINGULUS TECHNOLOGIES AG. The The preparation of the abbreviated consolidated interim results for the period SINGULUS NANO DEPOSITION TECHNOLOGIES GmbH does not exist anymore from January 1 to September 30, 2010 was made pursuant to IAS 34 after the merger. “Interim Financial Reporting”. The abbreviated consolidated interim results do not include all of the notes and information required for the reporting for Except for the aforementioned companies no other companies have been the full business year and should be read in conjunction with the consolidated excluded from the scope of consolidation since December 31, 2009. financial accounts as of December 31, 2009.
Mergers and acquisition of minority interests
The preparation of the annual results pursuant to IAS 34 requires estimates and assumption by the management, affecting the level of the reported assets, liabilities, income, expenses as well as contingent liabilities. These assumptions and estimates mainly affect the Group-consistent determination of useful life expectancy, the write-offs of assets, the valuation of provisions, the recoverability of receivables, the determination of realizable terminal values in the area of inventories as well as the realizability of future tax relieves. The actual values can differ from the assumptions and estimates made on a case by case basis. Changes are recognized affecting earnings at the time of the knowledge gained.
Exercise of the call/put STANGL Semiconductor Equipment AG 2009 With effect from September 14, 2007 the company acquired 51 % of the shares of STANGL Semiconductor Equipment AG. The company’s objective is the development, production as well as sales & marketing of machines for wet-chemical processes in the processing of silicon and thin-film solar cells. A purchase price in the amount of € 43.8 million was agreed for these shares. For the remaining shares the SINGULUS TECHNOLOGIES AG was granted the right to exercise a call option. At the same time a put option was granted to the shareholders of STANGL Semiconductor Equipment AG. The call option would have been exercisable between January 1, 2010 and May 31, 2010 or in a The accounting and valuation methods applied in the consolidated accounts period spanning from January 1, 2011 to May 31, 2011. The put option would for the interim reporting correspond to those applied for the most recent have been exercisable between June 1, 2010 and October 31, 2010 or in a consolidated financial report as of the end of the business year 2009. For a period spanning from June 1, 2011 to October 31, 2011. The put/call option detailed description of the accounting principles please refer to the notes of was recognized as a liability in the amount of the present value of the the consolidated financial statements of our Annual Report 2009. estimated cash outflow. On December 7, 2009 the parties involved agreed to the acquisition of the remaining 49 % of the shares ahead of schedule at a Scope of consolidation purchase price in the amount of € 20.0 million. Thereof, € 10.0 million were In addition to the SINGULUS TECHNOLOGIES AG the consolidated financial paid at the time of the acquisition of the shares right away, the remaining statements include all companies, which are legally or factually controlled by purchase price liability in the amount of € 10.0 million had to be paid by the company. In the interim report as of September 30, 2010, in addition to the December 31, 2010 according to the agreement. A prepayment ahead of SINGULUS TECHNOLOGIES AG in total one domestic and 15 foreign subsidiaries schedule was made in July 2010. The interest rate amounted to 9.00 %. were included. The difference between the actually paid lower purchase price and the estimated No company was added to the scope of consolidated after December 31, 2009. liability for the 49 % of the shares (contingent consideration) was recognized In 2010 the HamaTech APE GmbH & Co. KG, Sternenfels, and the HamaTech as an adjustment of the goodwill in the reporting period 2009. In the course of APE Beteiligungs-GmbH, Sternenfels, were sold and both companies were the adjustment the goodwill of the cash-generating unit STANGL Semiconductor excluded from the scope of consolidation as of February 15, 2010. Equipment AG decreased by € 23.9 million. On February 24, 2009 the merger of the HamaTech AG, Kahl am Main, as the company to be merged, to the SINGULUS TECHNOLOGIES AG, Kahl am Main, as the acquiring company, became effective with the entry of the merger into the Commercial Register at the residence of the SINGULUS TECHNOLOGIES AG. Therefore, the assets of the HamaTech AG including its liabilities are transferred to the SINGULUS TECHNOLOGIES AG. The HamaTech AG ceased to exist with
Purchase of minority interests 2009 Following the acquisition of the majority stake in 2006 further 24,410 shares of the HamaTech AG were acquired with a purchase price in the amount of € 86,000 in the business year 2009. The resulting goodwill in the amount of € 30,000 in total was recognized as an expense in the profit/loss statement. As of February 24, 2009 the shareholdings amounted to approximately 93.9 %.
Q03
Report Third Quarter 2010
Accounts receivable
Property, plant & equipment
The accounts receivable as of September 30, 2010 are split as follows:
In the first three months of the business year 2010 € 1.6 million were invested in property, plant & equipment (previous year: € 1.0 million). During the same period scheduled depreciation amounted to € 2.5 million (previous year: € 2.2 million).
09/30/2010
12/31/2009
[in T€]
[in T€]
Accounts receivable – short-term
47,339
40,676
Accounts receivable – long-term
4,925
5,585
less write-offs
-13,937
-7,266
38,327
38,995
Intangible assets Capitalized development expenses, goodwill as well as concession intellectual property rights and other intangible are included under intangible assets. The capitalized development expenses amounted to € 16.9 million (pevious year: € 26.5 million). In the first nine months of 2010 the investments in developments totaled € 4.3 million (previous year: € 5.8 million). Scheduled write-offs and amortization on capitalized development expenses amounted to € 6.5 million (previous year: € 7.4 million). In addition, extraordinary write-offs in the amount of € 7.5 million were recognized in the quarter under review. During the period under review scheduled depreciation on other intangible assets amounted to € 4.5 million (previous year: € 3.9 million). In addition, in connection with the revaluation of the business activities at SINGULUS STANGL extraordinary write-offs on the intangible assets customer base (€ 16.7 million) as well as brand (€ 2.3 million) were performed. In the course of the revaluation of the business activities at MASTERING the goodwill of this unit was completely written off. As a result impairment charges in the amount of € 20.8 million were recognized in the quarter under review.
Property held as investments Pursuant to IAS 40 SINGULUS values investment properties at book values. In the quarter under review the decision to sell the real estate included under this item was made. In this connection the respective assets were reclassified under “Assets held for disposal”.
Shareholders’ equity With consent of the Supervisory Board on March 4, 2010 the Executive Board of the SINGULUS TECHNOLOGIES AG decided on March 4, 2010 to increase the nominal capital of the company from € 37,355,471 divided into 37,355,471 common bearer shares with a nominal value of € 1.00 each by an amount of up to € 3,694,640 up to € 41,050,111 against payment in cash. The placement of the shares was successfully conducted by an accelerated book-building process with German and international investors on March 5, 2010. 3,694,640 shares entitled for profit attribution from the business year 2009 were placed at a price of € 4.10 per share. The gross cash flow for the company amounted to € 15.1 million. The subscription rights of existing shareholders were excluded pursuant to the authorization in Art. 5 Para. 2 Sent. 4 of the articles of incorporation. This capital increase was entered into the commercial register of the SINGULUS TECHNOLOGIES AG at the Local Court Aschaffenburg on March 10, 2010. To implement the merger of the HamaTech AG to the SINGULUS TECHNOLOGIES AG, in the first quarter 2009 the SINGULUS TECHNOLOGIES AG increased its nominal capital from authorized capital by € 409,064.00 by means of issue of 409,064 new bearer shares with a nominal value of € 1.00 each with dividend
Geographical breakdown of sales Germany Geographic information as of September 30, 2010
[K€]
Rest of
North and
Europe
South America
[K€]
[K€]
Asia
Africa
Australia
[K€]
[K€]
[K€]
Sales by country of origin
55,595
9,950
8,911
6,511
0
0
Country of destination
16,737
17,192
24,135
17,985
1,013
3,905
Sales by country of origin
71,946
8,284
9,791
5,905
0
0
Country of destination
20,053
20,711
22,540
31,209
1,075
339
Geographic information as of September 30, 2009
14 15
entitlement from January 1, 2008. This capital increase was entered into the commercial register of the SINGULUS TECHNOLOGIES AG at the Local Court Aschaffenburg on February 24, 2009. The inclusion of the new shares within the listing of the SINGULUS TECHNOLOGIES AG on the Regulated Market of the Frankfurt Stock Exchange (Prime Standard) under the ISIN DE0007238909 was implemented as of March 4, 2009.
Research and development expenses
Bank loans
Restructuring charges / impairment
As of September 30, 2010 bank loans totaled € 28.7 million (previous year: € 26.8 million). With effect from December 14, 2007 the SINGULUS TECHNOLOGIES AG signed a syndicated loan in the amount of € 60.0 million. The credit facility included a loan in the amount € 25.0 million as well as a revolving credit facility in the amount of € 35.0 million with a total term to maturity of five years.
These charges include impairment charges stemming from the reduction of the goodwill of SINGULUS MASTERING in the amount of € 20.8 million as well as write-offs on intangible assets in connection with the acquisition of STANGL Semiconductor Equipment AG. This includes the write-off on the respective customer base in the amount of € 16.7 million as well as on the brand by € 2.3 million. Moreover, within impairment charges write-offs on capitalized development expenses totaling € 4.4 million were recognized. The restructuring charges mainly result from the relocation of the SINGULUS MASTERING activities to Kahl am Main. This causes charges in the amount of € 1.8 million. In addition, write-offs on inventories amounting to € 6.4 million were recognized.
With effect from March 4, 2010 this agreement was modified. The syndicated credit line was reduced to currently € 41.5 million. The new credit line is split into an amortization loan in the amount of € 25.0 million and a loan on a revolving basis in the amount of € 16.5 million. Of this an amount of € 6.5 million is available for guarantees. With respect to this loan agreement the guarantors are the companies SINGULUS TECHNOLOGIES Inc. as well as SINGULUS MASTERING B.V. As of June 30, 2010 after the repayment of € 7.9 million the loan stood at € 8.3 million, the revolving credit facility was completely drawn in the amount of € 10.0 million. Furthermore, in January of the year under review the Executive Board submitted an application for the grant of a loan in the amount of € 10.0 million by the Kreditanstalt für Wiederaufbau (KfW). The cash inflow took place in the 2nd quarter 2010 and is tied to the payment of the remaining purchase price liability to acquire the remaining 49 % of the shares of STANGL Semiconductor Equipment AG.
Contingent liabilities and other financial obligations The contingent liabilities and other financial obligations not included in the consolidated accounts amount to € 41.4 million (previous year: € 39.3 million) and mainly include rent and leasing obligations (€ 35.1 million), guarantees for prepayments received (€ 4.5 million) as well as guarantees (€ 1.8 million). Management does not have knowledge about facts that could have a materially adverse impact on the business operations, the financial situation or the business results of the company.
Sales reductions and individual selling expenses The sales reductions include cash discounts granted. The individual selling expenses are mainly composed of expenses for packaging, freight and commissions.
General administrative expenses The administrative expenses include the expenses for the management, personnel expenses, the finance and accounting departments as well as the corresponding expenses for rent and company cars. Furthermore, they include the ongoing IT expenses, legal and consulting fees, expenses for investor relations activities, the Annual General Meeting and the annual financial statements.
In addition to the research and non-capitalized development expenses, the research and development expenses in the 3rd quarter of 2010 include the scheduled amortization of capitalized development expenses in the amount of € 2.1 million (previous year: € 2.5 million). Also this item includes extraordinary write-offs in the amount of € 3.1 million.
Other expenses/income The other expenses predominantly concern allowances for doubtful accounts (€ 7.4 million).
Financial income and financing expenses The interest income/ expenses are composed as follows:
Interest income from long-term customer receivables Interest income from time deposits/ overnight deposits Other interest income Financing expenses
09/30/2010
09/30/2009
[K€]
[K€]
540
991
31
375
100
0
-4,013
-5,841*
-3,342
-4,475
* previous year adjusted
Earnings per share For the calculation of the undiluted earnings per share the earnings attributable to the bearers of the common shares of the parent company are divided by the weighted average number of shares in circulation during the year under review. For the calculation of the diluted earnings per share the earnings attributable to the bearers of the common shares of the parent company (after subtracting interest on the convertible preference shares) are divided by the weighted average number of common shares in circulation during the year under review in addition to the weighted average number of shares resulting from the conversion of all potential common shares with dilution effect into common shares. The following table includes the amounts applied for the calculation of the undiluted and diluted earnings:
Q03
Report Third Quarter 2010 2010
2009*
[K€]
[K€]
-76,200
-55,470
40,092,241
37,232,752
0
0
40,092,241
37,232,752
Earnings for the calculation of the undiluted earnings attributable to the bearers of common shares of the parent company Weighted average number of common shares for calculation of undiluted earnings per shares
Dilution effect:
Weighted average number of common shares adjusted for dilution effect * previous year adjusted
Since no opposing effect to the dilution may be considered in the calculation of the diluted earnings per share, neither the issuance of new shares for the merger of the HamaTech AG (in 2009 409,064 shares were issued) neither the issuance of new shares for the capital increase as of March 4, 2010 (3,694,640 new shares with profit entitlement from 2009) may be considered for the dilution. In contrast to the wording of IAS 33.5, in the previous year the factual obligation from the acquisition of the minority interest from the STANGL Semiconductor Equipment AG was considered for the calculation of the weighted average number of common shares and of the earnings attributable to the bearers of the common shares of the parent company. Due to this effect negative, diluted earnings per share in the amount of € -1.20 resulted. Not considering this dilution would result in earnings per share of € -1.49 (corresponds to the undiluted earnings per share).
Events after the Balance Sheet Date There were no events with material impact after the completion of the quarter under review.
Shareholdings of Board members (as of November 5, 2010) As of the balance sheet date, the members of the Executive and Supervisory Boards of the SINGULUS TECHNOLOGIES AG held the following number of shares, convertible bonds and stock options: Shares Executive Board Members: Dipl.-Oec. Markus Ehret
2,000 shares
Dr.-Ing. Anton Pawlakowitsch
6,000 shares
Dr.-Ing. Stefan Rinck
8,000 shares
Supervisory Board Members: VVG Familie Roland Lacher KG
594,472 shares
Dr.-Ing. Wolfhard Leichnitz
10,000 shares
Günter Bachmann
15,000 shares Stock options
Executive Board Members Dipl.-Oec. Markus Ehret
20,000 options
Dr.-Ing. Anton Pawlakowitsch
80,000 options
Affirmation of the Legal Representatives “We affirm to the best of our knowledge, that the interim consolidated financial statements, in accordance with the relevant accounting principles for interim reporting, provide a true and fair view of the Group’s assets, financial and earnings situation and that the Group’s interim report represents a true and fair view of the course of business including the operating result and the Group’s financial situation as well as describing the material opportunities and risks concomitant with the expected development of the Group during the remainder of the business year." Kahl am Main, November 2010 The Executive Board SINGULUS TECHNOLOGIES AG
Company Calendar 2011 March 31, 2011 May 31, 2011
Annual Press Conference Annual Shareholders Meeting
at a glance Consolidated key figures 3rd quarters 2008-2010 (IFRS) 2008
2009
2010
million €
68.6
28.8
31.6
Order intake
million €
42.2
15.2
29.9
EBITDA
million €
-3.5
-28.2
-20.9
Sales
EBIT
million €
-39.0
-42.7
-72.9
Earnings before taxes
million €
-39.2
-44.9
-74.0
Net profit
million €
-36.3
-41.5
-68.3
R & D expenses
million €
7.3
2.5
1.9
Consolidated key figures (nine months cumulated) 2008-2010 (IFRS) 2008
2009
2010
Sales
million €
149.9
95.9
81.0
Order intake
million €
197.5
56.0
97.3
Order backlog (September 30)
million €
103.4
30.3
43.7
EBITDA
million €
10.9
-28.6
-20.0
EBIT
million €
-40.7
-53.3
-80.9
Earnings before taxes
million €
-44.2
-57.8
-84.2
Net profit
million €
-39.5
-55.4
-76.2
Operating cash flow
million €
0.2
-1.7
-9.7
Shareholders’ equity
million €
253.8
188.7
105.7
Balance sheet total
million €
453.3
335.9
184.5
R & D expenses
million €
15.6
8.0
5.2
Employees (September 30) Weighted average shares, basic Earnings per share, basic
€
764
633
454
36,946,407
37,232,752
40,092,241
-1.11
-1.49
-1.90
Future-oriented statements and forecasts
MetaCom 11/2010
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.
SINGULUS TECHNOLOGIES AG
Hanauer Landstrasse 103 D-63796 Kahl Phone: +49-6188-440-0 Fax : +49-6188-440-110
Investor Relations: Maren Schuster Phone: +49-6188-440-612 Fax : +49-6188-440-110
Mail: investor-relations@singulus.de Web: www.singulus.de