SOITEC ANNOUNCES HALF-YEAR RESULTS FOR 2012-2013

SOITEC ANNOUNCES HALF-YEAR RESULTS FOR 2012-2013

· Current Operating loss at 70.2 million Euros – Net loss at 132.3 million Euros – Cash resources at 131 million Euros at the end of September

· Strategic investments dedicated to industrial capacities for Solar activities almost complete – limited investments going forward

· Conservative outlook given the global economic environment - Sequential increase in Electronic sales - first significant sales in Solar activities and cost cutting programs could trigger improvement in results

Bernin , France , November 14, 2012 – Soitec (Euronext), world leader in generating and manufacturing high performance semiconductor materials for electronics and energy, announced today its audited consolidated results for the first six months of its 2012-2013 financial year.

In the first half of the year, the Group posted consolidated sales of 130.2 million Euros, down 19.9% compared to the first six months of last year, taking into account an increase of 12.7% in the dollar / euro exchange rate. The significant decrease in 300 mm wafers demand, the acceleration in the Research and Development efforts and the strengthening of the Solar activities to meet the new strategic challenges have led to a current operating loss of 70.2 million Euros against an operating loss of 8.5 million Euros in the first six months of last year. After asset write-offs, an impairment charge and net financial expenses, the net first half-year result (Group share) shows a loss of 132.3 million Euros against a loss of 12.9 million Euros in the first half of 2011-2012. Operating cash flow was negative at 37.4 million Euros,
which is close to the EBITDA at -37.9 million Euros mainly attributable to electronic related inventories being decreased to adjust to reduced demand. The Group's cash resources amounted to 131.0 million Euros at the end of September 2012.

Financial highlights

(Euros millions)
 
H1 2011-2012
 
H1 2012-2013


 
 
 
 
 
 


Sales
 
 
162.6
 
130.2


 
 
 
 
 
 


Gross profit
 
 
36.6
 
(12.8)


As a percentage of sales
 
 
22.5%
 
(9.9%)


 
 
 
 
 
 


Research and Development
 
 
(20.7)
 
(28.8)


Selling, General and Administrative expenses
 
 
(20.7)
 
(26.9)


Solar projects development costs
 
 
(3.7)
 
(1.6)


 
 
 
 
 
 


Current operating income / (loss)
 
 
(8.5)
 
(70.2)


As a percentage of sales
 
 
(5.2%)
 
(53.9%)


 
 
 
 
 
 


Other operating expenses
 
 
-
 
(56.3)*


 
 
 
 
 
 


Operating income / (loss)
 
 
(8.5)
 
(126.5)


 
 
 
 
 
 


Net financial income/(expense)
 
 
(4.5)
 
(5.5)


Income tax
 
 
(0.2)
 
-


 
 
 
 
 
 


Net loss (Group Share)
 
 
(12.9)
 
(132.3)


As a percentage of sales
 
 
(7.9%)
 
(101.6%)


 
 
 
 
 
 


EBITDA
 
 
21.4
 
(37.9)


As a percentage of sales
 
 
13.6%
 
(28.0%)


 
 
 
 
 
 


Net earnings per share
 
 
(0.12)
 
(1.08)

*of which 51.3 million Euros for Electronic Segment and 5.0 million Euros for Solar Energy Segment

Segment Analysis

Operating segments have been revised in a manner consistent with the new internal reporting provided to the Executive Team who are responsible for allocating resources and assessing performance. The Group now operates under three segments: Electronic, Solar Energy and Lighting. It has also elected to report corporate headquarters support functions within “Other segment”. 

Electronic Segment

(Euros millions)
 
H1 2011-2012
 
H1 2012-2013


 
 
 
 
 
 


Sales
 
 
162.6
 
126.0


 
 
 
 
 
 


Gross profit
 
 
41.7
 
7.6


As a percentage of sales
 
 
25.7%
 
6.1%


 
 
 
 
 
 


Research and Development
 
 
(11.8)
 
(13.2)


Selling, General and Administrative expenses
 
 
(9.7)
 
(11.5)


 
 
 
 
 
 


Current operating income / (loss)
 
 
20.2
 
(17.1)


As a percentage of sales
 
 
12.4%
 
(13.6%)


Other operating expenses
 
 
-
 
(51.3)


 
 
 
 
 
 


Operating Income / (Loss)
 
 
20.2
 
(68.4)

Total wafer sales for the first half of the financial year were down by 35.8% to 95.2 million Euros (43.0% at constant exchange rates) compared to the first half of last year. 300 mm wafer sales which represented 72% of total wafer sales in the first half of the year, decreased by 42.7% (49.1% at constant exchange) compared to the first half of last year. All other wafer sales decreased by 7.6% (18.0% at constant exchange rates) compared to the first half of last year.

Specialty Electronics were at 5.4 million Euros and licensing revenues were 1.4 million Euros for the half year. Layer Transfer Solutions tripled its sales to 21.9 million Euros compared to the first half of last year. Equipment sales totaled 2.1 million Euros for the half year.

The 300 mm wafer sales slowdown in volumes and pricing has led to a decrease in the reported gross margin, which came from 41.7 million Euros (25.7% of sales) in the first half-year 2011-2012 to 7.6 million Euros (6.1% of sales) in the first half-year of 2012-2013.

Net Research and Development effort has slightly increased with a net charge of 13.2 million Euros, or 10.5% of sales, compared to 11.8 million Euros for the first half-year of 2011-2012 or 7.3% of sales. This increase is directly related to lower funding, as gross research and development costs remain almost stable at 15.8 million Euros.

Compared to first half last year, the increase in SG&A costs is due to perimeter change after the integration of the Business Unit Equipment in January 2012 and to reinforcement of the marketing team to support developments of FDSOI technologies. Compared to the second half of last year SG&A costs are stable.

Current operating margin became negative at 17.1 million Euros compared to an income of 20.2 million Euros for the first half of last year. A reassessment of future capacity needs between Singapore and Bernin facilities have recently been initiated for the Electronics' Division. A one time charge has been booked for an amount of 51.3 million Euros for impairment and tool set write-off charges.

Solar Energy Segment

(Euros millions)
 
H1 2011-2012
 
H1 2012-2013


 
 
 
 
 
 


Sales
 
 
-
 
4.2


 
 
 
 
 
 


Gross profit
 
 
(5.1)
 
(20.5)


As a percentage of sales
 
 
N.S
 
N.S


 
 
 
 
 
 


Research and Development
 
 
(5.2)
 
(9.5)


Selling, General and Administrative expenses
 
 
(3.5)
 
(8.4)


Solar Project development costs
 
 
(3.7)
 
(1.6)


 
 
 
 
 
 


Current operating income / (Loss)
 
 
(17.5)
 
(40.0)


As a percentage of sales
 
 
-
 
-


Other operating expenses
 
 
-
 
(5.0)


 
 
 
 
 
 


Operating Income / (Loss)
 
 
(17.5)
 
(45.0)

Solar Energy sales are marginal as this segment is still in the development phase.

Significant investments have been made in the Solar Energy segment to support the industrial ramp up in Freiburg and San Diego with an annual total capacity of 210 MWp.

R&D efforts dedicated to the future high efficiency solar cell have also been strengthened to meet expected targets. The increase in SG&A costs relates mainly to the reinforcement of the marketing efforts and skills to capture further sales such as those recently recorded in Italy and develop new opportunities in high irradiance areas like one in South Africa.

The current operating loss increased from 17.5 million Euros to 40.0 million Euros. A total non current charge of 5.0 million Euros has been recorded relating to the Gen IV tool set write-off in Freiburg, as the fourth generation solar systems have now been successfully replaced by the fifth generation (Gen V).

Lighting Segment

(Euros millions)
 
H1 2011-2012
 
H1 2012-2013


 
 
 
 
 
 


Sales
 
 
-
 
-


 
 
 
 
 
 


Gross profit
 
 
-
 
-


As a percentage of sales
 
 
-
 
-


 
 
 
 
 
 


Research and Development
 
 
(3.7)
 
(6.1)


Selling, General and Administrative expenses
 
 
(0.1)
 
(0.3)


 
 
 
 
 
 


Current operating income / (loss)
 
 
(3.8)
 
(6.4)


As a percentage of sales
 
 
-
 
-

The lighting segment was created last year as the R&D costs to support the Group's strategic positioning on Lighting markets became significant. Current efforts are focused on developing advanced substrates to address the future high growth market of solid state lighting.

Current operating loss increased from 3.8 million Euros to 6.4 million Euros.

Other segment

(Euros millions)
 
H1 2011-2012
 
H1 2012-2013


 
 
 
 
 
 


Sales
 
 
-
 
-


 
 
 
 
 
 


Gr oss profit
 
 
-
 
-


As a percentage of sales
 
 
-
 
-


 
 
 
 
 
 


Research and Development
 
 
-
 
-


Selling, General and Administrative expenses
 
 
(7.4)
 
(6.7)


 
 
 
 
 
 


Current operating income / (loss)
 
 
(7.4)
 
(6.7)


As a percentage of sales
 
 
-
 
-

The Other segment is made up of corporate headquarters support functions.

Strategic investments dedicated to industrial capacities for Solar activities almost completed – limited investments going forward

In the first half-year, the cash flow generated from operations was negative at an amount of 37.4 million Euros but remained close to the EBITDA at negative 37.9 million Euros as no additional significant working capital requirements took place. The net cash flow devoted to investment increased to 100.4 million Euros. The Group had at its disposal at the end of September 2012, cash resources amounting to 131.0 million Euros. Net cash position stated at (45.1) million Euros compared to 96.4 million Euros end of March 2012. By the end of September 2012, the Group has almost completed its strategic investments dedicated mainly to solar activities. H2 total capex budget is expected to be reduced below 40.0 million Euros.

Conservative short-term outlook - Sequential increase in H2 Electronic sales - first significant sales in Solar activities and cost cutting programs could trigger improvement in results in H2

In the Electronics sector, global end-customer consumption remains uncertain, especially for high performance PC-related markets, but booming demand for mobility products (slates, mobile phones) drive technological changes for chip manufacturers. Soitec's historical major customers for 300 mm wafers face intense competition and have announced their willingness to propose new solutions based on bulk technology. At the same time, Intel's technological roadmap which relies on non-planar design, forces competition into technological choices for products based on 20nm nodes and below. While Soitec has devised SOI-based solutions which address both planar and non-planar designs for 20 nm nodes and below, these solutions have yet to be adopted on a large scale in order to offset the current trend observed for traditional 300mm SOI markets.

ST Microelectronics' recent announcement concerning fully-depleted SOI-based solutions demonstrates the value of Soitec's technological arsenal, but needs to translate into mass adoption by several other industry players in order to generate sufficient revenue for Soitec, directly or from royalties paid by its licensee, Shin Etsu Handotai with whom Soitec recently renewed its license agreement. Considering the general economic uncertainty, the semiconductor industry is however cautious about accelerated adoption of new technologies. As a consequence, activity is anticipated to remain soft in the Electronics division in the coming quarters with visibility limited to the second half of the current financial year.

Beyond this time frame, the major technological choices currently contemplated by the industry shall significantly affect the Group's prospects either positively or negatively considering the importance of the revenues stemming from the business concerned with such technological choices.

Electronic sales for the second half of the 2012-2013 financial year are thus expected to be flat for segments linked with the current PCs market (300 mm) but will continue to benefit from anticipated strong growth for those related to RF, mobility and smart phones (smaller diameters).

In the second half, major driver for solar revenue growth remain linked to the South African related sign-off on project financing and successful completion of Italian projects which will trigger associated revenues. The recognition of the systems sales for this project is dependent upon the full refinancing of such project, failing which such sales to a group affiliate shall not be recorded as revenue. No other current project shall have a significant revenue contribution for the Solar Energy division until the end of the current fiscal year.

In order to restore its profitability and continue to support its customers, the Electronic Division has instituted a program to achieve additional cost savings of 20 million Euros on an annual basis. As part of this program, negotiations with unions on ways of making savings on Bernin payroll expenses are in progress. The company will provide update at the end of the negotiation process. Other sites in the Electronics segment are also currently implementing measures to reduce costs. 

The Group anticipates that its consolidated results for the full-year 2012-2013, will show EBIT margin remaining negative, while its cash resources end of September 2012 should remain sufficient to address challenges and opportunities for its financial year 2013-2014.

Agenda

Half year management report shall be available on Soitec's web site on November 19th.

The sales for the third quarter of the 2012-2013 fiscal year will be published on January 14, 2013, after the closing of the Paris stock exchange.

About Soitec

Soitec (Euronext Paris) is an international manufacturing company, at the heart of generating and manufacturing extreme performance semiconductor materials. Soitec's products encompass substrates for micro and nanoelectronics (most notably SOI : Silicon On Insulator) and concentrating photovoltaic systems (CPV), and company's core technologies Smart Cut™, Smart Stacking™ and Concentrix™, as well as expertise in epitaxy make it a world leader. Soitec delivers enhanced performance and energy efficiency to a broad range of applications including consumer and mobile electronics, telecommunications, automotive electronics, lighting products and solar power plants for large scale utilities. Soitec has manufacturing plants and Research and Development centers in France, Singapore, Germany, and the United States.

# # #

For more information, visit www.soitec.com.

For all information, please contact :

International Media Contacts



Business press:

Marylen Schmidt

+33 (0) 4 76 92 87 83

marylen.schmidt@soitec.com

 

Trade press:

Camille Darnaud-Dufour

+33 (0)6 79 49 51 43

camille.darnaud-dufour@soitec.com

 

 

 

 
Investor Relations

 

Olivier Brice

+33 (0)4 76 92 93 80

olivier.brice@soitec.com
French Media Contact

 

Marie-Caroline Saro

H&B Communication

+33 (0)1 58 18 32 44

mc.saro@hbcommunication.fr

 

 

 

 

 





 
 
 

Consolidated financial statements for the 6 month period ended September 30, 2012

Consolidated income statement

(in thousand Euros)
 
September 30, 2012
September 30, 2011


Sales
 
130 243
162 574


Cost of sales
 
(143 091)
(125 933)


Gross profit
 
(12 848)
36 641


Selling and marketing expenses
 
(8 154)
(4 374)


Research and development expenses
 
(28 831)
(20 709)


Photovoltaic project development costs
 
(1 592)
(3 725)


General and administrative expenses
 
(18 750)
(16 299)


Current operating income
 
(70 175)
(8 466)


Other operating income
 
-
-


Other operating expenses
 
(56 260)
-


Operating income
 
(126 435)
(8 466)


Finance income
 
8 598
7 819


Finance costs
 
(14 060)
(12 326)


Net finance costs
 
(5 462)
(4 506)


Loss before income tax
 
(131 897)
(12 792)


Income tax
 
-
3


Consolidated net loss for the period
 
(131 897)
(12 969)


Share of loss of associates
 
(441)
-


Loss for the period
 
(132 338)
(12 969)


Non-controlling interests
 
-
(61)


Net loss (Group share)
 
(132 338)
(12 908)


Basic net earnings per share in Euros
 
(1.08)
(0.12)


Diluted net earnings per share in Euros
 
(1.08)
(0.12)

Comprehensive income

(in thousand Euros)
 
September 30, 2012
September 30, 2011


Net loss
 
(132 338)
(12 969)


Exchange gains arising on translation of foreign operations
 
4 666
6 110


Actuarial gains/(losses) on pension obligations and other post-retirement benefits
 
-
-


Total income and expenses for the period recognized directly in equity
 
4 666
6 110


Total comprehensive loss for the period
 
(127 672)
( 6 859)


Non-controlling interests
 
-
(17)


Total comprehensive loss for the period (Group share)
 
(127 672)
(6 842)

Consolidated Balance sheet

Assets

(in thousand Euros)
 
September 30, 2012
March 31, 2012


Non-current assets :
 
 
 


Goodwill and intangible assets
 
64 619
63 259


Capitalized development projects
 
3 155
3 339


Property, plant and equipment
 
348 066
328 974


Deferred tax assets
 
-
-


Investments in associates
 
14 506
14 353


Non-current financial assets
 
6 223
5 938


Other non-current assets
 
19 402
6 689


Total non-current assets
 
455 971
422 552


Current assets :
 
 
 


Inventories
 
67 172
66 623


Trade receivables
 
45 755
47 161


Other current assets
 
35 328
55 931


Current financial assets
 
9 600
9 232


Cash and cash equivalents
 
130 956
259 804


Total current assets
 
288 811
438 751


Total assets
 
744 782
861 303





Equity and liabilities

(in thousand Euros)
 
September 30, 2012
March 31, 2011


Equity :
 
 
 


Share capital
 
12 231
12 213


Share premium
 
640 378
641 663


Treasury shares
 
(478)
(478)


Retained earnings
 
(198 244)
(67 120)


Other reserves
 
10 899
6 233


Total shareholders' equity
 
464 786
592 511


Non-controlling interests
 
-
-


Total equity
 
464 786
592 511


Non-current liabilities :
 
 
 


Long-term financial debt
 
138 713
139 702


Deferred tax liabilities
 
-
-


Provisions and other non-current liabilities
 
8 092
10 186


Total non-current liabilities
 
146 806
149 888


Current liabilities :
 
 
 


Short term financial debt
 
37 310
23 674


Trade payables
 
46 659
41 267


Provisions and other current liabilities
 
49 221
53 963


Total current liabilities
 
133 190
118 904


Total liabilities
 
744 782
861 303

Statement of changes in equity

(in thousand Euros)
Number of shares
Share capital
Share premium
Treasury shares
Retained earnings
Other reserves
Total shareholders' equity
Non-controlling interests
Total equity


March 31, 2011
87 487 811
8 749
492 318
(210)
(16 671)
(233)
483 953
421
484 374


Exchange gains arising on translation of foreign operations
-
-
-
-
-
6 066
6 066
44
6 110


Actuarial gains/(losses) on pension obligations and other post-retirement benefits
-
-
-
-
-
-
-
-
-


Total income and expenses for the period directly recognized in equity
-
-
-
-
-
6 066
6 066
44
6 110


Loss for the period
-
-
-
-
(12 908)
-
(12 908)
(61)
(12 969)


Total comprehensive income/(loss) for the period
-
-
-
-
(12 908)
6 066
(6 842)
(17)
(6 859)


Stock options, warrants and free shares
216 403
22
-
-
-
(22)
-
-
-


ABSAAR transactions
1 100 000
110
13 530
-
-
-
13 640
-
13 640


Proceeds from share issues
33 301 578
3 330
146 527
-
-
-
149 857
-
149 857


Share issuance expenses, net
-
-
(8 122)
-
-
-
(8 122)
-
(8 122)


Change in equity component of compound financial instruments
-
-
271
-
-
(271)
-
-
-


Share-based payments
-
-
-
-
2 930
-
2 930
-
2 930


Purchase of treasury shares
-
-
-
210
-
(423)
(213)
-
(213)


Other items
-
-
-
-
-
30
30
-
30


September 30, 2011
122 105 792
12 211
644 524
-
(26 649)
5 147
635 233
404
635 637





(in thousand Euros)
Number of shares
Share capital
Share premium
Treasury shares
Retained earnings
Other reserves
Total shareholders' equity
Non-controlling interests
Total equity


March 31, 2012
122 128 392
12 213
641 663
(478)
(67 120)
6 233
592 511
0
592 511


Exchange gains arising on translation of foreign operations
-
-
-
-
-
4 666
4 666
-
4 666


Actuarial gains/(losses) on pension obligations and other post-retirement benefits
-
-
-
-
-
-
-
-
-


Total income and expenses for the period directly recognized in equity
-
-
-
-
-
4 666
4 666
-
4 666


Loss for the period
-
-
-
-
(132 338)
-
(132 338)
-
(132 338)


Total comprehensive income/(loss) for the period
-
-
-
-
(132 338)
4 666
(127 672)
-
(127 62)


Stock options, warrants and free shares
184 451
18
-
-
(18)
-
-
-
-


ABSAAR transactions
-
-
(1 286)
-
-
-
(1 286)
-
(1 286)


Share-based payments
-
-
-
-
1 273
-
1 273
-
1 273


Other items
-
-
-
-
(39
-
(37)
-
(37)


September 30, 2012
122 312 843
12 231
640 378
(478)
(198 242)
10 899
464 787
-
464 787