Okmetic Oyj Interim report 1 January - 31 March 2016: Strong cash flow in weak market situation

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OKMETIC OYJ INTERIM REPORT 21 APRIL 2016AT 8.00 A.M. OKMETIC OYJ INTERIM REPORT 1 JANUARY - 31 MARCH 2016: STRONG CASH FLOW IN WEAK MARKET SITUATION JANUARY-MARCH IN BRIEF: Net sales amounted to 19.6 (21.6) million euro, down 9.2 (up 24.2) %. ...

OKMETIC OYJ         INTERIM REPORT          21 APRIL 2016     AT 8.00 A.M.

OKMETIC OYJ INTERIM REPORT 1 JANUARY - 31 MARCH 2016: STRONG CASH FLOW IN WEAK MARKET SITUATION

JANUARY-MARCH IN BRIEF:

  • Net sales amounted to 19.6 (21.6) million euro, down 9.2 (up 24.2) %.
  • Sensor wafer net sales 10.2 (10.8) million euro, down 5.3%.
  • D&A wafer net sales 9.4 (10.8) million euro, down 13.1%.
  • Operating profit without non-recurring items was 1.4 (2.9) million euro corresponding to 7.0 (13.5) % of net sales.
  • Operating profit was 6.7 (2.9) million euro corresponding to 34.2 (13.5) % of net sales. The operating profit includes a non-recurring gain of 6.0 million euro related to the sale of operations of the US-based epi plant, announced on 1 April 2016.
  • Profit for the period was 6.5 (2.2) million euro.
  • Basic earnings per share was 0.39 (0.13) euro.
  • Net cash flow from operations amounted to 4.4 (0.9) million euro.

Unless otherwise stated, figures in parenthesis refer to the corresponding period of the previous year.

SHORT-TERM OUTLOOK

Demand for Okmetic's advanced sensor wafers is expected to remain on a growth track in 2016. Sensor wafers have more stable demand and prices than silicon wafers used in the manufacture of discrete semiconductors and analog circuits (Discrete & Analog, D&A), and they are also traditionally less sensitive to economic fluctuations. D&A wafers replaced semiconductor wafers as one of Okmetic's two customer segments at the beginning of 2016. For D&A wafers, growth is anticipated to be flat in 2016 due to sluggish demand in the early months of the year.

The market was quieter than usual in early 2016 as anticipated, particularly due to forecasts of lacklustre smartphone sales and the ensuing inventory adjustments across the entire value chain. Demand is expected to pick up again from the second quarter onwards.

FINANCIAL GUIDANCE FOR 2016

The company revised its guidance for net sales in conjunction of the sale of the Allen plant published on 1 April 2016. In 2016, the net sales are estimated to decline from the level of 2015 and operating profit without non-recurring items to exceed the level of 2015. According to the earlier guidance, the net sales and operating profit without non-recurring items were estimated to exceed the level of 2015 in 2016.

PRESIDENT KAI SEIKKU:

"The slowing demand in the end of 2015 carried over into 2016, and it took until March for demand to pick up again. Demand for smartphones, a driver of market growth in recent years, is falling because they have now reached a point of saturation. This has led to a rise in inventory levels across the whole value chain. Adjustments in inventory levels will in 2016 affect the entire silicon wafer market, including both of Okmetic's customer segments despite the fact that demand in these is more stable than in the rest of the market.

Net sales (19.6 million euro) were down by 9.2 percent against the comparison period. The biggest drop by far was in the North American market (-1.8 million euro), but Europe (-0.5 million euro) did not escape the effects of the slowing demand either. Net sales growth brought Asia's share of Okmetic's net sales already to 24 percent. Asia has been identified as the fastest-growing market area for Okmetic in the next few years.

The lacklustre market in early 2016 was reflected in Okmetic's operating profit without non-recurring items, which lagged clearly behind the level achieved in the comparison period. The weakening of the US dollar against the euro had a negative impact of 0.2 million euro on the operating profit. A considerable non-recurring gain of 6.0 million euro was recorded for the review period as a result of the sale of the Allen epi plant. The operating profit also includes a non-recurring item of 0.6 million euro related to the voluntary public tender offer by National Silicon Industry Group (NSIG), announced after the review period on 1 April 2016 (described in more detail later in this report). The Allen plant ended its final quarter under Okmetic in the negative at -0.4 million euro.

The sale of the Allen plant was a better option than the wind-down plan announced in December 2015. The plant will remain operational and the delivery of products to customers will continue. Meanwhile, Okmetic will continue to supply wafers to the plant, now owned and operated by Epitek Silicon. The phase-out of the epi business is a logical step for Okmetic in light of its chosen strategy and focus on high value-added silicon wafers.

Net cash flow in early 2016 (4.4 million euro) was at a significantly better level than in the comparison period. The measures to release working capital are taking effect, and the high polysilicon inventory levels we have seen over the past few years have begun to come down in early 2016 as anticipated, and will continue to do so until the second half of 2017.

In the early months of the year, Okmetic continued its focused investments in line with the company strategy. March saw the launch of an enhanced SOI wafer, E-SOI, which is the result of sustained R&D efforts. Thanks to its advanced properties, E-SOI opens new markets for Okmetic such as HV devices, silicon photonics applications and high-precision sensors."

KEY FIGURES

1,000 euro 1 Jan-
31 Mar,
2016
1 Jan-
31 Mar,
2015
1 Jan-
31 Dec,
2015
1 Jan-
31 Dec,
2014
         
Net sales 19,628 21,612 84,540 74,104
Operating profit
before depreciation
(EBITDA)


8,421


4,545


15,115


12,985
Operating profit without
non-recurring items

1,382

2,923

10,972

6,401
 % of net sales 7.0 13.5 13.0 8.6
Operating profit 6,720 2,923 7,718 6,401
 % of net sales 34.2 13.5 9.1 8.6
Profit for the period 6,512 2,165 4,832 4,832
Basic earnings
per share, euro

0.39

0.13

0.29

0.29
Net cash flow
from operating
activities


4,421


896


14,716


12,478
Net interest-
bearing
liabilities


4,077


4,033


2,283


-1,110
Equity ratio, % 69.5 68.6 64.0 70.5
Average number
of personnel
during the period


387


372


394


370

MARKETS

Semiconductor industry

Semiconductor industry sales in 2015 were down by two percent year-on-year (IHS) and are estimated at approximately 350 billion US dollars (IC Insights, IHS). Growth was weak in all quarters and especially in the first quarter (IHS). The slowing down of the semiconductor market in 2015 resulted from stagnant smartphone and tablet markets as well as developments in world economy, and China in particular, that are affecting the consumption in general.

In 2016, the semiconductor market is projected to remain flat or fall slightly from the previous year's level (Gartner, WSTS). Growth for 2017 is projected at around three percents (WSTS).

Sensor industry

In 2015, the sensor industry is estimated to have grown by one percent from the previous year with the market value amounting to 6.4 billion US dollars (IC Insights). Growth for 2016 is projected at around two percents (Semi, SIA, WSTS).

Certain silicon-based microelectromechanical (MEMS) products within the sensor segment have higher sales growth than the others. As a result of the increasing amount of sensors in mobile devices, the demand for e.g. pressure sensors and microphones has surged despite the slowing growth rate of the markets. Silicon-On-Insulator (SOI) technology is increasingly used in the manufacture of these products, among others. Okmetic is a pioneering supplier of SOI wafers for the sensor industry.

Discrete semiconductor and analog circuits industries (Discrete & Analog)

The discrete semiconductor market is estimated to decline by around one percent (WSTS) analog circuits market around two percents in 2016 (Semi, SIA, WSTS).

Silicon wafer market

According to the estimate published by SMG, the group of silicon wafer suppliers in SEMI (a global umbrella organisation for semiconductor materials and equipment industry), the surface area of silicon wafer shipments grew by three percent in 2015 compared to the previous year and were at a record-high level. However at the same time the value of silicon wafer shipments decreased by six percent compared to the previous year. According to the company's own estimate, the surface area of silicon wafer shipments in January-March 2016 were around five percent lower than in the corresponding period in 2015 and around four percent lower than in 2015 on average.   

Key customer areas for Okmetic in the silicon wafer market

In line with its strategy, Okmetic seeks niches in the silicon wafer market, where growth exceeds market average and in which the company has special expertise. The company supplies primarily 150 mm and 200 mm wafers.

The sensor/MEMS industry has been a key growth area for Okmetic for a long time. The use of sensors and their requirement level are expected to keep growing owing to proliferation of sensor applications in the automotive industry, industrial process control and in portable devices like smartphones, cameras, game consoles, and wearable electronics. In the future, a central growth driver for the sensor industry will be the Internet of Things, which will utilise sensor-produced data in communication between devices.

Another significant growth area is wafers used for the production of discrete and power semiconductors as well as analog circuits. In these wafer markets, areas for growth include, among others, components used in the production of renewable energy, increasing automotive electronics, electric cars, portable consumer products, as well as different solutions related to power supply and efficiency improvement. Okmetic has launched new products for these areas.

SALES

In January-March, Okmetic's net sales amounted to 19.6 (21.6) million euro. Net sales declined by 9.2 (grew by 24.2) percent compared to the corresponding period last year. The net sales of D&A wafers decreased by 13.1 percent and net sales of sensor wafers by 5.3 percent. The decline in net sales resulted mainly from overall weakness of demand. However, sales improved towards the end of the first quarter, and Okmetic's market share remained stable in the product groups important to the company.

As of financial year started on 1 January 2016, the company reports the net sales of its new customer segments, Sensor wafers and Discrete&Analog wafers (D&A wafers), as well as net sales of its market areas instead of value of deliveries.

Net sales per customer segment

1,000 euro 1 Jan-
31 Mar,
2016
1 Jan-
31 Mar,
 2015
1 Jan-
31 Dec,
2015
       
Sensor wafers 10,220 10,791 41,202
D&A wafers 9,407 10,821 43,338
Total 19,628 21,612 84,540

Net sales per market area

1,000 euro 1 Jan-
31 Mar,
2016
1 Jan-
31 Mar,
 2015
1 Jan-
31 Dec,
2015
       
North America 8,223 10,046 38,344
Europe 6,779 7,302 28,641
Asia 4,626 4,263 17,555
Total 19,628 21,612 84,540

The North American net sales decreased by 18.2 percent from the strong comparison period. Europe's net sales declined by 7.2 percent. In strategically important Asia the demand continued strong and net sales increased by 8.5 percent from the comparison period.

PROFITABILITY

January-March

In January-March, operating profit was 6.7 (2.9) million euro corresponding to 34.2 (13.5) percent of net sales. Operating profit includes non-recurring gain of 6.0 million euro related to the sale of the US-based epi plant announced on 1 April 2016 as well as non-recurring cost of 0.6 million euro related to the Tender Offer of NSIG. 

Operating profit without non-recurring items was 1.4 (2.9) million euro corresponding to 7.0 (13.5) percent of net sales. The weaker operating profit is resulting mainly from decline in sales, weaker sales mix as well as weak result of the Allen epi plant.

Profit for the period was 6.5 (2.2) million euro. The low income tax expense (0.3 million euro) in the financial period are explained by the Allen plant's tax losses (approximately 5.7 million euro), which are deductible in full against gain from the sale of Allen plant. Basic earnings per share was 0.39 (0.13) euro. Diluted earnings per share was 0.38 (0.13) euro.

FINANCING

The company's financial position was solid at the end of the period. In January-March, net cash flow from operations amounted to 4.4 (0.9) million euro.

The company's interest-bearing liabilities amounted to 10.6 (13.2) million euro on 31 March 2016. At the end of the period, cash and cash equivalents amounted to 6.5 (9.2) million euro. The company's net interest-bearing liabilities amounted to 4.1 (4.0) million euro on 31 March 2016. The company has ensured liquidity with credit facilities of 6.0 million euro. On 31 March 2016, the credit facilities were fully unused. To ensure liquidity, Okmetic has rearranged its credit facilities after the end of the review period. The company has negotiated new committed credit facilities of 6.0 million euro to replace the 6.0 million euro uncommitted credit facilities. A total of 3.0 million euro has been drawn from these new committed credit facilities after the review period.

Return on equity was 16.5 (13.8) percent. Return on investment was 15.7 (15.0) percent. The company's equity ratio was 69.5 (68.6) percent. Equity per share amounted to 3.78 (3.66) euro.

CAPITAL EXPENDITURE

In January-March, capital expenditure amounted to 2.6 (1.6) million euro. The investments focused mainly on increasing capacity and capability for SOI and 200 mm wafers.

PRODUCT DEVELOPMENT

In January-March, the company expensed 0.7 (0.7) million euro in product development projects, corresponding to 3.4 (3.3) percent of net sales. Product development costs have not been capitalised.

In the first quarter of 2016, Okmetic's product development projects focused on the development of new crystal technology and new SOI applications, deployment of new processes to improve productivity, as well as process development for sophisticated C-SOI wafers. As a result of sustained R&D efforts, the company launched an enhanced SOI wafer, E-SOI in March.

PERSONNEL

Okmetic employed on average 387 (372) people in January-March. At the end of the period, Okmetic employed 389 (375) people, of which 340 worked in Finland, 43 in the US, five in Japan, and one in Hong Kong. As a result of the sale of the Allen epi plant, the majority of the employees of Okmetic Inc., the US-based subsidiary of Okmetic, transfered to the service of the new owner on 1 April 2016.

SHORT-TERM RISKS

There have been no significant changes in the company's near future risks and uncertainties. However, changes in macro economy may indirectly have an influence also on Okmetic's business.

Business is confronted by risks, which may arise from the company's operations or changes in its operating environment. Risks that, if materialised, can have an adverse effect on the company's operations and valuation are described below.

Silicon wafer sales are targeted at the sensor, discrete semiconductor and analog circuit producers in the electronics industry. The demand of discrete semiconductor and analog circuit industries is sensitive to economic fluctuations, and changes in the market situation can be sudden and dramatic. The demand for sensor wafers is more stable. The proliferation of sensors in consumer electronics applications has, however, increased the susceptibility of this market too to economic fluctuations. In addition, the consolidation of customer companies might be a risk for the company's wafer sales.

Okmetic's share of the global silicon wafer market is around one percent, and market prices have a notable effect on the price development of the company's products. The company has considerable pricing power only with its own special products. The pricing of other wafers is largely based on global market price.

Okmetic operates globally, and therefore the company's business is affected by risks due to exchange rate fluctuations, consisting of cash flows from purchases and sales. A significant part of sales is conducted in US dollars. Despite hedging of the forecasted open currency position, the company remains exposed to exchange rate fluctuations.

Substantial volumes of electricity are used in Okmetic's production. Despite hedging, the company is exposed to fluctuations in the price of electricity.

SHARES AND SHAREHOLDERS

On 31 March 2016, Okmetic Oyj's paid-up share capital, as entered in the Finnish Trade Register, was 11,821,250.00 euro. The number of shares was 17,287,500. The shares have no nominal value attached. Each share entitles to one vote at general meetings. The company has one class of shares. The company's shares are included in the Finnish book-entry system.

Major shareholders 31 Mar, 2016
  Shares,
pcs
Share,
%
Ilmarinen Mutual Pension Insurance
Company

1,004,985

5.81
Oy Ingman Finance Ab 900,000 5.21
Mandatum Life Insurance
Company Ltd.
800,000 4.63
The State Pension Fund 600,000 3.47
Nordea Nordic Small Cap Fund 566,207 3.28
Varma Mutual Pension Insurance
Company

477,175

2.76
Okmetic Oyj 406,129 2.35
Oy Etra Invest Ab  400,000 2.31
Taaleritehdas Mikro Markka Fund 229,456 1.33
Kaleva Mutual Insurance Company 212,700 1.23
10 largest owners total 5,596,652 32.37
Nominee registered 3,216,648 18.61
Other 8,474,200 49.02
Total 17,287,500 100.00

SHARE PERFORMANCE AND TRADING

A total of 0.7 (2.4) million shares were traded between 1 January and 31 March 2016, representing 4.2 (13.6) percent of the weighted average of share total of 17.3 (17.3) million during the period. The lowest quotation of the reporting period was 6.66 (4.80) euro, and the highest 7.60 (7.25) euro, with the average being 7.07 (5.74) euro. The closing quotation for the period was 7.60 (6.59) euro. At the end of the period, market capitalisation amounted to 131.4 (113.9) million euro.

OWN SHARES

At the end of the period, the company held a total of 406,129 (416,763) own shares, which is approximately 2.3 (2.4) percent of Okmetic's all shares and votes.

OTHER EVENTS IN THE INTERIM PERIOD

The sale of the Allen epi plant

With its stock exchange release published on 1 April 2016, Okmetic announced that it has sold its production plant focusing on epitaxial deposition of silicon wafers, located in Allen in the United States, to American company Epitek Silicon instead of the wind-down announced earlier. In line with the agreement, Okmetic Inc. has transferred the plant to the buyer on 31 March 2016.

The purchase price was 9.5 million US dollars (around 8.5 million euros). The financing conditions are as follows: 0.25 million US dollars were paid at the signing of the agreement on 31 March 2016 and the rest of the purchase price is financed by a vendor note. According to the agreement, 1.5 million US dollars of the vendor note is paid back in parts on a monthly basis by the use of inventories mostly or totally during 2016, 5.75 million US dollars in July 2016, 1.0 million US dollars will be paid 12 months after the signing of the agreement and 1.0 million US dollars 24 months after the signing of the agreement. Okmetic recorded a non-recurring gain of six million euro based on the transaction.

As a result of the sale the business, production facility, equipment, inventories as well as majority of the personnel of Okmetic's US-based subsidiary Okmetic Inc. transferred to the buyer. Okmetic Inc. continues as a North American sales office as announced earlier. Okmetic has agreed with Epitek Silicon that Okmetic will deliver wafers for epitaxial deposition at least for five years time after the transaction.

EVENTS AFTER THE INTERIM PERIOD

Tender offer

Okmetic Oyj ("Okmetic") and National Silicon Industry Group ("NSIG") have on 1 April 2016 entered into a Combination Agreement pursuant to which NSIG, either directly or through its subsidiary (jointly, the "Offeror"), will make a voluntary public tender offer to purchase all of the issued and outstanding shares and option rights in Okmetic that are not owned by Okmetic or any of its subsidiaries (the "Tender Offer").

The consideration offered for each share validly tendered in the Tender Offer is EUR 9.20 in cash. In addition, in accordance with the Combination Agreement, the dividend of EUR 0.65 per share declared by Okmetic's Annual General Meeting held on 7 April 2016 and paid to Okmetic shareholders on 18 April 2016 does not reduce the price offered for the shares. The price offered for Option Rights validly tendered in the Tender Offer is EUR 4.87 in cash for each 2013 A Option Right and EUR 4.62 in cash for each 2013 B Option Right.

The Share Offer Price of EUR 9.20 per Okmetic share represents a premium of approximately 21.1 percent compared to the closing price of the Okmetic shares on Nasdaq Helsinki Ltd. ("Nasdaq Helsinki") on 31 March 2016, the last trading day before the announcement of the Tender Offer. The Share Offer Price of EUR 9.20 together with the Dividend of EUR 0.65 per Okmetic share already paid to Okmetic's shareholders, EUR 9.85 in the aggregate, represents a premium of approximately 29.6 percent compared to the closing price of the shares on Nasdaq Helsinki on the last trading day before the announcement of the Tender Offer.

Certain of the largest shareholders of Okmetic, Accendo Capital SICAV SIF, Ilmarinen Mutual Pension Insurance Company, Oy Ingman Finance Ab, Mandatum Life Insurance Company Limited and Kaleva Mutual Insurance Company, as well as the members of the Board of Directors and the Executive Management Group of Okmetic, representing jointly approximately 29.9 percent of the outstanding shares and votes in Okmetic as well as 92.9 percent of the outstanding option rights, have, subject to certain customary conditions, irrevocably undertaken to accept the Tender Offer.

The detailed terms and conditions of the Tender Offer and information on how to accept the Tender Offer will be included, in accordance with the Combination Agreement, in the tender offer document to be published by the Offeror by 22 April 2016.

Annual general meeting on 7 April 2016

Okmetic Oyj's annual general meeting on 7 April 2016 adopted the annual accounts and the consolidated annual accounts for 2015 and discharged the company's management from liability. The annual general meeting decided, in accordance with the proposal of the board of directors, to distribute a dividend of 0.65 euro per share (in total 11.0 million euro). The dividend was paid on 18 April 2016.

The annual general meeting confirmed that the company's board of directors consists of five members. Mr. Jan Lång, Mr. Hannu Martola, Ms. Riitta Mynttinen, Mr. Mikko Puolakka and Mr. Henri Österlund were re-elected as members of the board of directors until the end of the next annual general meeting. The board of directors elected Jan Lång as chairman and Henri Österlund as vice chairman in its organising meeting held immediately after the annual general meeting.

Authorised Public Accountant PricewaterhouseCoopers Oy was re-elected as auditor, with APA Mr. Mikko Nieminen as principal auditor.

A separate stock exchange release on the decisions of the annual general meeting was published on 7 April 2016.

Financing

To ensure liquidity, Okmetic has rearranged its credit facilities after the end of the review period. The company has negotiated new committed credit facilities of 6.0 million euro to replace the 6.0 million euro uncommitted credit facilities. A total of 3.0 million euro has been drawn from these new committed credit facilities after the review period.

CONDENSED FINANCIAL STATEMENTS AND TABLES 1 JANUARY - 31 MARCH 2016 (unaudited)

ACCOUNTING POLICIES

These interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting.

In preparing these interim financial statements, Okmetic has followed the same accounting policies as in the financial statements for 2015 except for the effect of changes required by the adoption of certain new or revised standards and interpretations as of 1 January 2016, which have been described in financial statements 2015. The adoption of the new and revised standards and interpretations has not had an effect on the figures presented from the reporting period.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

1,000 euro 1 Jan-
31 Mar,
2016
 1 Jan-
31 Mar,
2015
1 Jan-
31 Dec,
2015
       
Net sales 19,628 21,612 84,540
Cost of sales -15,671 -15,878 -65,759
Gross profit 3,957 5,734 18,781
Other income
and expenses

2,763

-2,810

-11,063
Operating
profit

6,720

2,923

7,718
Financial
income and
expenses


62


-142


-370
Profit
before tax

6,782

2,781

7,348
Income tax -270 -616 -2,516
Profit for
the period

6,512

2,165

4,832
       
Other
comprehensive
income:
     
Items that may be
reclassified to profit or
loss in subsequent
periods
     
Cash flow hedges 25 -2 20
Translation
differences

-372

916

759
Other
comprehensive
income for the
period, net of
tax




-347




914




779
       
Total
comprehensive
income for
the period



6,165



3,079



5,612
       
Profit for the
period
attributable
to:
     
Equity holders
of the parent
company


6,512


2,165


4,832
       
Total
comprehensive
income
attributable
to:
     
Equity holders
of the parent
company


6,165


3,079


5,612
       
Basic earnings
per share,
euro


0.39


0.13


0.29
Diluted
earnings per
share, euro


0.38


0.13


0.28

CONDENSED CONSOLIDATED BALANCE SHEET

1,000 euro 31 Mar,
2016
31 Mar,
2015
31 Dec,
2015
       
Assets      
Non-current assets      
Property, plant and
equipment

45,643

42,941

46,532
Intangible assets 247 575 329
Other receivables 1,921 708 164
Total non-current
assets

47,811

44,224

47,025
       
Current assets      
Inventories 15,816 18,103 17,477
Receivables 21,772 18,623 16,156
Cash and cash
equivalents

6,500

9,194

9,468
Total current
assets

44,088

45,919

43,101
       
Total assets 91,899 90,143 90,127
       
Equity and liabilities      
Equity      
Equity attributable
to equity holders of
the parent company
     
Share capital 11,821 11,821 11,821
Other equity 51,977 49,850 45,787
Total equity 63,799 61,671 57,608
       
Liabilities      
Non-current
liabilities

11,025

13,358

12,004
Current liabilities 17,075 15,114 20,514
Total liabilities 28,100 28,472 32,519
       
Total equity and
liabilities

91,899

90,143

90,127

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

1,000 euro 1 Jan-
31 Mar,
2016
 1 Jan-
31 Mar,
2015
1 Jan-
31 Dec,
2015
       
Cash flows from operating
activities:
     
Profit before tax 6,782 2,781 7,348
Adjustments -3,894 1,565 8,082
Change in working capital 1,780 -3,142 1,102
Financial items -78 -306 -655
Tax paid -170 -2 -1,161
Net cash from
operating activities

4,421

896

14,716
       
Cash flows from investing
activities:
     
Purchases of property,
plant and equipment

-5,530

-1,740

-7,579
Net cash used in
investing activities

-5,530

-1,740

-7,579
       
Cash flows from financing
activities:
     
Proceeds from long-term
borrowings

-

1,000

1,000
Payments of long-term
borrowings

-1,000

-1,000

-2,000
Payments of finance
lease liabilities

-161

-159

-641
Dividends paid -619 -5,061 -11,193
Net cash used in
financing activities

-1,780

-5,221

-12,834
       
Increase (+) /
decrease (-) in cash
and cash equivalents


-2,889


-6,064


-5,698
Exchange rate changes -79 822 730
Cash and cash
equivalents at
the beginning
of the period



9,468



14,436



14,436
Cash and cash
equivalents at
the end of the
period



6,500



9,194



9,468

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

    Equity attributable to equity holders of parent company
 

 

 

1,000 euro
Share
capital
Share
pre-
mium
Reserve
for in-
vested
unre-
stricted
equity
Other
re-
serves
 1)
Retained
earnings
Total
Balance at
31 Dec, 2015

11,821

20,045

753

3,415

21,574

57,608
Profit for
the period
       
6,512

6,512
Other com-
prehensive
income, net
of tax:
           
Cash flow
hedges
     
25
 
25
Translation
differences
     
-372
 
-372
Total com-
prehensive
income for
the period
     


-347



6,512



6,165
             
Share-based
payments
       
26

26
Balance at
31 Mar, 2016

11,821

20,045

753

3,068

28,112

63,799
             
Balance at
31 Dec, 2014

11,821

20,045

753

2,636

28,372

63,627
Profit for
the period
       
2,165

2,165
Other com-
prehensive
income, net
of tax:
           
Cash flow
hedges
     
-2
 
-2
Translation
differences
     
916
 
916
Total com-
prehensive
income for
the period
     


914



2,165



3,079
             
Share-based
payments
       
26

26
Dividend
distribution
       
-5,061

-5,061
Balance at
31 Mar, 2015

11,821

20,045

753

3,550

25,501

61,671

1)"Other reserves" contains hedge reserve and translation differences.

SALE OF THE EPI PLANT

On 31 March 2016, Okmetic sold its production plant focusing on epitaxial deposition of silicon wafers, located in Allen in the United States, to American company Epitek Silicon instead of the wind-down announced earlier. The purchase price was 9.5 million US dollars (around 8.5 million euros). Okmetic recorded a gain of 6.0 million euro based on the transaction.

CHANGES IN PROPERTY, PLANT AND EQUIPMENT

1,000 euro 1 Jan-
31 Mar,
2016
1 Jan-
31 Mar,
2015
1 Jan-
31 Dec,
2015
       
Carrying amount at the beginning
of the period

46,532

42,538

42,538
Additions 2,595 1,587 10,834
Disposals -1,781 - -65
Depreciation and impairment
losses

-1,619

-1,540

-7,070
Exchange differences -84 356 296
Carrying amount at the end of
the period

45,643

42,941

46,532

COMMITMENTS AND CONTINGENCIES

1,000 euro 31 Mar,
2016
31 Mar,
2015
31 Dec,
2015
       
Loans, secured with collaterals 5,000 7,000 6,000
Collaterals 15,110 15,110 15,110
Off-balance sheet
lease commitments

188

323

244
Capital commitments 3,811 2,653 5,336
       
Nominal values of
derivative contracts
     
Currency options, call - 595 528
Currency forward agreements 4,086 4,518 5,268
Electricity derivatives 264 897 351
       
Fair values of
derivative contracts
     
Currency options, call - 1 1
Currency forward agreements 143 -215 -93
Electricity derivatives -133 -249 -185

The contract price of the derivatives has been used as the nominal value of the underlying asset.

HIERARCHY LEVELS OF DERIVATIVE CONTRACTS MEASURED AT FAIR VALUE

1,000 euro 31 Mar, 2016   31 Mar, 2015
  Level 1 Level 2 Level 3   Level 1 Level 2 Level 3
Financial assets          
Derivative financial
instruments

-

144

-
 
-

3

-
          
Financial liabilities          
Derivative financial
instruments

133

1

-
 
249

217

-

Fair value estimation

The group's financial instruments that are measured at fair value comprise derivatives used for hedging and held for trading.

Fair values of level 1 instruments are based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

Fair values of level 2 instruments are based on other data than quoted prices in active markets, but on the data from which the asset or liability is observable, either directly (i.e. price) or indirectly (i.e. derived from the prices).

Electricity derivatives are classified as level 1, currency derivatives as level 2.

Fair value determination

The fair values of electricity derivatives are based on quoted market prices. The fair values of currency forwards and options are determined on the basis of market and contract prices of the agreements at the reporting date by applying commonly used valuation techniques.

KEY FIGURES SHOWING FINANCIAL PERFORMANCE

1,000 euro 1 Jan-
31 Mar,
2016
1 Jan-
31 Mar,
2015
1 Jan-
31 Dec,
2015
       
Net sales 19,628 21,612 84,540
Change in net sales
compared to the previous
year's period, %


-9.2


24.2


14.1
Export and foreign
operations share
of net sales, %


90.2


91.0


91.5
Operating profit before
depreciation (EBITDA)

8,421

4,545

15,115
  % of net sales 42.9 21.0 17.9
Operating profit without
non-recurring items

1,382

2,923

10,972
  % of net sales 7.0 13.5 13.0
Operating profit 6,720 2,923 7,718
  % of net sales 34.2 13.5 9.1
Profit before tax 6,782 2,781 7,348
  % of net sales 34.6 12.9 8.7
Return on equity, % 1) 16.5 13.8 8.0
Return on investment, % 1) 15.7 15.0 10.4
Non-interest-bearing
liabilities

17,523

15,246

20,768
Net interest-bearing
liabilities

4,077

4,033

2,283
Net gearing ratio, % 6.4 6.5 4.0
Equity ratio, % 69.5 68.6 64.0
Capital expenditure 2,595 1,587 10,834
  % of net sales 13.2 7.3 12.8
Depreciation and impairment
losses

1,701

1,622

7,397
Research and development
expenditure

665

712

2,580
  % of net sales 3.4 3.3 3.1
       
Average number of
personnel during
the period


387


372


394
Personnel at the
end of the period

389

375

387

1) non-recurring items adjusted in 2016
             
KEY FIGURES SHOWING FINANCIAL PERFORMANCE

Euro 31 Mar,
2016
31 Mar,
2015
31 Dec,
2015
Basic earnings per share 0.39 0.13 0.29
Diluted earnings per share 0.38 0.13 0.28
Equity per share 3.78 3.66 3.41
Dividend per share - - 0.65
Dividends/earnings, % - - 224.1
Effective dividend yield, % - - 9.0
Price/earnings(P/E) - - 25.3
       
Share performance (1 Jan-)      
Average trading price 7.07 5.74 6.48
Lowest trading price 6.66 4.80 4.80
Highest trading price 7.60 7.25 7.70
Trading price at the
end of the period

7.60

6.59

7.24
Market capitalisation at the
end of the period, 1,000 euro

131,385

113,925

125,162
       
Trading volume (1 Jan-)      
Trading volume,
transactions, 1,000 pcs

730

2,353

5,153
In relation to weighted
average number of shares, %

4.2

13.6

29.8
Trading volume, 1,000 euro 5,162 13,516 33,386
The weighted average number
of shares during the period
under review adjusted by the
share issue, 1,000 pcs



17,288



17,288



17,288
The number of shares at the
end of the period adjusted by
the share issue, 1,000 pcs


17,288


17,288


17,288

When calculating earnings per share and equity per share, Okmetic's own shares are deducted from the total number of shares.

QUARTERLY KEY FIGURES

1,000 euro 10-12/
2016
7-9/
2016
4-6/
2016
1-3/
2016
         
Net sales       19,628
  Compared to previous quarter, %       -2.1
  Compared to corresponding
  period last year, %
     
-9.2
Operating profit without
non-recurring items
     
1,382
 % of net sales       7.0
Operating profit       6,720
  % of net sales       34.2
Profit before tax       6,782
  % of net sales       34.6
         
Net cash flow generated from:
Operating activities
     
4,421
Investing activities       -5,530
Financing activities       -1,780
Increase/decrease in cash
and cash equivalents
     
-2,889
         
Personnel at the end of the period       389

1,000 euro 10-12/
2015
7-9/
2015
4-6/
2015
1-3/
2015
         
Net sales 20,040 20,820 22,068 21,612
  Compared to previous quarter, % -3.7 -5.7 2.1 15.7
  Compared to corresponding
  period last year, %

7.3

7.8

18.0

24.2
Operating profit without
non-recurring items

1,595

3,540

2,914

2,923
 % of net sales 8.0 17.0 13.2 13.5
Operating profit/loss -1,660 3,540 2,914 2,923
  % of net sales -8.3 17.0 13.2 13.5
Profit/loss before tax -1,816 3,477 2,906 2,781
  % of net sales -9.1 16.7 13.2 12.9
         
Net cash flow generated from:
Operating activities

5,399

4,761

3,660

896
Investing activities -3,301 -1,913 -625 -1,740
Financing activities -3,767 -1,159 -2,687 -5,221
Increase/decrease in cash
and cash equivalents
-1,669 1,688 348 -6,064
         
Personnel at the end of the period 387 384 426 375

DEFINITIONS OF KEY FINANCIAL FIGURES

     

Operating profit before depreciation (EBITDA) = Operating profit + depreciation + impairment losses
     
Non-recurring items = Gain of the sale of US-based epi plant and expenses related to Tender Offer for the period
     
Return on equity (ROE), % = Profit/loss for the period x 100/
    Equity(average for the period)
     
Return on investment (ROI), % = (Profit/loss before tax + interest and other financial expenses) x 100/
    Balance sheet total - non-interest bearing liabilities(average for the period)
     
Equity ratio, % = Equity x 100/
    Balance sheet total - advances received
     
Net interest-bearing liabilities = Interest-bearing liabilities - cash and cash equivalents
     
Net gearing ratio, % = (Interest-bearing liabilities - cash and cash equivalents) x 100/
    Equity
     
Basic earnings per share = Profit/loss for the period attributable to  equity holders of the parent company/
    Adjusted weighted average number of shares outstanding during the period

 
     
Equity per share = Equity attributable to equity holders of the parent company/
    Adjusted number of shares at the end of the period

     
Dividend per share = Dividend for the period/
    Adjusted number of shares at the end of the period
     
Effective dividend yield, % = Dividend per share x 100/
    Trading price at the end of the period
     
Price/earnings ratio (P/E) = Last adjusted trading price at the end of the period/
    Earnings per share
     
Average trading price = Total traded amount in euro/
    Adjusted number of shares traded during the period
     
Market capitalisation at the end of the period = Number of shares at the end of the period x trading price at the end of the period
     
Trading volume = Number of shares traded during the period/
    Weighted average number of shares during the period

All figures of the financial tables are rounded, and consequently the sum of individual figures can deviate from the presented sum figure.

The future estimates and forecasts in this interim report release are based on the company management's current knowledge. Actual events and results may differ from the estimates presented here.

INTERIM REPORT BRIEFING

A briefing for analysts, investors and media takes place today, Thursday 21 April 2016, at 8.30 a.m. in Helsinki Stock Exchange building, Fabianinkatu 14a, Helsinki (2nd floor, entrance via Nasdaq's reception). The result will be presented by President Kai Seikku.

OKMETIC OYJ

Board of directors

For further information, please contact:

President Kai Seikku
tel. +358 9 5028 0232, email: kai.seikku@okmetic.com

Senior Vice President, Finance, IT and Communications Juha Jaatinen
tel. +358 9 5028 0286, email: juha.jaatinen@okmetic.com

Okmetic supplies tailored, high value-added silicon wafers to be used in the manufacture of sensors as well as discrete semiconductors and analog circuits. Okmetic's strategic objective is profitable growth driven by a product portfolio designed to meet customers' current and future technology needs. The core of the company's operations is being genuinely close to the customers and understanding their needs and processes.

Okmetic's global sales network, extensive portfolio of high value-added products, in-depth knowledge of crystal growing, long-term product development projects, as well as efficient and flexible production create prerequisites for achieving the strategic targets. The company's headquarters is located in Finland, where the majority of the company's silicon wafers is manufactured. In addition to in-house manufacture, Okmetic has contract manufacturing in Japan and China. Okmetic's shares are listed on Nasdaq Helsinki Ltd under the code OKM1V. For more information on the company, please visit our website at www.okmetic.com.




This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Okmetic Oyj via Globenewswire

HUG#2005280

Source(s) : Okmetic Oyj

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