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Form 6-K AIXTRON SE For: Aug 11

August 11, 2016 11:16 AM EDT

Table of Contents

 

 

 

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 


 

FORM 6-K

 


 

Report of Foreign Issuer

 

Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934

 

Commission File No. 000-51196

 

August 11, 2016

 

 


 

AIXTRON SE
(Translation of registrant’s name into English)

 

Dornkaulstr. 2
52134 Herzogenrath

Germany
(Address of principal executive offices)

 


 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  x        Form 40-F  o

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes  o        No   x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 


 

 


Table of Contents

 

 

 

AIXTRON SE

 

2016 Half-Year Group Financial Report

 

Interim consolidated financial statements for the six months ended June 30, 2016

 



Table of Contents

 

Key Financials

 

Key Financials

 

2016

 

2015

 

 

 

2016

 

2015

 

 

 

(in EUR million)

 

H1

 

H1

 

+/-

 

Q2

 

Q2

 

+/-

 

Revenues

 

55.5

 

80.7

 

-31

%

34.1

 

40.4

 

-16

%

Gross profit

 

10.0

 

12.4

 

-19

%

6.9

 

3.6

 

92

%

Gross margin

 

18

%

15

%

3

pp

20

%

9

%

11

pp

Earnings before interest, tax, depreciation and amortization (EBITDA)

 

-20.0

 

-21.8

 

8

%

-8.2

 

-15.3

 

46

%

Operating result (EBIT)

 

-25.9

 

-26.7

 

3

%

-11.2

 

-17.9

 

38

%

EBIT margin

 

-47

%

-33

%

-14

pp

-33

%

-44

%

11

pp

Net result

 

-26.6

 

-27.6

 

4

%

-11.1

 

-18.1

 

39

%

Net result margin

 

-48

%

-34

%

-14

pp

-33

%

-45

%

12

pp

Net result per share - basic (EUR)

 

-0.23

 

-0.25

 

8

%

-0.09

 

-0.17

 

47

%

Net result per share - diluted (EUR)

 

-0.23

 

-0.25

 

8

%

-0.09

 

-0.17

 

47

%

Free cash flow*

 

-41.0

 

-12.3

 

-233

%

-20.7

 

-0.1

 

n.m

 

Total order intake

 

95.5

 

101.4

 

-6

%

51.1

 

52.5

 

-3

%

Equipment order backlog (end of period)

 

86.2

 

91.2

 

-5

%

86.2

 

91.2

 

-5

%

 


* Operating CF + Investing CF + Changes in Cash Deposits adjusted for acquisition effects (upfront payments and loan)

 

Management confirms 2016 outlook / EBITDA expectation for 2017 under review

 

AIXTRON Supervisory and Executive Boards recommend to accept the offer of Grand Chip Investment

 

Despite the fact that the first half 2016 revenues were 31% weaker compared to the first six months of 2015, the development of revenues and earnings in the first half 2016 was in line with Management expectations and the significant revenue growth expectation for the remainder of 2016 is supported by the quarterly sequential development in total order intake and backlog. Consequently, Management reiterates the full year 2016 revenue guidance given in February 2016. Before transaction related impacts, 2016 results and free cash flow are expected to improve slightly compared to 2015 but to remain negative. Due to uncertainties in terms of investment requirements for certain product groups, potential restructuring costs or consequences from the transaction, Management will review EBITDA development for 2017. Please see chapter 7. “Outlook” of this report for more details on AIXTRON’s guidance.

 

As declared in the joint statement by the AIXTRON Supervisory and Executive Boards which was published today, both boards recommend AIXTRON shareholders to tender their shares and to accept the takeover offer by Grand Chip Investment. AIXTRON’s works councils welcome the transaction as well. Please refer to the reasoned statement published today which can be downloaded from http://www.aixtron.com/en/investors for more details on the recommendation by both AIXTRON Boards.

 

Key Share Data

 

Key Share Data

 

H1/2016

 

H1/2015

 

Germany in EUR, NASDAQ in USD

 

Shares

 

ADS

 

Shares

 

ADS

 

Closing Price (end of period)

 

5.46

 

6.08

 

6.06

 

6.74

 

Period High Price

 

5.72

 

6.55

 

9.38

 

11.21

 

Period Low Price

 

2.95

 

3.25

 

5.93

 

6.67

 

Number of shares issued (end of period)

 

112,737,030

 

 

 

112,715,180

 

 

 

Market capitalization (end of period), million EUR, million USD

 

615.5

 

685.4

 

683.1

 

759.7

 

 

1



Table of Contents

 

Table of Contents

 

Interim Management Report

3

1. Business Activity

3

2. Macroeconomic and Industry Developments

4

3. Business Performance and Key Developments

5

4. Results of Operations

6

4.1. Development of Orders

6

4.2. Development of Revenues

6

4.3. Development of Results

7

5. Financial Position and Net Assets

9

6. Opportunities and Risks

10

7. Outlook

11

Interim Financial Statements

12

1. Consolidated Income Statement*

12

2. Consolidated Statement of other Comprehensive Income*

13

3. Consolidated Statement of Financial Position*

14

4. Consolidated Statement of Cash Flows*

15

5. Consolidated Statement of Changes in Equity*

16

Additional Disclosures

17

1. Accounting Policies

17

2. Segment Reporting

17

3. Stock Option Plans

17

4. Employees

18

5. Management

18

6. Related Party Transactions

18

7. Litigation

18

8. PlasmaSi, Inc.

18

9. Post-Balance Sheet Date Events

18

Responsibility Statement

19

 

Forward-Looking Statements

 

This document may contain forward-looking statements regarding the business, results of operations, financial condition and earnings outlook of AIXTRON within the meaning of the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. These statements may be identified by words such as “may”, “will”, “expect”, “anticipate”, “contemplate”, “intend”, “plan”, “believe”, “continue” and “estimate” and variations of such words or similar expressions. These forward-looking statements are based on our current views and assumptions and are subject to risks and uncertainties. You should not place undue reliance on these forward-looking statements. Actual results and trends may differ materially from those reflected in our forward-looking statements. This could result from a variety of factors, such as actual customer orders received by AIXTRON, the level of demand for deposition technology in the market, the timing of final acceptance of products by customers, the condition of financial markets and access to financing for AIXTRON, general conditions in the market for deposition plants and macroeconomic conditions, cancellations, rescheduling or delays in product shipments, production capacity constraints, extended sales and qualification cycles, difficulties in the production process, the general development in the semi-conductor industry, increased competition, fluctuations in exchange rates, availability of public funding, fluctuations and/or changes in interest rates, delays in developing and marketing new products, a deterioration of the general economic situation and any other factors discussed in any reports or other announcements filed by AIXTRON with the U.S. Securities and Exchange Commission. Any forward-looking statements contained in this document are based on current expectations and projections of the Executive Board and on information currently available to it and are made as at the date hereof. AIXTRON undertakes no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise, unless expressly required to do so by law.

 

This financial report should be read in conjunction with the interim financial statements and the additional disclosures included elsewhere in this report.

 

Due to rounding, numbers presented throughout this report may not add up precisely to the totals indicated and percentages may not precisely reflect the absolute figures for the same reason

 

Our registered trademarks: AIXACT®, AIXTRON®, Atomic Level SolutionS®, Close Coupled Showerhead®, CRIUS®, Gas Foil Rotation®, Optacap™, OVPD®, Planetary Reactor®, PVPD®, TriJet®

 

2



Table of Contents

 

Interim Management Report

 

1. Business Activity

 

AIXTRON (“the AIXTRON Group” or “the Company”) is a leading provider of deposition equipment to the semiconductor industry. The Company’s technology solutions are used by a diverse range of customers worldwide to build advanced components for electronic and optoelectronic applications based on compound, silicon, or organic semiconductor materials. Such components are used in a broad range of innovative applications, technologies and industries. These include LED applications, display technologies, data storage, data transmission, energy management and conversion, communication, signalling and lighting as well as a range of other leading-edge technologies.

 

The Company markets and sells its products worldwide, principally through its own direct sales organization, but also through appointed dealers and sales representatives.

 

AIXTRON’s business activities include developing, producing and installing equipment for the deposition of semiconductor and other complex materials, process engineering, consulting and training, including ongoing customer support and after-sales service. AIXTRON also offers a comprehensive range of peripheral equipment and services.

 

AIXTRON supplies its customers with both production-scale material deposition systems and small scale systems for Research & Development (“R&D”) or small scale production.

 

Demand for AIXTRON’s products is driven by increased processing speed, improved efficiency, energy storage and energy efficiency requirements and the necessity to reduce the cost of ownership for current and emerging microelectronic and optoelectronic components. The ability of AIXTRON’s products to precisely deposit thin material films and the ability to control critical surface dimensions in these components, enables manufacturers to improve performance, yield and quality in the fabrication process of advanced microelectronic and optoelectronic devices.

 

AIXTRON’s product range includes customer-specific systems capable of depositing material films on a diverse range of different substrate sizes and materials.

 

The deposition technologies for opto and power electronics include Metal-Organic Chemical Vapor Deposition (“MOCVD”) for the deposition of compound materials to produce for instance LEDs, power electronics or other optoelectronic components. For thin film deposition technologies for organic electronics applications including Organic Light Emitting Diodes (“OLED”), AIXTRON offers Polymer Vapor Phase Deposition (“PVPD®”) and Organic Vapor Phase Deposition (“OVPD®”). For thin film encapsulation, AIXTRON offers a Plasma Enhanced Chemical Vapor Phase Deposition (“PECVD”) technology. PECVD is also being employed for the deposition of complex Carbon Nanostructures (Carbon Nanotubes, Nanowires or Graphene). For logic and memory applications, AIXTRON systems are capable of depositing material films on wafers of up to 300mm in diameter for the production of memory chips, by employing technologies such as: Chemical Vapor Deposition (“CVD”) and Atomic Layer Deposition (“ALD”). Additionally, MOCVD technology is applied to deposit compound materials for the development of future logic devices.

 

The Company’s R&D capability remains of important strategic significance, as it provides for a competitive, leading edge technology portfolio and supports the future business development. Therefore, AIXTRON is committed to investing specifically in research and development projects to not only further pursue the Company’s leading technology position in MOCVD equipment for applications such as LEDs and for the production of wide band gap (WBG) materials for Power Electronics or next generation Logic & Memory applications. AIXTRON also targets to penetrate growth areas in the field of Organic Semiconductors.

 

Environmental protection and the responsible use of resources are an essential part of AIXTRON’s business strategy. The Company’s engineers work on improving AIXTRON’s systems continuously, both in terms of resource conservation and environmental-friendly design and function. AIXTRON SE’s DIN EN ISO 50001:2011 certified energy management system and the EN ISO 14001:2004 certified environmental management system at AIXTRON, Inc. contribute to the efficient use of energy and the careful use of resources.

 

3



Table of Contents

 

2. Macroeconomic and Industry Developments

 

Macroeconomic developments

 

Global economic growth remains stagnant. With the positive effect of the reduced oil price phasing out, growth in the advanced economies is uninspiring, increasingly reflecting structural constraints that cannot be resolved by additional monetary or fiscal policy actions. Emerging and developing countries still account for the lion’s share of global growth, albeit at a significantly slower pace than in previous years. The slightly increasing commodity prices are now supporting the growth dynamic in many of these countries. At the end of June, the outcome of the United Kingdom’s withdrawal from the European Union (“Brexit”) vote has become a new risk factor in growth projections and is expected to have an uncertain growth effect overall. The International Monetary Fund (IMF) in its World Economic Outlook Update (published July 19, 2016) has reduced its global growth forecast for 2016 (compared to the April 2016 Outlook) by 0.1 percentage points to 3.1% (2015: 3.1%). While growth in the advanced economies is now projected at 1.8% (2015: 1.9%) the emerging and developing countries are expected to grow by 4.1% (2015: 4.0%).

 

However, AIXTRON is much more dependent on industry specific cycles and does not expect major impacts of global economic environment on its business development in 2016. Brexit has limited immediate implications to the Company. Management will monitor potential impacts on the Company carefully.

 

The average exchange rate used by AIXTRON to translate income and expenses denominated in US dollars in the first six months of 2016 was 1.11 USD/EUR (Q1/2016: 1.09 USD/EUR; Q2/2016: 1.13 USD/EUR), which compares to 1.12 USD/EUR in H1/2015. Thus, compared to the same period of the previous year, the average US dollar exchange rate was largely unchanged and had only minimal effects on AIXTRON’s US-Dollar denominated revenues in the course of the first half-year. As of June 30, 2016, the US-Dollar remained stable at 1.11 USD/EUR (June 30, 2015: 1.11 USD/EUR).

 

Industry developments

 

According to the market research institute IHS (at the end of February 2016), the market for WBG Gallium nitride (GaN) and Silicon Carbide (SiC) based power management devices is expected to grow from 231 million shipped units in 2015 to 2.0 billion shipped units in 2025. IHS viewed that SiC will account for the majority of WBG shipments power management devices, as SiC adoption could be accelerated by the hybrid and electric vehicle market growth.

 

IHS (at the mid of March 2016) maintained the forecast of LED-lamps penetration relative to total lamps from 7% in 2015 to 25% in 2020, supported by the increasing availability of attractively priced, quality LED lighting products.

 

4



Table of Contents

 

3. Business Performance and Key Developments

 

Revenues in the first half of 2016 remained at low levels as the manufacturers remained cautious regarding capacity expansions. Orders received have been driven particularly by demand for applications in the area of opto- and power electronics. Total order intake and equipment order backlog both of which increased sequentially in a quarterly comparison support a significantly improving revenue development in the second half of 2016 as expected by Management.

 

Revenues in Q2/2016 increased to EUR 34.1m compared to the previous quarter (Q1/2016: EUR 21.4m). Due to relatively lower cost of sales compared to revenues, the gross profit increased to EUR 6.9m with an improved gross margin of 20% (Q1/2016: EUR 3.1m; 15%). Operating expenses in Q2/2016 were stable compared to the previous quarter, leading to an improved EBITDA of EUR -8.2m (Q1/2016: EUR -11.7m). The operating result (EBIT) improved to EUR -11.2m with an EBIT margin of -33% (Q1/2016: EUR -14.7m; -69%). The net result amounted to EUR -11.1m (Q1/2016: EUR -15.5m).

 

Despite higher revenues in the quarter, Free Cashflow in Q2/2016 was EUR -20.7m (Q1/2016: EUR -20.3m) which was mainly due to higher inventories in preparation for stronger planned shipments in the remainder of the year as well as timing effects.

 

AIXTRON reported cash and cash equivalents (including bank deposits with a maturity of more than 90 days) of EUR 161.3m as of June 30, 2016, which is EUR 48.1m below the EUR 209.4m recorded on December 31, 2015. The difference is mainly attributable to the negative operating result, the payment of the second installment of the agreed return of advance payments to San’an and an agreed milestone payment for the purchase of PlasmaSi (acquired in 2015) in Q1/2016. The Company did not have any bank borrowings.

 

On May 23, 2016, Fujian Grand Chip Investment Fund LP (“FGC”) announced that AIXTRON SE (“AIXTRON”) and Grand Chip Investment GmbH (“GCI”), a 100% indirect subsidiary of FGC, have entered into a business combination agreement. On July 29, 2016, GCI launched a voluntary public takeover offer to acquire all of the outstanding ordinary shares, including all ordinary shares represented by AIXTRON ADS. Under the terms of the agreement, AIXTRON shareholders will be offered 6.00 Euros in cash per each ordinary share. The transaction values AIXTRON’s equity, including net cash, at approximately 670 million Euros and reflects a 50.7% premium to the three-month volume weighted average share price prior to announcement. The takeover offer is subject to the conditions precedent of, amongst others, a minimum acceptance rate of 60 per cent of the issued AIXTRON Shares, the absence of capital measures of the target company and a material adverse effect and the granting of certain regulatory approvals. In their joint reasoned statement which was published today, AIXTRON Supervisory and Executive Boards have recommended AIXTRON shareholders to accept the offer and tender their shares within the tender period.

 

5



Table of Contents

 

4. Results of Operations

 

4.1. Development of Orders

 

Equipment Orders

 

2016

 

2015

 

+/-

 

(in EUR million)

 

H1

 

H1

 

 

 

%

 

Total order intake incl. spares & services

 

95.5

 

101.4

 

-5.9

 

-6

 

Equipment order backlog (end of period)

 

86.2

 

91.2

 

-5.0

 

-5

 

 

As a matter of internal policy, the 2016 US dollar based equipment order intake and backlog are recorded at the current 2016 budget exchange rate of 1.10 USD/EUR (2015: 1.25 USD/EUR).

 

In H1/2016, total order intake including spares & service showed a year-on-year decrease of 6% to EUR 95.5m (H1/2015: EUR 101.4m). Lower demand for silicon applications were not fully offset by rising demand for power electronic and optoelectronic applications. In Q2/2016, total order intake came in at EUR 51.1m improving by 15% sequentially (Q1/2016: EUR 44.4m). This order development is mainly driven by demand for the planetary reactor technology.

 

The equipment order backlog of EUR 86.2m as at June 30, 2016 was lower than the EUR 91.2m at the same point in time in 2015, and 27% higher than the Q1/2016 backlog of EUR 67.7m. The majority of the backlog is due for shipment in 2016.

 

As a matter of strict internal policy, AIXTRON follows clear requirements before recording and reporting received equipment orders as order intake and order backlog. These requirements comprise all of the following minimum criteria:

 

1. the receipt of a firm written purchase order,

2. the receipt of the agreed deposit,

3. accessibility to the required shipping documentation,

4. a customer confirmed agreement on a system specific delivery date.

 

In addition and reflecting current market conditions, the Company’s Management reserves the right to assess whether the actual realization of each respective system order is sufficiently likely to occur in a timely manner according to Management’s opinion. When Management concludes, that there is sufficient likelihood of realizing revenue on any specific system or that there is an unacceptable degree of risk of not realizing revenue on any specific system, Management will include or exclude the order, or a portion of the order, into or from the recorded order intake and order backlog figures, regardless of compliance with requirements of the points 1-4 above.

 

4.2. Development of Revenues

 

During the first six months of 2016, AIXTRON recorded total revenues of EUR 55.5m, a decrease of EUR 25.2m or 31% compared to the same period last year (H1/2015: EUR 80.7m) reflecting lower demand from GaN LED- and Silicon applications, particularly in Q1/2016. Compared to the previous quarter, revenues in Q2/2016 increased to EUR 34.1m (Q1/2016: EUR 21.4m).

 

Equipment revenues in H1/2016 were EUR 36.6m (H1/2015: EUR 57.9m), representing 66% of the total H1/2016 revenues (H1/2015: 72%). In the second quarter 2016, equipment revenues amounted to EUR 24.7m (Q2/2015: EUR 28.7m; Q1/2016: EUR 11.9m).

 

The deposition equipment and upgrades bought by AIXTRON’s customers in the first half-year 2016 are predominantly used for optoelectronic applications. The second largest end-market in terms of revenues for AIXTRON equipment in the first half-year of 2016 was equipment used for the silicon industry.

 

6



Table of Contents

 

 

 

2016

 

2015

 

 

 

Revenues by Equipment, Spares & 

 

H1

 

H1

 

+/-

 

Service 

 

m EUR

 

%

 

m EUR

 

%

 

m EUR

 

%

 

Equipment revenues

 

36.6

 

66

 

57.9

 

72

 

-21.3

 

-37

 

Other revenues (service, spare parts, etc.)

 

18.8

 

34

 

22.8

 

28

 

-4.0

 

-18

 

Total

 

55.5

 

100

 

80.7

 

100

 

-25.2

 

-31

 

 

 

 

2016

 

2015

 

 

 

 

 

 

 

H1

 

H1

 

+/-

 

Revenues by Region

 

m EUR

 

%

 

m EUR

 

%

 

m EUR

 

%

 

Asia

 

30.3

 

55

 

63.7

 

79

 

-33.3

 

-52

 

Europe

 

13.9

 

25

 

9.1

 

11

 

4.8

 

53

 

Americas

 

11.3

 

20

 

7.9

 

10

 

3.4

 

43

 

Total

 

55.5

 

100

 

80.7

 

100

 

-25.2

 

-31

 

 

4.3. Development of Results

 

 

 

2016

 

2015

 

 

 

 

 

 

 

H1

 

H1

 

+/-

 

Cost Structure 

 

m EUR

 

% Rev.

 

m EUR

 

% Rev.

 

m EUR

 

%

 

Cost of sales

 

45.5

 

82

 

68.3

 

85

 

-22.8

 

-33

 

Gross profit

 

10.0

 

18

 

12.4

 

15

 

-2.4

 

-19

 

Operating costs

 

35.9

 

65

 

39.1

 

48

 

-3.2

 

-8

 

Selling expenses

 

5.8

 

10

 

6.3

 

8

 

-0.5

 

-8

 

General and administration expenses

 

8.3

 

15

 

8.5

 

11

 

-0.2

 

-3

 

Research and development costs

 

26.0

 

47

 

27.6

 

34

 

-1.6

 

-6

 

Net other operating (income) and expenses

 

-4.2

 

-8

 

-3.3

 

-4

 

0.9

 

27

 

 

In a yearly comparison, cost of sales in H1/2016 decreased to EUR 45.5m (82% of revenues) compared to EUR 68.3m (85% of revenues) in H1/2015. The year-on-year improvement is mainly due to lower revenues and partially due to higher AIX R6 qualification costs recorded in H1/2015. The sequential increase in cost of sales was disproportionally lower than the increase in revenues from EUR 18.3m (85% of revenues) in Q1/2016 to EUR 27.2m (80% of revenues) in Q2/2016, which was mainly due to better utilization of production capacities from higher volumes.

 

Against this background, the Company’s gross profit in H1/2016 was EUR 10.0m (H1/2015: EUR 12.4m), resulting in an improved gross margin of 18.0% (H1/2015: 15%). In a quarterly comparison, the gross profit in Q2/2016 improved sequentially to EUR 6.9m (Q1/2016: EUR 3.1m), due to higher sales volume. Q2/2016 gross margin was 5 percentage points higher than the previous quarter at 20% (Q1/2016: 15%; Q2/2015: 9%).

 

Operating costs in H1/2016 of EUR 35.9m were 8% lower year-on-year compared to EUR 39.1m in H1/2015. The additional costs from PlasmaSi and the comparative negative currency effect in Q1/2016 were offset by higher productivity, better cost control and a contractual settlement. In a quarterly sequential comparison, operating costs were stable at EUR 18.0m compared to EUR 17.8m in Q1/2016 despite increased revenues in the same period.

 

The operating cost development was influenced by the following single factors:

 

Selling expenses in H1/2016 were down 8% year-on-year in absolute terms to EUR 5.8m (H1/2015: 6.3m) and stable relative to revenues at 10% (H1/2015: 8%). Sequentially, selling expenses were flat at EUR 2.9m (Q1/2016: EUR 2.9m). In Q2/2016, selling expenses relative to revenues improved sequentially to 8% (Q1/2016: 14%).

 

In H1/2016, general and administration expenses were down by 3% year-on-year to EUR 8.3m (H1/2015: EUR 8.5m). In Q2/2016, general and administration expenses increased sequentially to EUR 4.5m (Q1/2016: EUR 3.8m) due to transaction related expenses.

 

7



Table of Contents

 

Research and development costs in H1/2016 decreased by 6% year-on-year to EUR 26.0m (H1/2015: EUR 27.6m). Sequentially, R&D costs in Q2/2016 at EUR 12.7m (Q1/2016: EUR 13.3m) were down 5%, which was mainly reflecting the timing of the R&D project spending.

 

Recent examples of R&D activities are the “PeroBOOST” project investigates the development of solar cells from perovskites and the “HEA2D” project to investigate the production, qualities, and applications of 2D nanomaterials. In a three-year “PeroBOOST” project, AIXTRON collaborates with a consortium of research institutions with aims to develop the basis for innovative and efficient solar cells utilizing the recently discovered superb properties of organo-perovskite materials. In addition to being expected to involve lower costs, this technology also opens up a variety of novel future applications due to its manufacturability on flexible substrates. The joint project HEA2D with five partners is now researching various deposition processes for 2D materials, processes for transfer onto plastic foils, and mass integration into plastics components. When integrated into mass production processes, 2D materials have the potential to create integrated and systematic product and production solutions that are sustainable in social, economic, and ecological terms. One focus of AIXTRON’s subproject involves researching processes and systems technology for the deposition of optically active 2D semiconductor materials such as molybdenum tungsten (Mo, W), selenium sulfur (Se, S), and graphene.

 

 

 

2016

 

2015

 

 

 

Key R&D Information

 

H1

 

H1

 

+/-

 

R&D expenses (million EUR)

 

26.0

 

27.6

 

-6

%

R&D expenses, % of sales

 

47

 

34

 

 

 

R&D employees (period average)

 

254

 

271

 

-6

%

R&D employees, % of total headcount (period average)

 

35

 

35

 

 

 

 

Net other operating income and expenses in the first half-year of 2016 resulted in an income of EUR 4.2m (H1/2015: EUR 3.3m income). In Q2/2016, net other operating income and expenses were virtually stable sequentially at EUR 2.0m income compared to  EUR 2.2m in Q1/2016.

 

EUR 1.2m of R&D grants received in H1/2016 (H1/2015: EUR 0.7m; Q2/2016: EUR 0.4m; Q1/2016: EUR 0.8m), were recorded as other operating income.

 

The EBITDA in the first half-year 2016 has improved compared to the previous year (H1/2016: EUR -20.0m; H1/2015: EUR -21.8m) and sequentially (Q2/2016: EUR -8.2m; Q1/2016: EUR -11.7m) as a consequence of above-mentioned effects.

 

The operating result (EBIT) improved in a year-on-year comparison from EUR -26.7m in H1/2015 to EUR -25.9m in H1/2016. Compared to the previous quarter, the operating result in Q2/2016 improved to EUR -11.2m (Q1/2016: EUR -14.7m).

 

Due to the above-mentioned developments, result before taxes improved from EUR -26.2m in H1/2015 to EUR -25.6m in H1/2016. The result before taxes in H1/2016 includes a net finance income of EUR 0.2m (H1/2015: EUR 0.5m; Q2/2016: EUR 0.1m; Q1/2016: EUR 0.1m). In Q2/2016, the result before taxes was EUR -11.0m (Q1/2016: EUR -14.6m).

 

In H1/2016, AIXTRON recorded a country specific tax expense of EUR 1.0m (H1/2015: EUR 1.3m tax expense; Q2/2016: EUR 0.1m tax expense; Q1/2016: EUR 0.9m tax expense).

 

The Company’s net result improved year-on-year from EUR -27.6m in H1/2015 to EUR -26.6m in H1/2016. In Q2/2016, the net result amounted to EUR -11.1m (Q1/2016: EUR -15.5m).

 

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Table of Contents

 

5. Financial Position and Net Assets

 

The Company did not have any bank borrowings as of June 30, 2016 or December 31, 2015.

 

Total equity as of June 30, 2016 decreased by EUR 31.3m to EUR 365.2m compared to December 31, 2015 mainly due to the period’s net loss. The equity ratio at 85% as of June 30, 2016, was stable compared to 82% as of December 31, 2015, mainly due to the lower balance sheet total.

 

The AIXTRON Group’s capital expenditures for the first six months of 2016 amounted to EUR 1.7m (H1/2015: EUR 7.4m), of which EUR 1.4m (H1/2015: EUR 7.0m) related to property, plant and equipment (including testing and laboratory equipment).

 

Cash and cash equivalents (including cash deposits with a maturity of more than 90 days) decreased to EUR 161.3m (EUR 100.9m + EUR 60.4m cash deposits) as of June 30, 2016. Compared to EUR 209.4m (EUR 116.3m + EUR 93.1m cash deposits) as of December 31, 2015, the difference is mainly attributable to the negative operating result, the payment of the second installment of the agreed return of advance payments to San’an and an agreed milestone payment of EUR 4.1m for the purchase of PlasmaSi (acquired in 2015) in Q1/2016.

 

The value of property, plant and equipment was lower at EUR 77.2m as of June 30, 2016 (EUR 81.3m as of December 31, 2015) mainly due to lower capital expenditures compared to the regular depreciation in the first six months of 2016.

 

The value of goodwill was at EUR 74.4m as per June 30, 2016 slightly lower than the EUR 75.9m as per December 31, 2015. The difference was related to exchange rate fluctuations. There were no impairments in the first half-year of 2016.

 

Inventories, including raw materials, unfinished and finished goods, increased to EUR 78.2m as per June 30, 2016, compared to EUR 70.8m as of December 31, 2015, mainly reflecting the expected stronger H2/2016 sales. The carrying value of unsold AIX R6 inventories and outstanding supplier commitments totals EUR 18.3m (EUR 20.6m as of December 31, 2015).

 

Advance payments from customers increased by EUR 5.5m to EUR 29.5m as of June 30, 2016 compared to EUR 24.0m as of December 31, 2015, reflecting the higher order backlog.

 

Trade receivables were at EUR 22.2m as of June 30, 2016 (December 31, 2015: EUR 26.0m).

 

Provisions (including non-current and current provisions) were down EUR 4.6m from EUR 21.5m as of December 31, 2015 to EUR 16.9m as of June 30, 2016 because of lower sales related accruals and provisions for the first six months of 2016.

 

Other current liabilities were down from EUR 25.0m as of December 31, 2015 to EUR 3.6m as of June 30, 2016, reflecting the above-mentioned repayment to San’an as well as the payment related to the acquisition of PlasmaSi, Inc. in Q1/2016.

 

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Table of Contents

 

6. Opportunities and Risks

 

AIXTRON expects the following market trends and opportunities in the relevant end user markets could possibly have a positive effect on future business:

 

Short Term

 

·                  Further increasing adoption of LEDs for Solid State Lighting.

·                  Increasing demand of optoelectronic components for tele- and data communication applications.

·                  Increased emergence of wide band gap GaN or SiC based devices for energy efficient power management applications.

·                  Development of next generation NAND and DRAM memory devices.

·                  Further progress in the development of GaN-on-Silicon LEDs and Wafer Level Packaging.

 

Mid- to Long-Term

 

·                  Development of new wide-band-gap applications such as RF and System-on-Chip with integrated power management.

·                  Progress in the development of large area OLED devices requiring efficient deposition technologies.

·                  Progress in the development of flexible and rigid OLED devices requiring thin-film encapsulation.

·                  Increased development activity for specialized compound solar cell applications.

·                  Increasing requirements for High-k and interconnect components, implying a new approach to production technologies.

·                  Progress in the development of future logic chips applying wide band gap and high electron mobility materials (III-V-on-Silicon).

·                  Development of applications using Carbon Nanostructures (Carbon Nanotubes, Carbon Nanowires, Graphene).

·                  Development of alternative LED applications such as Visual Light Communication technology.

 

AIXTRON is exposed to a series of risks, which are described in detail in the “Risk Report” of the Annual Report 2015 and in the section “Risk Factors” in AIXTRON’s 2015 20-F Report, which has been filed with the U.S. Securities and Exchange Commission on February 23, 2016. The Company’s most recent Annual Report and the 20-F Report are both available on the Company’s website at www.aixtron.com (sections “Investors/Financial Reports” and “Investors/US-Listings”), the 20-F Report being additionally available on the SEC website at www.sec.gov/filings.

 

During the first six months of 2016, AIXTRON Management was not aware of any significant additions or changes in the risks as described in the 2015 Annual Report/20-F Report referred to above.

 

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7. Outlook

 

Despite the fact that the first half 2016 revenues were 31% weaker compared to the first six months of 2015, Management expects stronger revenues in the second half of 2016 compared to the first half. Total order intake in Q2/2016 as well as equipment backlog were up compared to the previous quarter, supporting Management’s expectation of revenue growth for the remainder of 2016.

 

Consequently, Management reiterates the full year 2016 revenue guidance given in February 2016.

 

Based on the assessment on AIXTRON’s current order situation, including current risks and opportunities as well as on the internal budget rate of USD/EUR 1.10, Management expects for fiscal year 2016 to achieve revenues between EUR 170 and 200 million. Total 2016 order intake is expected to be in a range between EUR 180 and 200 million.

 

Based on the internal budget rate of USD/EUR 1.10 and depending on the successful completion of qualification processes, market entry efforts as well as the achievement of revenues at the high end of the guidance range, Management expects to achieve another improvement of results in 2016. Before transaction related impacts, EBITDA, EBIT, net result and free cash flow are expected to improve slightly compared to 2015 but to remain negative for the full year 2016.

 

Due to uncertainties in terms of investment requirements for certain product groups, potential restructuring costs or consequences from the transaction, Management will review EBITDA development for 2017.

 

Further details on the outlook can be found in the chapter “Report on Expected Developments” of the Annual Report 2015 which is publicly available for download on the Company’s website at http://www.aixtron.com/en/investors/financial-reports/.

 

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Table of Contents

 

Interim Financial Statements

 

1. Consolidated Income Statement*

 

in EUR thousands

 

H1/2016

 

H1/2015

 

+/-

 

Revenues

 

55,486

 

80,663

 

-25,177

 

Cost of sales

 

45,492

 

68,270

 

-22,778

 

Gross profit

 

9,994

 

12,393

 

-2,399

 

 

 

 

 

 

 

 

 

Selling expenses

 

5,797

 

6,257

 

-460

 

General administration expenses

 

8,268

 

8,514

 

-246

 

Research and development costs

 

26,007

 

27,565

 

-1,558

 

Other operating income

 

5,105

 

4,414

 

691

 

Other operating expenses

 

904

 

1,151

 

-247

 

Operating result

 

-25,877

 

-26,680

 

803

 

 

 

 

 

 

 

 

 

Finance Income

 

255

 

456

 

-201

 

Finance Expense

 

0

 

0

 

0

 

Net Finance Income

 

255

 

456

 

-201

 

Result before taxes

 

-25,622

 

-26,224

 

602

 

 

 

 

 

 

 

 

 

Taxes on income

 

1,004

 

1,341

 

-337

 

Profit/loss attributable to the equity holders of AIXTRON SE (after taxes)

 

-26,626

 

-27,565

 

939

 

 

 

 

 

 

 

 

 

Basic earnings per share (EUR)

 

-0.23

 

-0.25

 

0.02

 

Diluted earnings per share (EUR)

 

-0.23

 

-0.25

 

0.02

 

 


* unaudited

 

12



Table of Contents

 

2. Consolidated Statement of other Comprehensive Income*

 

in EUR thousands

 

H1/2016

 

H1/2015

 

+/-

 

Profit or Loss

 

-26,626

 

-27,565

 

939

 

 

 

 

 

 

 

 

 

Currency translation adjustment

 

-5,199

 

9,992

 

-15,191

 

Other comprehensive income

 

-5,199

 

9,992

 

-15,191

 

Total comprehensive income attributable to equity holders of AIXTRON SE

 

-31,825

 

-17,573

 

-14,252

 

 


* unaudited

 

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Table of Contents

 

3. Consolidated Statement of Financial Position*

 

in EUR thousands

 

30-06-16

 

31-12-15

 

Assets

 

 

 

 

 

Property, plant and equipment

 

77,235

 

81,332

 

Goodwill

 

74,382

 

75,902

 

Other intangible assets

 

5,820

 

6,392

 

Other non-current assets

 

644

 

630

 

Deferred tax assets

 

2,851

 

3,242

 

Tax assets

 

59

 

59

 

Total non-current assets

 

160,991

 

167,557

 

Inventories

 

78,211

 

70,817

 

Trade receivables less allowance kEUR 2,219 (2015: kEUR 2,410)

 

22,153

 

25,956

 

Current tax receivables

 

1,981

 

2,538

 

Other current assets

 

5,904

 

5,691

 

Other financial assets

 

60,403

 

93,089

 

Cash and cash equivalents

 

100,933

 

116,305

 

Total current assets

 

269,585

 

314,396

 

Total assets

 

430,576

 

481,953

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

Subscribed capital Number of shares: 111,598,458 (2015: 111,581,783)

 

111,598

 

111,582

 

Additional paid-in capital

 

373,127

 

372,636

 

Retained earnings

 

-126,588

 

-99,962

 

Income and expenses recognised in equity

 

7,050

 

12,249

 

Total shareholders’ equity

 

365,187

 

396,505

 

Other non-current liabilities

 

1,741

 

2,294

 

Other non-current accruals and provisions

 

1,175

 

1,305

 

Total non-current liabilities

 

2,916

 

3,599

 

Trade payables

 

11,021

 

9,814

 

Advance payments from customers

 

29,519

 

24,011

 

Other current provisions

 

15,731

 

20,182

 

Other current liabilities

 

3,592

 

24,968

 

Current tax liabilities

 

2,610

 

2,874

 

Total current liabilities

 

62,473

 

81,849

 

Total liabilities

 

65,389

 

85,448

 

Total liabilities and shareholders’ equity

 

430,576

 

481,953

 

 


* unaudited

 

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Table of Contents

 

4. Consolidated Statement of Cash Flows*

 

in EUR thousands

 

H1/2016

 

H1/2015

 

+/-

 

Cash flow from operating activities

 

 

 

 

 

 

 

Net income for the period (after taxes)

 

-26,626

 

-27,565

 

939

 

Reconciliation between profit and cash flow from operating activities

 

 

 

 

 

 

 

Expense from share-based payments

 

446

 

614

 

-168

 

Depreciation and amortization expense

 

5,924

 

4,924

 

1,000

 

Net result from disposal of property, plant and equipment

 

-6

 

103

 

-109

 

Deferred income taxes

 

414

 

163

 

251

 

 

 

 

 

 

 

 

 

Change in

 

 

 

 

 

 

 

Inventories

 

-8,055

 

-2,002

 

-6,053

 

Trade receivables

 

3,582

 

4,440

 

-858

 

Other assets

 

-31

 

-565

 

534

 

Trade payables

 

1,356

 

-4,956

 

6,312

 

Provisions and other liabilities

 

-21,629

 

-8,592

 

-13,037

 

Non-current liabilities

 

-648

 

-49

 

-599

 

Advance payments from customers

 

6,005

 

27,103

 

-21,098

 

Cash flow from operating activities

 

-39,268

 

-6,382

 

-32,886

 

 

 

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

 

 

Cash flow from acquisitions

 

-4,183

 

-6,214

 

2,031

 

Capital expenditures in property, plant and equipment

 

-1,465

 

-7,003

 

5,538

 

Capital expenditures in intangible assets

 

-282

 

-371

 

89

 

Proceeds from disposal of fixed assets

 

9

 

33

 

-24

 

Bank deposits with a maturity of more than 90 days

 

32,360

 

22,488

 

9,872

 

Cash flow from investing activities

 

26,439

 

8,933

 

17,506

 

 

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

 

 

Own shares acquired

 

0

 

-250

 

250

 

Proceeds from issue of equity shares

 

64

 

60

 

4

 

Cash flow from financing activities

 

64

 

-190

 

254

 

 

 

 

 

 

 

 

 

Effect of changes in exchange rates on cash and cash equivalents

 

-2,607

 

5,184

 

-7,791

 

Net change in cash and cash equivalents

 

-15,372

 

7,545

 

-22,917

 

Cash and cash equivalents at the beginning of the period

 

116,305

 

116,580

 

-275

 

Cash and cash equivalents at the end of the period

 

100,933

 

124,125

 

-23,192

 

 

 

 

 

 

 

 

 

Interest received

 

365

 

585

 

-220

 

Income taxes paid

 

-627

 

-1,150

 

523

 

Income taxes received

 

224

 

81

 

143

 

 


* unaudited

 

15



Table of Contents

 

5. Consolidated Statement of Changes in Equity*

 

 

 

 

 

 

 

Income and expenses
recognised directly in
equity

 

Shareholders’
equity

 

 

 

Subscribed
capital
under

 

Additional
paid-in-

 

Currency

 

Retained
Earnings/
Accumulated

 

attributable to
the owners of
AIXTRON SE

 

 

 

IFRS

 

capital

 

translation

 

deficit

 

Total

 

Balance at January 1, 2016

 

111,582

 

372,636

 

12,249

 

-99,962

 

396,505

 

Share based payments

 

 

 

444

 

 

 

 

 

444

 

Transactions with shareholders

 

 

 

 

 

 

 

 

 

 

 

Own shares acquired

 

 

 

 

 

 

 

 

 

0

 

New shares issued

 

16

 

47

 

 

 

 

 

63

 

Net income for the period

 

 

 

 

 

 

 

-26,626

 

-26,626

 

Other comprehensive income

 

 

 

 

 

-5,199

 

 

 

-5,199

 

Total comprehensive income

 

 

 

 

 

-5,199

 

-26,626

 

-31,825

 

Balance at June 30, 2016

 

111,598

 

373,127

 

7,050

 

-126,588

 

365,187

 

 

 

 

 

 

 

 

Income and expenses
recognised directly in
equity

 

Shareholders’
equity

 

 

 

Subscribed
capital
under

 

Additional
paid-in-

 

Currency

 

Retained
Earnings/
Accumulated

 

attributable to
the owners of
AIXTRON SE

 

 

 

IFRS

 

capital

 

translation

 

deficit

 

Total

 

Balance at January 1, 2015

 

111,591

 

371,781

 

3,132

 

-70,802

 

415,702

 

Share based payments

 

 

 

617

 

 

 

 

 

617

 

Transactions with shareholders

 

 

 

 

 

 

 

 

 

 

 

Own shares acquired

 

-35

 

-215

 

 

 

 

 

-250

 

New shares issued

 

15

 

45

 

 

 

 

 

60

 

Net income for the period

 

 

 

 

 

 

 

-27,565

 

-27,565

 

Other comprehensive income

 

 

 

 

 

9,992

 

 

 

9,992

 

Total comprehensive income

 

 

 

 

 

9,992

 

-27,565

 

-17,573

 

Balance at June 30, 2015

 

111,571

 

372,228

 

13,124

 

-98,367

 

398,556

 

 


* unaudited

 

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Table of Contents

 

Additional Disclosures

 

1. Accounting Policies

 

This consolidated interim financial report of AIXTRON SE has been prepared in accordance with International Financial Reporting Standards (IFRS) applicable for Interim Financial Reporting, IAS 34.

 

The accounting policies adopted in this interim financial report are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended December 31, 2015.

 

The consolidated interim financial statements of AIXTRON SE include the following operating subsidiaries (collectively referred to as “AIXTRON”, “the AIXTRON Group”, or “the Company”): AIXTRON, Inc., Sunnyvale (USA); AIXTRON Ltd., Cambridge (United Kingdom); AIXTRON AB*, Lund (Sweden); AIXTRON Korea Co. Ltd., Seoul (South Korea); AIXTRON China Ltd., Shanghai (PR of China); AIXTRON KK, Tokyo (Japan); AIXTRON Taiwan Co. Ltd., Hsinchu (Taiwan) and Genus Trust, Sunnyvale (USA).

 

Due to rounding, numbers presented throughout this report may not add up precisely to the totals indicated and percentages may not precisely reflect the absolute figures for the same reason.

 

As in previous years, the consolidated interim financial report was not audited according to §317 HGB or reviewed by a certified auditor.

 

2. Segment Reporting

 

The following segment information has been prepared in accordance with IFRS 8 “Operating Segments”. As AIXTRON has only one operating segment, the information provided relates only to geographical data.

 

The Company markets and sells its products in Asia, Europe, and the United States, mainly through its direct sales organization and cooperation partners.

 

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.

 

Geographical Segments

 

 

 

 

 

 

 

 

 

 

 

(in EUR thousands)

 

 

 

Asia

 

Europe

 

Americas

 

Group

 

Revenues realized with third parties

 

H1/2016

 

30,299

 

13,899

 

11,288

 

55,486

 

 

 

H1/2015

 

63,648

 

9,149

 

7,866

 

80,663

 

Segment assets (property, plant and equipment)

 

30/06/16

 

2,857

 

67,216

 

7,162

 

77,235

 

 

 

31/12/15

 

3,207

 

70,536

 

7,589

 

81,332

 

 

3. Stock Option Plans

 

As of June 30, 2016, AIXTRON’s employees and Executive Board members held stock options, representing the right to receive AIXTRON common shares. The status of these options developed as follows:

 

AIXTRON ordinary shares

 

Jun 30, 2016

 

Exercised

 

Expired/Forfeited

 

Allocation

 

Dec 31, 2015

 

Stock options

 

2,514,265

 

16,675

 

360,875

 

0

 

2,891,815

 

Underlying shares

 

2,514,265

 

16,675

 

360,875

 

0

 

2,891,815

 

 

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Table of Contents

 

4. Employees

 

The total number of employees decreased from 759 on June 30, 2015 to 724 persons on June 30, 2016.

 

 

 

2016

 

2015

 

+/-

 

Employees by Region

 

Jun-30

 

%

 

Jun-30

 

%

 

abs.

 

%

 

Asia

 

122

 

17

 

138

 

18

 

-16

 

-12

 

Europe

 

468

 

65

 

495

 

65

 

-27

 

-5

 

USA

 

134

 

18

 

126

 

17

 

8

 

6

 

Total

 

724

 

100

 

759

 

100

 

-35

 

-5

 

 

 

 

2016

 

2015

 

+/-

 

Employees by Function

 

Jun-30

 

%

 

Jun-30

 

%

 

abs.

 

%

 

Sales

 

58

 

8

 

63

 

8

 

-5

 

-9

 

Research and Development

 

249

 

34

 

261

 

34

 

-12

 

-5

 

Manufacturing and Service

 

320

 

44

 

332

 

44

 

-12

 

-3

 

Administration

 

97

 

14

 

103

 

14

 

-6

 

-6

 

Total

 

724

 

100

 

759

 

100

 

-35

 

-5

 

 

5. Management

 

As compared to December 31, 2015, there were no changes to the composition of the Company’s Executive and Supervisory Boards as of June 30, 2016. All Supervisory Board members were re-elected during the Annual General Meeting on May 25, 2016.

 

6. Related Party Transactions

 

During the reporting period, AIXTRON did not initiate or conclude any material transactions with related parties.

 

7. Litigation

 

AIXTRON has been named as a defendant in a putative class action commenced in the United States District Court for the Southern District of New York as described in detail in the “Report on Post-Balance Sheet Date Events” of the Annual Report 2015 and in the section “Legal Proceedings” of AIXTRON’s 20-F Report for fiscal year 2015.

 

On August 5, 2016, AIXTRON filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted.

 

AIXTRON disputes the allegations and intends to contest the allegations vigorously.

 

8. PlasmaSi, Inc.

 

On April 1st, 2015, the Group acquired 100% of the voting equity interests of PlasmaSi, Inc. (USA), obtaining control of the company. During the first quarter of 2016, AIXTRON paid the outstanding contingent consideration of EUR 4,183k to the former shareholders of PlasmaSi, Inc.

 

9. Post-Balance Sheet Date Events

 

There were no known business events after June 30, 2016 with a potentially significant effect on AIXTRON’s results of operation, financial position or net assets at June 30, 2016.

 

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Table of Contents

 

Responsibility Statement

 

To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements for the six months ended June 30, 2016 give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.

 

Herzogenrath, August 11, 2016

 

AIXTRON SE

Executive Board

 

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Table of Contents

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

AIXTRON SE

 

 

 

 

 

 

Date: August 11, 2016

 

 

 

By

/s/ MARTIN GOETZELER

 

Name:

Martin Goetzeler

 

Title:

Chairman, President and

 

 

Chief Executive Officer

 

 

 

 

 

 

 

By

/s/ MARTIN GOETZELER

 

Name:

Martin Goetzeler

 

Title:

Acting Chief Financial Officer

 

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