RNS Number : 1899D
SPI Lasers plc
11 September 2008
NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN, REPUBLIC OF IRELAND OR
SOUTH AFRICA
Press Release 11 September 2008
SPI Lasers plc
("SPI" or "the Group")
Interim Results
SPI Lasers plc (AIM:SPIL), a leader in the design, development, engineering, and manufacture of optical fibre-based lasers, today
releases its Interim Results for the six months to 30 June 2008.
Highlights
* Turnover of �6.1 million (H2 2007: �5.9 million, H1 2007: �7.2 million)
* Gross loss of �0.4 million (H2 2007: �1.2 million, H1 2007: �0.7million)
* Loss after taxation �4.6 million (H2 2007: �7.0 million, H1 2007:
�5.3million).
* Cash on hand at the half year �5.7 million (H2: 2007: �11.2 million, H1
2007: �6.8million)
* Introduction in the period of new platforms for MICRO, MARKING and
MEDICAL becoming established and shipping to customers in volume
* New platforms yielding anticipated improvements in gross margin
On 9 September 2008, TRUMPF International Beteiligungs-GmbH, a 100% subsidiary of TRUMPF GmbH + Co. KG ("TRUMPF"), announced a
recommended offer to acquire 100% of the issued and to be issued share capital of SPI. Under the terms of the acquisition, SPI shareholders
will receive 40 pence in cash for each SPI share (the "Offer"). For further details please refer to the announcement made on 9 September
2008.
David Parker, Chief Executive of SPI, said: "We are proud of our achievements to date, and in particular during 2008. However, there is
no doubt that with the support of the TRUMPF organisation we can take the business to a higher level and be a major player in this exciting
sector. We see many opportunities to leverage our world class technology position into new products and markets and look forward to working
within the TRUMPF group to achieve this."
- Ends -
For further information:
SPI Lasers plc
David Parker, Chief Executive Officer Tel: +44 (0) 1489 779 696
david.parker@spilasers.com
David Holloway, Chief Financial Officer
david.holloway@spilasers.com www.spilasers.com
Panmure Gordon
Dominic Morley Tel: +44 (0) 20 7459 3600
dominic.morley@panmure.com www.panmure.com
Media enquiries:
Abchurch
Henry Harrison-Topham / Joanne Shears Tel: +44 (0) 20 7398 7709
henry.ht@abchurch-group.com www.abchurch-group.com
Chairman's Statement
At first glance, the interim results for the half year ending 30 June 2008 may not fully reflect the accomplishments which have been
made in driving SPI towards profitability from operations. However, the two new platforms introduced at the start of the year are making SPI
more competitive in the MICRO and MARKING/MEDICAL markets on both price and product quality. Our confidence in these new platforms has been
confirmed by customer acceptance of our products following testing and field trials, and by a growing order book.
We have also significantly lowered the manufacturing cost for these new products, despite the need to utilise legacy stock purchased at
higher prices during the first few months of 2008. This trend, combined with management action to curb overheads and improve stock turns is
consistent with achieving the Board's goal of operating profitability in one or more months of the final quarter of 2008.
The Board and management continue to believe the fibre laser sector is an exciting growth area. Our belief seems to be shared by our
competitors, many of whom have now announced significant fibre laser development programmes and notable acquisitions. Many of these
competitors have greater financial resources, larger sales and customer support operations and a substantial installed base of customers.
Against this shifting strategic background, the Board decided to explore ways in which the Group could protect the interests of
shareholders, customers, employees and our other constituencies.
On 9 September 2008, TRUMPF International Beteiligungs-GmbH, a 100% subsidiary of TRUMPF GmbH + Co. KG ("TRUMPF"), announced an Offer to
acquire 100% of the issued and to be issued share capital of SPI at an offer price of 40 pence per share (the "Offer"). TRUMPF is one of the
world's leading companies in production technology offering high-quality laser-based products and solutions for materials processing
applications, and generated revenues of more than EUR2 billion in the year to 30 June 2008. The Board of SPI intends unanimously to
recommend, that SPI shareholders accept the Offer as the Board believes the Offer delivers attractive value and certainty to SPI
shareholders. Moreover, the Group will be in a stronger position to develop its business within the TRUMPF organisation.
The management and employees of SPI have, since 2000, made tremendous progress in the development of leading fibre laser technology and
overcome substantial technical challenges to produce industrial-quality fibre-lasers. The Board wishes to extend its thanks for the immense
effort and dedication shown by the worldwide team and looks forward to further successes for the team within the TRUMPF organisation.
Graham Meek
Chairman
11 September 2008
Chief Executive's Review
Introduction
SPI's business performance in the first half of 2008 has improved over the second half of 2007, as reflected in the loss for the period
from continuing operations reducing from �7 million to �4.6 million respectively. At the time of our October 2007 share placing we
discussed the need for, and progress towards, two major new product platforms: a new system laser, the "R4" targeted at our MICRO business,
and a new OEM module, the "G3", focused on MARKING and MEDICAL applications. These new platforms were intended to significantly reduce both
variable and fixed costs and improve product quality.
I am pleased to report significant progress with both platforms. The impact on our financial performance is already clear with our first
half operating loss reduced by some �2.3 million compared to the second half of 2007 on similar revenue levels.
Markets, Customers and Channel
Revenue in the first half of the year had only modest growth compared to the second half of 2007. This metric, however, belies the
progress made in securing design wins and customer acquisitions that will lead to revenue growth in the second half of the year, albeit at a
lower rate than we had hoped for. This is particularly true with our pulsed laser where we have secured a number of large contracts and
established more than 30 new trading relationships in the MARKING sector. Whilst we had to overcome many technical challenges in bringing
this product to market, we are now seeing the impact of our product performance on customer perception. Further to this we believe the "G3"
is an ideal platform to address new and exciting markets including the energy-related SOLAR sector.
Progress in MICRO has been slower. Demand from manufacturers of medical products, and from the US market in general, has been subdued in
the first half. We are now pursuing major initiatives to broaden the product offering and application space for these products in the second
half of the year.
Finally, our MEDICAL business has reached a comparative plateau during the period to date, which is understandable, given the strong
growth in 2007. We are aware of new application trials utilising SPI's laser platform for 2009 introduction which may offer further scope
for SPI business.
Operational
The impact of the new platforms on direct costs has moved the Group to a position where at the end of the first half we generated
positive gross margin. Further cost reductions, which are well underway, combine with the projected increased volumes will move us towards
achieving profitability from operations. We are also confident in our ability to further improve product quality with the ambition to move
SPI into a "best in class" position in the foreseeable future.
Outlook and Key Events
Whilst cost and quality remain the major focus areas, we are now able to return to deploying resources to enhance the product portfolio.
We have two major new product introductions planned for the second half of the year: a higher power OEM module targeted at new application
in electronics; and a higher power system product which will be key if we are to move into the welding arena.
In summary, the task for the second half of the year is to build upon the momentum we have generated across the business as we strive
for our key objective of becoming profitable in one or more months of Q4 2008, notwithstanding the current economic climate and on revenues
lower that previously expected, and this objective remains in place irrespective of our ownership.
David Parker
Chief Executive Officer
11 September 2008
Financial Review
Sales
Total sales for the first half of 2008 were �6.1 million compared with �7.2 million in the same period last year, the reduction was
largely accounted for by a major one-off order in the Medical sector last year. Contract sales, which relate to SPI's USA and UK defence and
aerospace development contracts, were 67% of equivalent revenues in the same period in 2007 due to contract phasing and resources being
re-deployed to support the investment in product development.
Asia remains SPI's biggest market with 45% of total sales and 49% of product sales in the first half of 2008, down from 48% and 54%
respectively in the first half of 2007. Total sales in the UK grew to 14% of total sales, up from 10% for the first half of 2007 due to an
increase in both product and contract sales.
Operational Performance
Gross losses reduced by �0.3 million from �0.7 million in the first half of 2007 to �0.4 million in the first half of 2008 as a result
of improved product design and performance. New product platforms established from the start of the year offer significant cost reduction
from our previous product designs.
The reduction in gross losses was complemented by an increase in other income (�0.2 million) due to DTI funding for several R&D
Projects. The net result was a decrease in the loss before taxation of �0.7 million to �4.8 million from �5.5 million in 2007.
Group funded product research and development was �1.4 million while the Group spent �0.3 million on customer funded R&D which was
charged to cost of sales. The total incurred investment in R&D was therefore �1.7 million, a decrease of 19% over the �2.1 million
equivalent spend in 2007. These values are shown after the capitalisation of �0.1 million for the period, which is in addition to �0.3
million capitalised during 2007.
Taxation
SPI has an unrecognised deferred tax asset of �16.1 million, which has primarily arisen from the losses incurred to date. In the first
half of 2008, an R&D Tax Credit of �0.2 million (�0.2 million in 2007) was recognised; the associated cash receipt from HM Revenues and
Customs is expected to be received in the first half of 2009 (the 2007 related tax credit is expected to be received in the second half of
2008).
Loss after Taxation
The loss after taxation for the first half of 2008 was �4.6 million, a decrease of �0.7 million over the first half of 2007 of �5.3
million. This is primarily due to the issues referred to above in operational performance.
Dividend
The directors do not propose to pay an interim dividend (2007: nil).
Headcount
Average heads increased from 167 in the first half of 2007 to 172 in the first half of 2008 due to investment in manufacturing,
logistics, engineering and sales. Annualised sales decreased from �86,000 per head in the first half of 2007 to �70,000 per head in the
first half of 2008, as explained above due to the exceptional nature of 2007 medical sales. The annualised loss after tax for 2007 and 2008
reduced from �64,000 per head to �54,000 per head respectively.
Fixed Assets
Gross fixed assets grew by �0.1 million during the first half of 2008, an increase of 1% on the balance as at 31 December 2007. This
expenditure mainly related to the expansion of manufacturing capacity. The Group's investment in fixed assets is now mostly related to
further increases in capacity rather than the underlying capability.
Depreciation for the first half of 2008 was �0.4 million (2007: �0.3 million). Accumulated depreciation at 30 June 2008 stands at 84% of
the gross cost of the assets.
Working Capital
Net current assets, excluding cash, loans and short term investments (working capital), increased from �2.4 million at 31 December 2007
to �2.6 million at 30 June 2008. Stock decreased by �0.5 million and the receivable debt relating to the R&D tax credit reduced by �0.2
million following payment received in the first quarter from HM Revenues & Customs. These decreases in working capital were more than offset
by an increase in trade debtors of �0.4 million and a reduction in trade creditors of �0.6 million, the latter related to the stock
reduction as improvements in working capital were being sought. Cash at 30 June 2008 was �5.7 million a reduction of �5.5 million since
December 2007. Outstanding loans and convertible loan notes both current and non-current, at 30 June 2008 were �1.0 million and �0.6 million
respectively, having being reduced by repayments since December 2007 by �0.5 million and �0.4 million respectively.
David Holloway
Chief Financial Officer
11 September 2008
Condensed Consolidated Income statements
Six months ended 30 June 2008
Continuing operations
6 months to 6 months to Year ended
30 June 2008 30 June 2007 31 December 2007
(unaudited) (unaudited) (audited)
Notes �000 �000 �000
Revenue 3 6,079 7,159 13,047
Cost of sales (6,469) (7,907) (14,954)
Gross loss (390) (748) (1,907)
Other operating income 200 107 209
Other operating expenses - (71) (207)
Administrative expenses (4,687) (4,757) (10,695)
Operating loss (4,877) (5,469) (12,600)
Investment revenues 192 138 281
Finance costs (139) (192) (371)
Loss before tax (4,824) (5,523) (12,690)
Tax credit 6 182 200 390
Loss for the period from 7 (4,642) (5,323) (12,300)
continuing operations
Basic and diluted loss per 9 (6.9p) (21.6p) (37.9p)
share
Condensed Consolidated Statement Of Recognised Income And Expense
Continuing Operations
6 months to 6 months to Year ended
30 June 2008 30 June 2007 31 December 2007
(unaudited) (unaudited) (audited)
�000 �000 �000
Foreign exchange differences 3 (19) (21)
on retranslation of net assets
of subsidiary undertakings
Loss for the period (4,642) (5,323) (12,300)
Total recognised income and (4,639) (5,342) (12,321)
expense for the period
Condensed consolidated balance sheet
Six months ended 30 June 2008
30 June 2008 30 June 2007 31 December 2007
(unaudited) (unaudited) (audited)
Notes �000 �000 �000
Non-current assets
Intangible assets 267 - 208
Property, plant and equipment 2,216 2,702 2,475
2,483 2,702 2,683
Current assets
Inventories 2,442 2,186 2,916
Trade and other receivables 4,061 3,823 3,583
Cash and cash equivalents 5,679 6,819 11,225
R&D tax assets 547 552 742
12,729 13,380 18,466
Total assets 15,212 16,082 21,149
Current liabilities
Trade and other payables (3,863) (3,180) (4,450)
Loans and convertible loan 4 (955) (1,248) (1,460)
notes
Provisions (350) - (440)
(5,168) (4,428) (6,350)
Net current assets 7,561 8,952 12,116
Non-current liabilities
Loans and convertible loan 4 (642) (1,596) (1,035)
notes
Long-term provisions (255) (213) (100)
Total liabilities (6,065) (6,237) (7,485)
Net assets 9,147 9,845 13,664
Equity
Share capital 5,7 1,567 656 1,566
Share premium account 7 34,863 25,270 34,861
Merger reserve 7 50,389 50,389 50,389
Equity reserve 7 845 429 726
Translation reserve 7 (144) (145) (147)
Retained earnings 7 (78,373) (66,754) (73,731)
Total equity 9,147 9,845 13,664
Condensed consolidated cash flow statement
Six months ended 30 June 2008
6 months to 6 months to Year ended
30 June 2008 30 June 2007 31 December 2007
(unaudited) (unaudited) (audited)
Notes �000 �000 �000
Net cash outflow from 8 (4,626) (5,147) (10,621)
operating activities
Cash flows from investing
activities
Interest received 192 138 281
Purchases of property, plant (97) (403) (507)
and equipment
Expenditure on product (120) - (250)
development
Net cash from/(used) in (25) (265) (476)
investing activities
Cash flows from financing
activities
Proceeds on issue of share 3 10,507 21,391
capital
Payments of expenses on issue - (433) (825)
of equity shares
Repayment of borrowings (898) - (349)
Net cash (used in)/from (920) 10,074 20,217
financing activities
Net (decrease)/increase in (5,546) 4,662 9,120
cash and cash equivalents
Cash and cash equivalents at 11,225 2,113 2,113
start of period
Effect of foreign exchange - 44 (8)
rate changes
Cash and cash equivalents at 5,679 6,819 11,225
end of period
Notes to the Condensed set of Financial Statements
Six months ended 30 June 2008
1. General Information
The information for the year ended 31 December 2007 does not constitute statutory accounts as defined in section 240 of the Companies
Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those
accounts was not qualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985.
2. Accounting policies
The annual financial statements of SPI Lasers plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed
set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting
Standards 34 'Interim Financial Reporting', as adopted by the European Union.
The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as
applied in the Group's latest annual audited financial statements.
3. Revenue and geographical analysis
In the opinion of the directors, the Group has only one class of business and revenue as follows:
An additional voluntary analysis of the Group's revenue within this class of business and by geographical market is as follows:
Class of Business 6 months to 6 months to Year ended
30 June 2008 30 June 2007 31 December 2007
(unaudited) (unaudited) (audited)
�000 �000 �000
Revenue:
Products 5,556 6,377 11,761
Contract development 523 782 1,286
6,079 7,159 13,047
Geographical Market 6 months to 6 months to Year ended
30 June 2008 30 June 2007 31 December 2007
(unaudited) (unaudited) (audited)
�000 �000 �000
Asia/Australasia 2,718 3,442 6,241
North America 1,275 1,543 2,500
Rest of Europe 1,222 1,457 2,807
United Kingdom 864 717 1,499
6,079 7,159 13,047
SPI Lasers plc Group do not operate on a seasonal basis
4. Bank overdrafts and loans
Repayments of other bank loans amounting to �0.9 million were made during the period, in line with previously disclosed repayment
terms.
5. Share capital
During the period, the Group's issued share capital increased to �1.57million due to share options vesting. The number of shares in
issue as at 30 June 2008 were 62,695279
6. Tax
In the first half of 2008, an R&D Tax Credit of �0.2 million (�0.2 million in 2007) was recognised. The associated cash receipt from HM
Revenues and Customs is expected to be received in the first half of 2009
7. Consolidated statement of changes in equity
Share Share Merger Equity Translation Profit Total
capit premiu reserv reserv reserve & loss
al m e e
�000 �000 �000 �000 �000 �000 �000
At 1 January 2008 1,566 34,861 50,389 726 (147) (73,731) 13,664
Arising on share issues 1 2 - - - - 3
IFRS 2 charge - - - 119 - - 119
Retained loss for the period - - - - - (4,642) (4,642)
Exchange differences on - - - - 3 - 3
retranslation of net assets of
subsidiary undertakings
At 30 June 2008 1,567 34,863 50,389 845 (144) (78,373) 9,147
8. Notes to the cash flow statement
a) Reconciliation of operating loss to net cash outflow from operating activities
6 months to 6 months to Year ended
30 June 2008 30 June 2007 31 December 2007
(unaudited) (unaudited) (audited)
�000 �000 �000
Operating loss (4,877) (5,469) (12,600)
Adjustments for:
Depreciation on property, 356 297 662
plant and equipment
Amortisation of intangibles 62 - 42
Share based payment expense 119 267 564
537 564 1268
Operating cash flows before (4,340) (4,905) (11,332)
movements in working capital
Decrease/(increase) in 474 (195) (925)
inventories
(Increase)/decrease in (478) (291) 436
receivables
(Decrease)/increase in (586) (97) 1,148
payables
Increase in provisions 65 109 436
Exchange difference - (63) (13)
Cash generated by operations (4,865) (5,442) (10,250)
R&D tax credit received 378 487 -
Interest paid (139) (192) (371)
Net cash from operating (4,626) (5,147) (10,621)
activities
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and
other short-term highly liquid investments with a maturity of three months or less.
b) Analysis of net debt
At
1 January Cash Non-cash 30 June
2008 flow movements 2008
�000 �000 �000 �000
Cash at bank and in hand 11,225 (5,546) - 5,679
Loans - short term (1,460) 898 (393) (955)
Loans - long term (1,035) - 393 (642)
8,730 (4,648) - 4,082
9. Loss per share
From continuing operations
Basic and diluted loss per share for the six months ended 30 June 2008 of 6.9p (2007:21.6p) per ordinary share is calculated using
67,454,667 shares (2007: 24,643,519), being the weighted average number of shares to June 2008.
6 months to 6 months to Year ended
30 June 2008 30 June 2007 31 December 2007
�000 �000 �000
Loss for year �4,642,000 �5,323,000 �12,300,000
Weighted average number of 67,454,667 24,643,519 32,430,311
shares
Basic and diluted loss per 6.9p 21.6p 37.9p
share
10. Related Party Transactions
Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note.
Trading Transactions
During the period, Group companies entered into the following transactions with related parties who are not members of the Group:
Sales of Goods Purchase of goods Royalties Amounts owed by Amounts owed to
related parties related parties
Six months ended �000 �000 �000 �000 �000
30 June 2008
University of Southampton 90 3 2 - 229
OFS Fitel - 177 - - 41
90 180 2 - 270
Six months ended �000 �000 �000 �000 �000
30 June 2007
University of Southampton 90 225 4 59 154
90 225 4 59 154
Year ended 31 December 2007 �000 �000 �000 �000 �000
University of Southampton 180 467 10 59 271
OFS Fitel - 293 - - 49
180 760 10 59 320
University of Southampton is a related party of the Group because David Payne, a director of SPI Lasers plc, is an employee of the
university.
OFS Fitel is a related party of the group because they are a wholly owned subsidiary of Furukawa Electric Company who has a significant
shareholding in SPI Lasers plc. As at 8/8/2008 Furukawa held 6,666,667 shares in SPI Lasers plc which is 10.7% of the shares in issue.
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been
made for doubtful debts in respect of the amounts owed by related parties.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
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