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Company AZ Electronic Materials S.A.
TIDM AZEM
Headline

Final Results

Released 07:00 19-Feb-2013
Number 1486Y07

RNS Number : 1486Y
AZ Electronic Materials S.A.
19 February 2013
 



19 February 2013

 

 

AZ ELECTRONIC MATERIALS S.A.

 

AUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012

 

A SOLID YEAR AND A STRONG PLATFORM FOR GROWTH

 

Highlights

 

US$m

2012

2011

Change

Revenue

793.9

791.8

-

EBITDA1

262.4

261.0

+1%

EBITDA margin1

33.1%

33.0%

+0.1pts

Operating Profit

150.7

150.7

-

Profit before Tax

129.1

125.6

+3%

Profit after Tax

82.9

96.5

-14%

Basic Earnings per Share

21.8c

25.3c

-14%

Adjusted (underlying):

 

 

 

 

Profit after Tax1

134.7

134.1

-

Earnings per Share1

35.4c

35.2c

+1%

Operating Cash Flow1

204.4

206.3

-1%

Net Debt

289.4

343.4

-16%

Leverage (x EBITDA)

1.1

1.3

(0.2)

Dividend per Share

13.1c

12.3c

+7%

 

 

·      Solid trading performance, in line with our expectations.

·      Total revenue of US$793.9m (up 2% at constant currencies1); second half revenues up 7% from first half.

·      EBITDA of US$262.4m (up 1% at constant currencies1); EBITDA margin maintained at around 33%.

·      Profit after tax and basic earnings per share up 2% on a like-for-like basis, adjusting for a US$15.0m tax credit included in the previous year's earnings.

·      IC Materials division revenue down 1% to US$537.2m (flat at constant currencies1). Outperformance of underlying market in IC Niche driven by demand for yield enhancement and colloidal silica materials.

·      Optronics division revenue up 6% to US$236.9m (up 6% at constant currencies1). Strong second half performance, driven by customer wins and improved trading in the global flat panel display industry.

·      Strong platform for growth with continued focus on new and innovative materials for next generation semiconductors and advanced displays, as well as niche applications in LED lighting and non-electronic markets.

·      Strong cash flow reduced net debt to US$289.4m; net debt to EBITDA multiple improved to 1.1 times.

·      Recommended final dividend of 9.1 cents per share (2011: 8.5 cents), resulting in a total dividend payment of 13.1 cents per share for the year, up 7% from the previous year (2011: 12.3 cents).

 

 

1. See definitions below.

 

 

Outlook

We expect 2013 to be a year in which revenues and profits will show positive momentum, with industry analysts and our discussions with customers suggesting a stronger environment for growth during the second half of the year. There are still uncertainties in the near-term macroeconomic outlook that continue to impact consumer markets and many of our customers. We nevertheless expect the first half to show modest year-on-year growth.

 

We remain committed to investing in our business and technologies, developing leadership positions and delivering growth in line with our long-term guidance in order to provide attractive long-term returns to shareholders.

 

 

Geoff Wild, CEO of AZ, commented:

"We have delivered solid results for 2012. I'm pleased with the continued market penetration of our products, particularly in IC Niche where we continue to grow ahead of the market, and also in Optronics where we continue to make good progress.

 

Although the near-term outlook remains uncertain, the fundamental long-term demand drivers for our business continue to be strong. Our customers continue to invest heavily in leading edge innovation to support new interactive and powerful consumer electronic technologies. We remain focused on positioning AZ to capture these opportunities and are confident of making progress in 2013 and beyond."

 

 

For further information, please contact:

 

AZ Electronic Materials

Tel +44 (0) 20 8622 3825

Geoff Wild, Chief Executive Officer


Mike Powell, Chief Financial Officer


Majid Nazir, Head of Investor Relations


 

FTI Consulting

Tel +44 (0) 20 7269 7147

Edward Bridges / Nick Hasell


 

The Company will host a results presentation to analysts today at 8.30am (GMT) at the offices of FTI Consulting, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB. A simultaneous live audiocast of the presentation will be available via the Investors section of the Company's website at www.azem.com and where, subsequent to the live audiocast, a copy of the results presentation will also be available for viewing.

 

 

Definitions

EBITDA is defined as Operating Profit before depreciation and amortisation of intangible assets.

EBITDA marginis calculated by dividing EBITDA by revenue.

Adjusted Profit after Tax is Profit after Tax adding back amortisation of intangible assets, net of tax.

Adjusted Earnings per Share is Adjusted Profit after Tax divided by the weighted average number of shares in issue during the year.

Operating Cash Flow is defined as EBITDA with charges in relation to share-based payments added back, less any changes in working capital, less net cash payments in relation to capital expenditure.

Constant currency movements calculated by comparing 2012 results with 2011, retranslated at weighted average 2012 exchange rates.

 

About AZ (www.azem.com)

AZ is a leading global producer and supplier of high quality, high-purity specialty chemical materials, operating in the high growth electronics market. Its materials are widely used in integrated circuits ("ICs") and devices, flat panel displays ("FPDs"), light-emitting diodes ("LEDs") and photolithographic printing. AZ is a critical partner to the leading global electronic players because our chemical technology allows them to enhance existing processes and enables them to innovate new products. This is critically important in the "digital world" where there is increasing global demand and a drive towards smaller, faster, more powerful and less expensive technology. AZ operates in 10 countries, namely China, India, South Korea, Taiwan, Hong Kong, Japan, Singapore, the USA, France and Germany. It also has corporate and support services offices in Luxembourg, the UK and Hong Kong, and employs over 1,000 people globally.

 

Cautionary statement regarding forward-looking statements

This document may contain certain forward-looking statements with respect to the operations, performance and financial condition of the AZ Group. These statements are made in good faith and are based on current expectations and beliefs, as well as assumptions about future events. By their nature, future events and circumstances can cause results and developments to differ materially from those anticipated. The Company undertakes no obligation to update any forward-looking statements contained in this document, whether as a result of new information, future events or otherwise. Nothing in this document should be construed as a profit forecast or an invitation to deal in the securities of the Company.

 

 

 

GROUP RESULTS

 

AZ delivered a solid trading performance in 2012 that was in line with our expectations.

 

Group revenue for the year was US$793.9m (2011: US$791.8m). The first half of the year was characterised by challenging trading conditions, with revenues improving in the second half. While IC Materials saw some demand variations from quarter to quarter, its market was generally subdued due to on-going macroeconomic uncertainty and some supply imbalances at our customers. As a result, growth in wafer starts - a fundamental demand driver for the IC Materials business - was muted in 2012. The Optronics business grew more strongly as the year unfolded, driven by consumers' appetite for mobile display technologies. In FPD Photoresist, the Group extended its market position in Taiwan and Japan through significant customer wins as we once again leveraged our technology advantages, supply chain security, product quality and reliable order execution.

 






Increase/(Decrease)

Revenue

H1 2012

US$m

H2 2012

US$m

2012

US$m

2011

US$m

(as reported)

(at constant currencies)

IC Materials

265.8

271.4

537.2

545.1

(1)%

-

Optronics

108.1

128.8

236.9

224.1

6%

6%

Printing

9.7

10.1

19.8

22.6

(12)%

(5)%

Group

383.6

410.3

793.9

791.8

-

2%

 

 

Group EBITDA was also at a similar level to the previous year, at US$262.4m (2011: US$261.0m). The Group EBITDA margin was therefore broadly unchanged at 33.1% (2011: 33.0%). Currency translation reduced revenue by US$9.7m and EBITDA by US$0.1m. At constant currencies, revenue was up by 2% and EBITDA increased by 1%.

 

Operating profit of US$150.7m was flat versus the previous year (2011: US$150.7m), with the Group's higher gross profit in 2012 being offset by around US$3m of additional R&D investment and depreciation. Profit before tax increased to US$129.1m (2011: US$125.6m). On a like-for-like basis, after adjusting for a one-off deferred tax credit of US$15.0m that was included in the previous year's earnings, the Group's profit after tax in 2012 of US$82.9m was 2% higher than the previous year (2011: US$81.5m) and basic earnings per share were 21.8 cents (2011: 21.4 cents). Reported profit after tax in 2011 was US$96.5m and reported basic earnings per share in 2011 were 25.3 cents. Adjusted Profit after Tax, which adds back amortisation net of related tax, was US$134.7m (2011: US$134.1m) and Adjusted Earnings per Share were 35.4 cents (2011: 35.2 cents).

 

During the year we invested US$55.8m in research and development ("R&D") activities (2011: US$54.0m), representing 7.0% of Group revenue (2011: 6.8%). Our R&D expenditure remains highly customer-oriented, with a particular focus on materials that support the evolution of leading edge semiconductor and display technologies, and where we can command market leadership positions. Capital expenditure during the year was US$50.7m (2011: US$50.5m), representing 6.4% of Group revenue (2011: 6.4%). The majority of this investment was in equipment used in R&D and quality assurance processes, and the expansion of our Taiwanese and Korean facilities which will provide customers in those areas with shorter and more secure supply chains as well as enhanced local support.

 

AZ's cash flow remained strong. In 2012, we generated Operating Cash Flow of US$204.4m (2011: US$206.3m), representing a conversion of 78% of EBITDA into cash (2011: 79%), which was used to pay interest of US$19.4m, tax of US$84.9m and dividends of US$47.6m, with the remaining free cash reducing net debt. At 31 December 2012, net debt was US$289.4m (2011: US$343.4m) or 1.1 times EBITDA (2011: 1.3 times). We refinanced our debt in December, giving us new 4.5-year facilities totalling around US$500m. We expect that the average cost of this debt will be similar to our previous arrangements.

 

AZ intends to maintain a strong balance sheet going forward and we continuously seek to optimise our allocation of capital in order to meet the strategic needs of the business, namely: investment in the organic growth of the business, further reducing net debt and supporting our progressive dividend policy whilst maintaining sufficient flexibility to be able to pursue acquisitions if appropriate. We are clear that any transaction must be capable of delivering sustainable long-term value for shareholders in line with our strategic objectives. We will continue to evaluate options with regards to applying surplus funds in order to deliver attractive long-term returns to shareholders whilst ensuring that we have sufficient balance sheet flexibility to pursue our core strategic needs as outlined above.

As previously reported, the Group filed a lawsuit in March 2012 against UP Chemical Co., Ltd. ("UP Chem") in Korea, alleging infringement of certain intellectual property rights relating to our dielectric technology. In response to the action, UP Chem challenged the validity of a certain AZ patent through the Intellectual Property Tribunal ("IPT") of the Korean Intellectual Property Office. The IPT issued a ruling on 29 January 2013 rejecting UP Chem's challenge. The infringement lawsuit is on-going in the Seoul Central District Court, and we will provide a further update when the verdict is known. We will continue to vigorously defend our valuable intellectual property portfolio as and when required.

 

The Board

Adrian Whitfield stepped down from the Board on 25 May and Ms Philana Poon joined the Board as an independent Non-Executive Director on 29 June 2012. Following these changes, the Board composition remains compliant with the UK Corporate Governance Code.

 

Dividend

We announced an interim dividend of 4.0 cents per Ordinary share in August 2012, which was paid in October. The Board is now recommending a final dividend of 9.1 cents per Ordinary share, making a total dividend payment of 13.1 cents per Ordinary share for the year (representing approximately 37% of Adjusted Earnings per Share in 2012). Subject to shareholders' approval, the final dividend will be paid on 3 May 2013 to shareholders on the register at the close of business on 15 March 2013.

 

 

OPERATING REVIEW

 

IC MATERIALS

The IC Materials business produces and sells materials used in the manufacture of integrated circuits ("ICs"). The division comprises the IC Niche materials and IC Conventional materials businesses, where demand for these products is broadly correlated to the production and use of silicon wafer starts at our customers' fabrication facilities ("fabs").

 

IC Materials revenue decreased by 1% to US$537.2m (flat at constant currencies), and represented 68% of the Group's total revenue in the year (2011: 69%). EBITDA decreased by 2% to US$215.8m (down 1% at constant currencies), in line with the slight reduction in revenue.

 

IC Materials

2012

2011

Increase/(Decrease)


US$m

US$m

(as reported)

(at constant currencies)

IC Niche

356.0

352.1

1%

3%

IC Conventional

181.2

193.0

(6)%

(5)%

IC Materials - Total Revenue

537.2

545.1

(1)%

-

EBITDA

215.8

219.2

(2)%

(1)%

EBITDA margin

40.2%

40.2%

-

(0.5)pts

 

 

IC Niche 

Revenue increased by 1% to US$356.0m (up 3% at constant currencies), ahead of the 2% estimated reduction in the underlying market, as measured by year-on-year industry growth of memory wafer starts by DRAMeXchange, the independent market forecaster. This was primarily driven by strong demand for yield enhancement materials used in new technology nodes of our customers' products, particularly those in the IC foundry segment, as well as sales of AZ's Klebosol® colloidal silica materials which continued to progress well.

 

As expected, revenues from AZ's Spinfil® dielectric materials were impacted by dual-sourcing by certain customers, largely in relation to generic DRAM applications (used in, for example, desktop PCs). Much of the revenue loss in this area relates to intellectual property which is the subject of a lawsuit filed against a Korean competitor company, where the Group alleges infringement of certain intellectual property rights relating to our dielectric technology. Aside from this, AZ is making good progress with new applications of its dielectric materials for leading edge semiconductor manufacturing. In addition and as we would expect, some of our customers using relatively large dispense-volumes of our dielectric materials have reduced the amount dispensed per wafer as they optimise production. Although this trend is a typical feature of our customers' manufacturing processes, the effect has been to offset some of the benefits seen from increased node and product penetration.

AZ's yield enhancement materials continue to drive sales of our lithographic IC products, with good progress made in our top anti-reflective coatings ("TARCs") business, especially at certain foundry customers in Korea and Taiwan. Our pattern enhancement products, particularly our RELACS® shrink material, also continued to perform well, with AZ benefiting from accelerated use of the material at a major memory chip customer.

 

We completed the expansion of our Taiwanese and Korean facilities during the year. The new Taiwanese facility has recently commenced production of TARC products. In Korea, qualification processes are underway for AZ's Spinfil® dielectric materials, and we expect the facility to be fully operational during the second half of 2013. These new facilities further strengthen our collaborative activities with key customers in Taiwan and Korea and provide them with a more localised, secure and cost-efficient supply chain. In November, we commenced work on the expansion of colloidal silica manufacturing capacity at our Lamotte facility in France, which will allow us to meet growing demand for non-electronic applications of AZ's Klebosol® product. The additional capacity is scheduled to become operational during the second half of 2013.

 

We remain excited about the incremental opportunities created by further advances in semiconductor manufacturing and believe we are well positioned to support all possible outcomes. Materials to support extreme ultraviolet ("EUV") lithography, as well as alternative enabling technologies for sub-20 nanometre semiconductor fabrication, are qualified and ready for use. Moreover, the Group continues to explore directed self-assembly ("DSA") as a cost-effective and viable patterning technique for sub-20 nanometre applications, as well as in advanced methods of contact hole rectification. DSA continues to attract significant interest and engagement from our major IC customers and our development work for both applications is progressing well.

 

IC Conventional

IC Conventional revenues for the year were down 6% at US$181.2m (down 5% at constant currencies). The underlying decrease was in line with total industry wafer starts, which are estimated to have reduced by 3% over the same period (based on an estimate made by the independent market forecaster VLSI Research). The Group saw good volume growth from the semiconductor packaging sector, notably with our thick film resists ("TFRs"), masked by the proactive ceding of around US$18m of certain edge bead remover ("EBR") business to local competitors due to uneconomic supply arrangements.

 

OPTRONICS

The Optronics division produces and sells materials that are critical to the manufacture of flat panel displays ("FPDs"). There are two product categories within the division: FPD Photoresist, which supplies light-sensitive processing materials for FPDs; and Optronics Other, which includes EBRs, other ancillaries and silicon chemistry-based products for AZ's Light & Energy business (serving displays, lighting and other non-electronic markets). Demand for FPD Photoresist products is broadly correlated to the area of FPD glass substrate utilised at our customers' manufacturing lines.

 

Revenue for this division increased to US$236.9m (up 6% at both actual and constant currencies) and represented 30% of the Group's total revenue in 2012 (2011: 28%). Demand from touch panel customers remained strong and the primary driver of the FPD industry's recent strength, due to the continued demand for and proliferation of mobile devices such as smartphones, tablet computers and e-readers. EBITDA increased by 8% to US$67.9m (up 9% at constant currencies).

 

Optronics

2012

2011

Increase/(Decrease)


US$m

US$m

(as reported)

(at constant currencies)

FPD Photoresist

188.0

177.2

6%

7%

Optronics Other

48.9

46.9

4%

4%

Optronics - Total Revenue

236.9

224.1

6%

6%

EBITDA

67.9

62.8

8%

9%

EBITDA margin

28.7%

28.0%

0.7pts

0.8pts

 

 

FPD Photoresist

Revenue in this product line increased by 6% to US$188.0m (up 7% at constant currencies), seven percentage points behind the growth of glass area over the same period (based on a growth estimate of 14% made by the independent market forecaster, DisplaySearch). While the revenue performance is in line with our expectations for the year, the relative underperformance versus glass growth was largely attributable to planned price reductions, adverse customer mix and lower utilisation of our materials at certain customer fabs that completed refurbishment programmes during the year in order to accommodate advanced LCD applications.

 

Good progress was made in the second half of 2012, with AZ benefiting from new business wins in Taiwan and Japan. Local supply disruptions led to certain customers switching lines to AZ, recognising our ability to support their supply requirements and the launch of new LCD technologies.

 

AZ also benefited from generally increased utilisation rates at our FPD customers as the year progressed. Consumer appetite for displays with higher resolution, brightness and frame-refresh rates is leading to increased industry investment in new and innovative platforms such as Organic LED ("OLED"), and transitions within the LCD space to advanced technologies such as low temperature poly-silicon ("LTPS") and indium gallium zinc oxide ("IGZO"). Such platforms require advanced chemical materials, including increased photoresist consumption. Several of our customers are developing new fabrication facilities in China, or re-equipping existing LCD plants elsewhere in Asia to support these new technologies. In addition, photoresist utilisation ramped up during the year at two recently-completed customer fabs for FPDs in China.

 

Optronics Other

Optronics Other revenue increased to US$48.9m (up 4% at both actual and constant currencies). Our performance in this area was driven by good progress in our Light & Energy business, particularly in LEDs for display back-lighting, offset only by reduced year-on-year sales of low value-added EBR and ancillary business.

 

We continue to leverage our world class silicon chemistry capabilities in IC Materials to develop new materials (siloxanes and silazanes) for our leading Optronics customers. These silicon technology materials, currently undergoing extensive qualification processes at our customers, are incremental to the use of photoresist and used principally for planarisation and dielectric insulation processes. They have a diverse range of applications, including OLED displays, flexible displays, advanced LCD displays (such as ultra-high definition televisions) and also in general lighting (in particular, high-brightness LED lighting), which is expected to overtake the display back-lighting market as the largest user of LEDs within a few years. The small acquisition we made in India in October 2011 is now fully integrated and supporting this development.

 

During the year AZ entered into licensing and sponsored research agreements with William Marsh Rice University in the field of graphene nanoribbons, for application to electronic and advanced optical devices. This augments our platform for long-term growth and adds further weight to our belief that new and advanced display technologies and LED lighting are significant and exciting long-term market drivers where AZ is well positioned.

 

PRINTING AND OTHER

Products in this area are used to make printing plates for the production of printed materials including newspapers, magazines and books.

 

Revenues in the year were in line with our expectations, decreasing by 12% to US$19.8m (down 5% at constant currencies). EBITDA for the year was US$2.0m (2011: loss of US$0.8m), benefiting from measures taken in 2011 to reduce the cost base.

 

From 1 January 2013, Printing has been included within our IC Materials division (under IC Conventional), so that it is aligned to and reflects our new management structure.

 

STRATEGY

AZ has core expertise in photolithography, silicon technology, specialist polymer chemistry, thin films and coatings, manufacturing at ultra-high purity, and operating within a certified supply chain. The Group is focused on delivering sustainable long-term value for shareholders. Our strategy to achieve this objective is to:

 

·     Focus on the timely development and commercialisation of new products;

·     Develop niche markets where AZ can secure a leading position;

·     Extend and develop opportunities utilising AZ's core expertise;

·     Actively manage human resources to develop organisational capabilities and talent; and

·     Remain aware of the M&A landscape and be ready to act should appropriate opportunities develop.

 

To measure our success in pursuing this strategy the Group monitors certain financial key performance indicators; revenue growth, R&D expenditure, EBITDA, EBITDA margin, capital expenditure and Operating Cash Flow. We also monitor certain non-financial performance indicators, such as customer complaints and on-time delivery. Progress against these indicators is detailed in the Company's 2012 Annual Report & Accounts.

 

 

FINANCIAL REVIEW 

 

AZ delivered a solid revenue performance in 2012, in line with our expectations, together with sustained profitability and strong underlying cash flow generation. The Group's balance sheet continued to strengthen and AZ refinanced its debt facilities.

 

The Group's revenue for the year was US$793.9m (2011: US$791.8m), up 2% at constant currencies, while Group EBITDA was also at a similar level to the previous year, at US$262.4m (2011: US$261.0m). The Group EBITDA margin was therefore broadly unchanged at 33.1% (2011: 33.0%).

 

The Group maintained its strategic focus on market-leading and innovative niche products, such as those within IC Niche and FPD Photoresist, which together represent 69% of the Group's revenue (2011: 67%). The focus towards such high value-added and critical materials, together with robust sales volumes and solid material cost controls, helped to mitigate the impact of normal selling price reductions resulting in a stable Group gross margin for the year of 47.1% (2011: 46.8%).

 

During the year, AZ continued to invest for the future with highly customer-focused expenditure into R&D and related equipment, whilst also paying a final dividend to shareholders in respect of the 2011 financial year as well as an interim dividend in relation to 2012. Net debt was reduced by 16% since the previous year-end to US$289.4m at 31 December 2012, representing 1.1 times EBITDA (31 December 2011: 1.3 times). We refinanced our debt in December, giving us new 4.5-year facilities totalling around US$500m.

 

A solid performance in IC Materials and Optronics

The first half of the year was characterised by challenging trading conditions, with revenues across both core businesses improving in the second half.

 

IC Materials revenue, at US$537.2m, was 1% lower than last year. Revenue in the second half of the year increased by 2% over the first half, but was down 2% compared to the same period last year (H2 2011: US$275.9m). The EBITDA margin for the IC Materials division was maintained at 40.2% (2011: 40.2%), despite the 1% overall year-on-year decline in IC Materials revenue, reflecting the proactive ceding of low value-added EBR business within IC Conventional, together with solid cost controls over materials and overheads.

 

Optronics revenue, at US$236.9m, was 6% higher than last year and EBITDA was 8% higher at US$67.9m, resulting in an increase in EBITDA margin to 28.7% (2011: 28.0%). Revenue in the second half of the year was up 13% on the same period last year (H2 2011: US$114.3m) and up 19% on the first half of 2012.

 

Revenues in Printing and Other were down by 12% in 2012, from US$22.6m to US$19.8m, although revenues in the second half of 2012 were in line with both the first half of the year and the second half of 2011 (H2 2011: US$9.8m). Changes made to the Printing cost base in 2011 returned the business to profitability in 2012, reporting EBITDA of US$2.0m for the year (2011: loss of US$0.8m) with an associated EBITDA margin of 10.1% (2011: minus 3.5%). From 1 January 2013, Printing has been included within our IC Materials division (under IC Conventional), so that it is aligned to and reflects our new management structure.

 

Corporate costs increased by US$3.1m (15%) over the previous year, due in the main to increased share option costs, salary inflation and the legal costs of a patent case which ran throughout the year.

 

 

 

 

 

 

Increase/(Decrease)

EBITDA

H1 2012

US$m

H2 2012

US$m

2012

US$m

2011

US$m

(as reported)

(at constant currencies)

 

IC Materials

104.0

111.8

215.8

219.2

(2)%

(1)%

 

Margin %

39.1%

41.2%

40.2%

40.2%

-

(0.5)pts

 

Optronics

30.5

37.4

67.9

62.8

8%

9%

 

Margin %

28.2%

29.0%

28.7%

28.0%

0.7pts

0.8pts

 

Printing and Other

1.1

0.9

2.0

(0.8)

350%

334%

 

Margin %

11.3%

8.9%

10.1%

(3.5)%

13.6pts

14.2pts

 

Corporate costs

(10.5)

(12.8)

(23.3)

(20.2)

15%

20%

 

Group

125.1

137.3

262.4

261.0

1%

1%

 

Margin %

32.6%

33.5%

33.1%

33.0%

0.1pts

(0.3)pts

 

 

 

Customer-focused investment

During the year, AZ invested US$55.8m into R&D (2011: US$54.0m), representing 7.0% of Group revenue overall (2011: 6.8%). Of this expenditure, US$43.4m was in the IC Materials division - primarily in IC Niche products - which represented 8.1% of IC Materials revenue (2011: US$41.0m, 7.5%). R&D expenditure in the Optronics division was US$11.6m, being 4.9% of Optronics revenue (2011: US$10.6m, 4.7%), reflecting the continued focus on new applications of AZ's proprietary silicon chemistry. R&D costs have been fully expensed in the Group's income statement as the costs do not meet the strict capitalisation criteria under IAS 38 "Intangible Assets" at the time such costs are incurred.

 

Capital expenditure in the period was US$50.7m (2011: US$50.5m), of which US$14.2m (2011: US$20.9m) was invested in advanced equipment used in R&D to develop new products. Capital investment to expand production capacity was US$27.2m (2011: US$19.7m) and a further US$9.3m (2011: US$9.9m) was invested to support AZ's asset base.

 

Major capital expenditure projects during the year included the completion of plant expansion in Taiwan (c. US$3m) and Korea (c. US$18m), and also the commencement of a project in France to expand its colloidal silica capacity (c. US$1m, with approximately US$6m to follow in 2013).

 

Continued strong cash generation

In 2012, the conversion of EBITDA into Operating Cash Flow was 78% (2011: 79%). Strong cash generation continues to be a key focus for the Group.

 

Cash generated from operations during the year was used to pay interest of US$19.4m, tax of US$84.9m, a final dividend of US$32.4m (in respect of the 2011 financial year), an interim dividend of US$15.2m (in respect of the 2012 financial year) and net capital investments totalling US$51.1m. Capital expenditure for this purpose is different to the additions to tangible and intangible fixed assets from the Group's balance sheet because of the timing of payments.

 

Net debt

At 31 December 2012, outstanding borrowings were US$399.0m (31 December 2011: US$491.4m) and cash balances amounted to US$109.6m (31 December 2011: US$148.0m). Net debt was therefore US$289.4m (31 December 2011: US$343.4m), giving a ratio of net debt to EBITDA of 1.1 times at the end of the year (31 December 2011: 1.3 times).

 

In December we completed the refinancing of our debt facilities with the establishment of new 4.5-year facilities totalling approximately US$500m, comprising US$125m and €45m of amortising term debt and a US$315m revolving credit facility with a final maturity of April 2017. The new facilities have been syndicated to a group of UK and International banks, and reflect the transition from a leveraged pre-IPO facility to a corporate debt facility. Covenants attached to our new debt facilities compare EBITDA to net debt (maximum of 2.75 times), and to interest costs (minimum 4 times). At 31 December 2012, AZ's performance was well within the covenant criteria.

 

At 31 December 2012, 85% of the Group's borrowings were denominated in US Dollars (2011: 86%) and the remaining 15% was denominated in Euros (2011: 14%).

 

Finance costs and Tax

Finance costs in the year were US$23.3m, a reduction of US$3.4m compared to the previous year (2011: US$26.7m). This included interest costs on bank overdrafts and loans of US$13.6m (2011: US$15.5m) and interest rate swap costs of US$6.4m (2011: US$10.8m).

 

The tax charge for the year was US$46.2m (2011: US$44.1m), representing an effective tax rate of 35.8% (2011: 35.1%). The comparative year tax charge and effective tax rate are stated after adjusting for a non-recurring credit of US$15.0m that arose in the previous year following a change in the Japanese corporate tax rate in December 2011. The reported tax charge and effective tax rate in the 2011 financial year were US$29.1m and 23.2% respectively.

 

Earnings per share

On a statutory basis, basic earnings per share in 2012 were 21.8 cents (2011: 25.3 cents) and diluted earnings per share were 21.7 cents (2011: 25.3 cents). The comparative year figures reflect the impact of a one-off deferred tax credit of US$15.0m. Excluding this, basic and diluted earnings per share in 2011 were 21.4 cents.

 

Whilst the basic and diluted earnings per share are disclosed in accordance with statutory requirements, the Directors believe that Adjusted Earnings per Share ("EPS"), with amortisation of intangible assets (net of related tax) added back, provides a better basis for comparison with other companies than statutory earnings per share. Adjusted EPS, calculated as Adjusted Profit after Tax divided by the weighted average number of shares in issue during the year, were 35.4 cents (2011: 35.2 cents). In arriving at Adjusted Profit after Tax for the year of US$134.7m, amortisation of intangible assets of US$51.8m (stated net of corresponding current and deferred tax credits of US$30.8m) has been added back to profit after tax.

 

Dividend

The Board is recommending a final dividend of 9.1 cents per Ordinary share for 2012 which, when added to the interim dividend of 4.0 cents per Ordinary share, brings the total dividend for the full year to 13.1 cents per Ordinary share, up 7% from the previous year (2011: 12.3 cents per Ordinary share). Subject to shareholders' approval, the final dividend will be paid on 3 May 2013 to shareholders on the register at the close of business on 15 March 2013. The ex-dividend date is 13 March 2013.

 

Dividends are declared in US Dollars and, unless a shareholder elects to receive dividends in US Dollars prior to 8 April 2013, will be paid in GB Pounds Sterling. This will be at the exchange rate prevailing on or about 15 April 2013 and confirmed by means of an RNS announcement to the London Stock Exchange on or about 16 April 2013.

 

Currency impact on trading

AZ reports its results in US Dollars and conducts its business in many foreign currencies. With 42% of AZ revenues being generated in US Dollars during the year (2011: 40%), the other important trading currencies are:

 

·     Japanese Yen: 30% of 2012 revenues (2011: 31% of revenues)

·     Taiwanese Dollar: 16% of 2012 revenues (2011: 17% of revenues)

·     Euro: 6% of 2012 revenues (2011: 7% of revenues)

·     Korean Won: 2% of 2012 revenues (2011: 2% of revenues)

 

Based on the current mix of non-US Dollar denominated revenue and profit, a movement of 1% in the Group's non-US Dollar trading currencies (relative to the US Dollar) changes revenue by approximately US$5m and EBITDA by approximately US$1m.

 

Risk management and internal controls

Robust management information systems and business planning processes have been central to the development of the Group thus far. To ensure the continued resilience of our systems, a Group-wide programme of internal control and risk management is in place, which includes targeted reviews of systems and processes as part of a co-ordinated internal audit programme.

 

Principal risks and uncertainties

The Company has identified certain principal risks and uncertainties that could prevent the Group from achieving its strategic objectives and has assessed how these risks could best be mitigated through a combination of internal controls, risk management and external insurance cover purchase. These risks are reviewed and updated on a regular basis and were last formally assessed in December 2012.

 

A full description of the principal risks and uncertainties faced by the Group together with an assessment of their impact is listed below. The Group's approach to the management and mitigation of these risks is included in the Company's 2012 Annual Report & Accounts.

 

(a)   Dependence on the macroeconomic cycle

       AZ's business performance is dependent on demand for business and consumer electronic products and will fluctuate with changes in the economic cycle. A slowdown in general economic conditions, either globally or by territory, could adversely impact demand for electronic products and thereby reduce our revenue and earnings.

 

(b)   Supply chain failure

       Supply chain failure or interruption could arise from:

 

·   Disruption to raw materials supply;

·   Loss of qualifying manufacturing status at an AZ or supplier site;

·   Failure to manufacture to agreed quality standards;

·   Poor supply chain management; or

·   A natural disaster impacting the operating ability of an AZ or supplier site.

 

       AZ supplies many of the leading players in the IC and FPD manufacturing industries, based on long-standing business relationships. Failure to supply a major customer could jeopardise future as well as current contracts leading to revenue loss and operating inefficiencies. Product that fails to meet required quality standards could result in product liability exposure.

 

(c)   Failure to develop commercially successful new products

       AZ must develop and introduce new revenue generating products to replace sales of older products which may either become obsolete or be replaced by new technologies and processes. The investment choices that AZ makes results from the knowledge and understanding of customer requirements in the markets in which it operates.

 

       Failure to develop and produce products within customers' design schedules and timeframes would severely impact revenue and earnings. This could result in a loss of market share, weaken existing customer relationships and damage AZ's reputation as an industry leader. As demand for new products increases, customers may also optimise their production processes, which may result in significant reduction in the volume of materials consumed.

 

(d)   Increased competitor activity

       Significant elements of our future growth plan are expected to come from current and future product opportunities with existing customers, leveraging the Group's position as the incumbent supplier, sometimes as a sole source of supply. Customers could choose to diversify their supply base or source alternative products from the Group's competitors, and this could lead to an erosion in AZ's market position, reducing both price and volume. In the worst case scenario, this could ultimately lead to the loss of a major customer.

 

(e)   Failure to protect proprietary technologies

       A large proportion of AZ's revenue is attributable to patented products. Additionally, the Group's competitive position is strengthened by its unpatented technology and know-how. Failure to protect proprietary information, technologies and know-how could lead to increased competition for existing and future products, resulting in reduced revenue and earnings growth.

 

(f)    Failure to recruit and retain the best talent

       The future growth of AZ's business will be based upon strong client relationships, established over a long period of time, and success in the development of new products. This will ultimately be dependent on AZ's ability to recruit and retain key employees with significant technical knowledge, market expertise and customer account management skills who can deliver against this need. Failure to recruit and retain the best staff with specific technical and leadership skills, or ensure effective succession planning for key positions, could impact on AZ's ability to achieve its business objectives.

 

(g)   Fluctuations in raw material prices

       Raw materials constitute a large proportion of AZ's manufacturing cost base. Therefore, the risk associated with fluctuations in raw material input prices could result in an increase in manufacturing costs and lead to a reduction in earnings.

 

(h)   Fluctuations in foreign exchange rates

       The significant international spread of the Group's operations, covering Asia, Europe and the USA, exposes it to exchange rate fluctuations in these territories. This arises as a result of potential mismatches between currencies in which revenues and expenses are denominated when subsidiaries enter into transactions in a currency other than their local currency. Fluctuations in exchange rates between the US dollar, the Japanese Yen, Taiwanese Dollar, the Euro and South Korean Won, could materially and adversely affect AZ's reported results. The global nature of AZ's business exposes it to translation rate risk when consolidating numbers into US dollars for financial reporting purposes.

 

(i)    Risks associated with operating in different countries

       The Group's strategy is to serve its customers locally and establish its facilities close to where our key customers are located. As a consequence, the Group is subject to various laws, rules and regulations in the different countries in which it operates, and is exposed to the financial, economic, political, business and tax risks associated with such countries.

 

 

RESPONSIBILITY STATEMENT

 

The responsibility statement below has been prepared in connection with the Company's Annual Report & Accounts for the year ended 31 December 2012. Certain parts thereof are not included within this announcement.

 

We confirm that to the best of our knowledge and belief:

 

·     the consolidated financial statements of AZ Electronic Materials S.A., prepared in accordance with International Financial Reporting Standards as adopted in the European Union, give a true and fair view of the assets, liabilities, financial position, cash flows and loss of the Company and Group; and

 

·     the Directors' Report (which constitutes the management report, as defined by Luxembourg Law) includes a fair review of the development and performance of the business and the position of the Company and Group, together with a description of the principal risks and uncertainties it faces.

 

This responsibility statement was approved by the Board on 18 February 2013 and is signed on its behalf by:

 

 

 

Geoff Wild

Mike Powell

Chief Executive Officer

Chief Financial Officer

 

18 February 2013

 

 

 

Consolidated income statement

 

Continuing operations

 

 

Notes

Year ended

31 December

2012
US$m

Year ended

31 December

2011

US$m

Revenue

3

793.9

791.8

Cost of goods sold

 

(420.1)

(421.2)

Gross profit

 

373.8

370.6

Operating costs

4

(223.1)

(219.9)

Operating profit

 

150.7

150.7

Investment income

 

1.7

1.6

Finance costs

5

(23.3)

(26.7)

Profit before tax

 

129.1

125.6

Tax

6

(46.2)

(29.1)

Profit for the year from continuing operations

 

82.9

96.5

Attributable to:

 

 

 

Equity holders of AZ Electronic Materials S.A.

 

82.9

96.5

Earnings per share from continuing operations

 

 

 

Basic (cents)

8

21.8

25.3

Diluted (cents)

8

21.7

25.3

 

The accompanying Notes are integral to this financial information.

 

 

Consolidated statement of comprehensive income

 

 

 

Year ended

31 December

2012

US$m

Year ended

31 December

2011

US$m

Profit for the year

 

82.9

96.5

 

 

 

 

Cash flow hedges: net gains arising during the year

 

3.0

8.8

Exchange differences on translation of foreign operations

 

(29.5)

21.5

Other comprehensive (loss)/income

 

(26.5)

30.3

Tax charge relating to components of other comprehensive income

 

(1.5)

(1.0)

Other comprehensive (loss)/income for the year

 

(28.0)

29.3

Total comprehensive income for the year

 

54.9

125.8

Attributable to:

 


 

Equity holders of AZ Electronic Materials S.A.

 

54.9

125.8

 

The accompanying Notes are integral to this financial information.

 

 

Consolidated balance sheet

 

 

Notes

As at

31 December

2012

US$m

As at

31 December

2011

US$m

ASSETS

 

 

 

Non-current assets

 

 

 

Goodwill

 

409.0

413.4

Intangible assets

 

550.7

665.5

Property, plant and equipment

 

232.4

224.2

Investments

 

6.4

6.4

Deferred income tax assets

 

16.3

12.3

Derivative financial assets

 

0.1

-

 

 

1,214.9

1,321.8

Current assets

 

 

 

Inventory

 

77.0

79.5

Trade and other receivables

 

161.8

157.5

Derivative financial assets

 

-

0.7

Current income tax assets

 

2.5

1.8

Cash and cash equivalents

 

109.6

148.0

 

 

350.9

387.5

Total assets

 

1,565.8

1,709.3

 

 

 

 

EQUITY

 

 

 

Share capital

 

38.1

38.1

Share premium

 

367.7

367.7

Own shares

 

(7.1)

-

Other reserves

 

1,282.1

1,357.7

Accumulated deficit

 

(922.1)

(1,013.9)

Equity attributable to owners

 

758.7

749.6

 

 

 

 

LIABILITIES

 

 

 

Non-current liabilities

 

 

 

Borrowings

9

392.8

473.2

Deferred income tax liabilities

 

200.9

269.8

Derivative financial liabilities

 

3.8

8.5

Liability for share-based payments

 

-

0.1

Retirement benefit obligations

 

15.8

14.4

 

 

613.3

766.0

Current liabilities

 

 

 

Trade and other payables

 

112.2

122.1

Current income tax liabilities

 

71.4

50.7

Borrowings

9

6.2

18.2

Derivative financial liabilities

 

3.7

2.7

Liability for share-based payments

 

0.3

-

 

 

193.8

193.7

Total liabilities

 

807.1

959.7

Total equity and liabilities

 

1,565.8

1,709.3

 

The accompanying Notes are integral to this financial information.

 

 

Consolidated statement of changes in equity

 

 

Notes

Share

capital

US$m

Share

premium

US$m

Own

shares

US$m

Other

reserves

US$m

Accumulated

deficit

US$m

Total

equity

US$m

Balance at 1 January 2011


38.1

367.7

-

1,342.9

(1,111.1)

637.6

Profit for the year


-

-

-

-

96.5

96.5

Equity-settled share-based payments

 

-

-

-

-

0.7

0.7

Other comprehensive income for the year


-

-

-

29.3

-

29.3

Distributions to shareholders

7

-

-

-

(14.5)

-

(14.5)

Balance at 31 December 2011

 

38.1

367.7

-

1,357.7

(1,013.9)

749.6

Profit for the year

 

-

-

-

-

82.9

82.9

Consolidation of ESOP Trust

 

-

-

-

-

7.5

7.5

Purchase of own shares

 

-

-

(7.4)

-

-

(7.4)

Own shares vesting to employees

 

-

-

0.3

-

(0.3)

-

Equity-settled share-based payments

 

-

-

-

-

1.7

1.7

Other comprehensive loss for the year

 

-

-

-

(28.0)

-

(28.0)

Distributions to shareholders

7

-

-

-

(47.6)

-

(47.6)

Balance at 31 December 2012


38.1

367.7

(7.1)

1,282.1

(922.1)

758.7

 

The accompanying Notes are integral to this financial information.

 

 

 

Consolidated cash flow statement

 

 

Notes

Year ended

31 December

2012

US$m

Year ended

31 December

2011

US$m

Net cash provided by operating activities

10

152.2

155.1

 

 

 

 

Cash flows from investing activities

 

 

 

Purchases of property, plant and equipment

 

(46.3)

(46.3)

Proceeds on disposal of property, plant and equipment

 

0.5

0.1

Purchases of intangible assets

 

(5.3)

(3.3)

Interest received

 

1.0

0.7

Acquisition of subsidiary

 

-

(5.2)

Consolidation of ESOP Trust

 

7.5

-

Net cash used in investing activities

 

(42.6)

(54.0)

 

 

 

 

Cash flows from financing activities

 

 

 

Dividends paid

7

(47.6)

(14.5)

Costs of issuing shares

 

-

(7.8)

Repayments of borrowings

 

(492.7)

(64.7)

New bank loans raised

 

398.0

-

Purchase of own shares

 

(7.4)

-

Net cash used in financing activities

 

(149.7)

(87.0)

Net (decrease)/increase in cash

 

(40.1)

14.1

Cash and cash equivalents at the beginning of the year

 

148.0

133.7

Effect of foreign exchange rate changes on cash balances

 

1.7

0.2

Cash and cash equivalents at the end of year

 

109.6

148.0

 

The accompanying Notes are integral to this financial information.

 

 

Notes to the interim financial information

 

 

1. General information

 

AZ Electronic Materials S.A. was incorporated on 12 October 2010 as a public limited liability company (société anonyme) under the laws of the Grand Duchy of Luxembourg and is registered with the Registre de Commerce et des Sociétés de Luxembourg under number B156074. Since 3 November 2010, the Company's shares (each of nominal value US$0.10) have been traded on the London Stock Exchange's main market for listed securities.

 

The financial information set out above does not constitute statutory accounts for the years ended 31 December 2012 or 2011, but is derived from those accounts. The Company's 2012 Annual Report and Accounts will be published shortly. The auditors have reported on those accounts: their reports were unqualified and did not draw attention to any matters by way of emphasis without qualifying their report.

 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in March 2013.

 

 

2. Accounting policies

 

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2011 as described in the Group's Annual Report and Accounts for that year.

 

 

3. Segment information

The Group has identified its reportable segments, recognising the different characteristics of those segments as reflected in the information provided to the members of the Global Management Team ("GMT") that is responsible for the day-to-day management of the Group. The GMT comprises the Chief Executive Officer, Chief Financial Officer, Chief Technology Officer, the heads of the Business Divisions and the heads of Group Operations, HR and R&D.

The Group is focused on the ultimate end use of the products manufactured and has determined that the appropriate reportable segments are as follows.

IC Materials: being high-purity, advanced technology products for use in integrated circuits and devices, comprising:

· IC Niche products, being a number of specialty materials, specifically spin-on dielectrics, colloidal silica CMP slurries and lithographic process material that facilitate yield and pattern enhancements; and

· IC Conventional products constituting more widely available, and generally older products for photolithographic processes, specifically photoresists including thick film resists, edge bead removers (EBRs) and other ancillary products.

Optronics: being products used in the production of flat panel displays (FPDs) for use in televisions, computer monitors and similar equipment, comprising:

· FPD Photoresist products, being light-sensitive processing materials for FPDs; and

· Optronics Other products, including EBRs, other ancillaries and silicon chemistry-based products for AZ's Light & Energy business (serving displays, lighting and other non-electronic markets).

Printing and Other: being mainly printing and similar products used in photo lithographic processes.

Corporate: being staff and running costs of corporate and administrative offices.

The accounting policies of the reportable segments are the same as the Group's accounting policies.

The GMT uses EBITDA to measure the profitability of each segment. EBITDA represents operating profit excluding amortisation of intangible assets and depreciation in order to provide management with a consistent comparison of the Group's businesses, on a year on year basis and with other businesses.

Information regarding the Group's reporting segments is reported as follows:

 

Segment revenues

The following is an analysis of the Group's revenue generated from external customers by reportable segment:

 


2012
US$m

2011
US$m

IC Materials

537.2

545.1

Optronics

236.9

224.1

Printing and Other

19.8

22.6

Total revenue

793.9

791.8

 

All the revenue is derived from the sale of goods. There are no inter-segment sales. Below is a breakdown of total sales revenue by product type:


2012
US$m

2011
US$m

IC Niche

356.0

352.1

IC Conventional

181.2

193.0

Total IC Materials revenue

537.2

545.1

FPD Photoresist

188.0

177.2

Optronics Other

48.9

46.9

Total Optronics revenue

236.9

224.1

Total Printing and Other revenue

19.8

22.6

Total revenue

793.9

791.8

 

 

Segment results

The following is an analysis of the Group's EBITDA by reportable segment:

 

Year ended December 2012 (US$m)

IC Materials

Optronics

Printing
and Other

Corporate

Total

EBITDA

215.8

67.9

2.0

(23.3)

262.4

Depreciation

(20.1)

(8.4)

(0.6)

-

(29.1)

EBITA

195.7

59.5

1.4

(23.3)

233.3

Amortisation of intangible assets

(56.6)

(24.7)

(1.3)

-

(82.6)

Operating profit/(loss)

139.1

34.8

0.1

(23.3)

150.7

Net investment income and finance costs

 

 

 

 

(21.6)

Profit before tax

 

 

 

 

129.1

Taxation

 

 

 

 

(46.2)

Profit after tax

 

 

 

 

82.9

 

 

Year ended 31 December 2011 (US$m)

IC Materials

Optronics

Printing
and Other

Corporate

Total

EBITDA

219.2

62.8

(0.8)

(20.2)

261.0

Depreciation

(18.4)

(8.4)

(1.2)

-

(28.0)

EBITA

200.8

54.4

(2.0)

(20.2)

233.0

Amortisation of intangible assets

(55.7)

(25.3)

(1.3)

-

(82.3)

Operating profit/(loss)

145.1

29.1

(3.3)

(20.2)

150.7

Net investment income and finance costs

 

 

 

 

(25.1)

Profit before tax

 

 

 

 

125.6

Taxation

 

 

 

 

(29.1)

Profit after tax

 

 

 

 

96.5

 

 

 

 

 

 

 

Geographic information

The Group's revenue from external customers by geographic area of the Group's selling locations is as follows:

 


2012
US$m

2011
US$m

Taiwan

211.9

209.1

Korea

187.1

186.4

Japan

133.0

141.5

China

63.6

64.2

Singapore

36.0

34.0

India

1.0

0.2

Total Asia

632.6

635.4

Germany

50.2

52.6

France

13.6

14.7

Total Europe

63.8

67.3

USA

97.5

89.1

Total USA

97.5

89.1

Total revenue

793.9

791.8

 

 

4. Operating costs

 

 

 


2012
US$m

 

2011
US$m

Selling and marketing costs

 

 

 

 

Amortisation of intangible assets

 

81.8

 

81.8

Other expenses

 

21.2

 

26.0

Total selling and marketing costs

 

103.0

 

107.8

Research & development costs

 

55.8

 

54.0

Distribution costs

 

8.5

 

7.6

Administrative costs

 

58.7

 

53.8

Other gains and losses

 

(2.9)

 

(3.3)

Total

 

223.1

 

219.9

 

 

5. Finance costs

 

 

2012
US$m

2011
US$m

Interest on bank overdraft and loans

13.6

15.5

Retirement benefits

0.8

0.8

Fair value losses on interest rate swaps transferred from equity for cash
flow hedges of floating rate debt

6.4

10.8

Exchange differences (ineffective net investment hedge)

2.1

(0.6)

Losses on derivatives designated at fair value through profit or loss:

 

 

-    Interest rate derivatives

0.4

0.2

Total finance costs

23.3

26.7

 

 

6. Tax

The amounts recognised in the income statement were as follows:

 

 

2012
US$m

2011
US$m

Current tax

82.9

71.3

Deferred tax

(36.7)

(42.2)

Total tax

46.2

29.1

 

 

7. Dividends

 

2012
US$m

2011
US$m

Amounts recognised as distributions to equity holders in the year:

 

 

Interim dividend for the year ended 31 December 2012 of 4.0 cents (2011: 3.8 cents) per share

15.2

14.5

 

 

 

Proposed final dividend for the year ended 31 December 2012 of 9.1 cents (2011: 8.5 cents) per share

34.5

32.4

The proposed final dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

 

 

8. Earnings per share

The calculation of basic earnings per share has been based on the profit for the period and the number of shares for the relevant years set out below.

 


2012

2011

Profit attributed to shareholders (US$m)

82.9

96.5

Weighted average number of shares for the purposes of basic earnings per share

380,681,383

380,913,552

Basic earnings per share (cents)

21.8

25.3

Effect of dilutive potential ordinary shares

 

 

- share options

1,027,746

39,131

Weighted average number of ordinary shares for the purposes of diluted earnings per share

381,709,129

380,952,683

Diluted earnings per share (cents)

21.7

25.3

 

During the year shares have been purchased by an Employee Share Ownership Plan Trust ("ESOP Trust") and have been excluded in determining the weighted average number of shares for the purpose of calculating basic and diluted earnings per share.

In the calculation of adjusted earnings per share, the profit attributable to shareholders has been adjusted for amortisation of intangible assets net of the related deferred tax. In the prior year, the add back for amortisation of intangible assets net of the related deferred tax includes a US$13.1m reduction principally to eliminate the impact of the change in corporate tax rate in Japan.

 

 


2012
US$m

2011
US$m

Profit after tax from continuing operations

82.9

96.5

Add back (after tax):

 

 

amortisation of intangible assets

51.8

37.6

Adjusted profit after tax from continuing operations

134.7

134.1

Weighted average number of shares

380,681,383

380,913,552

Adjusted earnings per share (cents)

35.4

35.2

 

 

9. Financial liabilities - borrowings

 

 

2012
US$m

2011
US$m

Non current

 

 

Bank loans

392.8

473.2

Current

 

 

Bank loans

6.2

18.2

Total borrowings

399.0

491.4

 

 

10. Cash generated from operations

 

 

 

2012
US$m

2011
US$m

Profit for the year

 

82.9

96.5

Adjustments for:

 

 

 

Income tax expense

 

46.2

29.1

Depreciation on property, plant & equipment

 

29.1

28.0

Amortisation of intangible assets

 

82.6

82.3

Loss on sale of property, plant and equipment

 

(0.1)

0.4

Share-based payments charge

 

1.9

0.5

Finance costs

 

21.2

27.3

Investment incomes

 

(0.9)

(0.7)

Exchange differences on financial liabilities

 

2.1

(0.6)

Changes in working capital:

 

 

 

Decrease/(increase) in inventories

 

2.5

(3.6)

Increase in trade and other receivables

 

(7.2)

(4.3)

(Decrease)/increase in trade and other payables

 

(3.8)

0.1

Cash generated from operations

 

256.5

255.0

Income taxes paid

 

(84.9)

(75.3)

Interest paid

 

(19.4)

(24.6)

Net cash from operating activities

 

152.2

155.1

 

 

 

SHAREHOLDER INFORMATION

 

1. Company website: www.azem.com

 

The Company's Half-Year and Annual Reports to shareholders, and results announcements and presentations, are available to view and download at our website, www.azem.com. From there, shareholders can also access current AZ share price information, the latest news about the Group, its products and operations, and details of future events and how to obtain further information.

 

2. Company Registrar: Capita Registrars www.capitaregistrars.co.uk

 

Enquiries concerning shareholdings, dividends and changes in personal details should be referred to the Company's registrar, Capita Registrars ("Capita") in the first instance. They can be contacted at ssd@capitaregistrars.com or otherwise as follows:

 

Telephone:

 

·     0871 664 0300 (calls cost 10p per minute plus network extras)

·     +44 (0) 20 8639 3399 (from outside the UK)

·     Lines are open from 9.00am to 5.30pm, Monday to Friday, excluding public holidays

 

Share Registrar (Shareholders):

 

Capita Registrars (Jersey) Limited

12 Castle Street

St Helier

Jersey JE2 3RT

Channel Islands

 

Depository Interest Registrar (Depository Interest holders):

 

Capita IRG Trustees Limited

Regulated Business

The Registry

34 Beckenham Road

Kent BR3 4TU

United Kingdom

 

Alternatively, shareholders can view and manage their shareholding through AZ's share portal which is hosted by Capita - simply log on to www.capitashareportal.com and follow the registration instructions.

 

3. 2012 Final Dividend and related services

 

The Board is recommending a final dividend for the year ended 31 December 2012 of 9.1 cents per Ordinary share. Subject to shareholder approval being obtained at the Company's Annual General Meeting on 24 April, the final dividend will be paid on 3 May to shareholders registered at the close of business on 15 March 2013.

 

Related services (briefly described below) will be offered in support of the 2012 Final Dividend payment. Full details are available on the Investors section of the Company's website at www.azem.com. This includes a direct link to the AZ share portal hosted by Capita (through whom the related services are to be provided) and from where reference booklets and application forms can be downloaded and services applied for online.

 

·     Currency election for cash dividends

 

The 2012 Final Dividend has been declared in US Dollars but will be paid in GB Pounds Sterling unless a currency election is made to receive the dividend in US Dollars. The US$:GB£ exchange rate to be used for the default payment will be that prevailing on or about 15 April and notified by the Company by means of a public announcement to the London Stock Exchange made the following day.

 

To be valid in respect of the 2012 Final Dividend, completed currency election forms must be returned to Capita by 8 April 2013. Depository Interest holders who wish to make a currency election should either reference their CREST Manual (if they are CREST participants) or contact their CREST sponsor (if they are CREST members) who will be able to take appropriate action on their behalf.

 

·     Dividend payments to UK shareholders - Dividend Mandates

 

UK shareholders may request that their dividends be paid directly into a nominated UK bank or building society account through the Bankers' Automated Clearing System ("BACS"). This arrangement is only available in respect of dividends paid in GB Pounds Sterling. To take advantage of this facility in respect of the 2012 Final Dividend, completed mandate forms must be received by Capita by 8 April 2013.

 

·     Dividend payments to overseas shareholders - International Payment Service

 

For international shareholders who would prefer to receive the payment of their dividends in local currency and direct into their local bank account, an International Payment Service ("IPS") is available. To be valid in respect of the 2012 Final Dividend, completed IPS application forms must be received by Capita by 8 April 2013.

 

·     Dividend Reinvestment Plan

 

A Dividend Reinvestment Plan ("DRIP") is a simple and convenient means by which EEA registered shareholders can increase their holding in the Company by using their dividends to buy more shares instead of receiving the cash payment. To be valid in respect of the 2012 Final Dividend, completed DRIP mandates must be received by Capita by 8 April 2013.

 

4. 2012 Final Dividend timetable

 

 

2013

Preliminary Announcement, including final dividend recommendation in US Dollars*

19 February

Ex-dividend date

13 March

Record date

15 March

Annual Report and AGM Notice mailed to Shareholders and Depository Interest holders

18 March

Deadline for return of currency elections, IPS mandates, dividend mandates and DRIP elections

8 April

Exchange rate announced for GB Pound Sterling default payment of interim dividend

16 April

Annual General Meeting (seeking shareholder approval to the Final Dividend)

24 April

Payment date

3 May

 

* The 2012 Final Dividend will be paid by the Company without deduction of Luxembourg withholding tax.

 

The tax outcomes of receiving a dividend from the Company will depend on the specific circumstances of Shareholders and Depository Interest holders. If you are in any doubt as to your tax position, you should consult an appropriately qualified professional advisor.

 

5. Investor and media enquiries

 

For any investor enquiries, please contact Majid Nazir (Head of Investor Relations) at AZ Electronic Materials, by telephone on +44 (0) 20 8622 3825 or by email at majid.nazir@azem.com.

 

For any media enquiries, please contact Edward Bridges or Nick Hasell at FTI Consulting, by telephone on +44 (0) 20 7269 7147 or by email at azem@fticonsulting.com.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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