PV Crystalox Solar PLC Trading Statement (5787O)
February 10 2016 - 2:00AM
UK Regulatory
TIDMPVCS
RNS Number : 5787O
PV Crystalox Solar PLC
10 February 2016
PV Crystalox Solar plc
Trading Update
10 February 2016
At the time of the PV Crystalox Solar plc (the "Group") interim
results on 27 August 2015 the Board indicated that it was to carry
out a strategic review of the business which it intended to
complete by the end of 2015. The review was to take account of the
Group's cash position and production cost structure, industry
overcapacity and the prospects for rational pricing returning to
the market. As a result of recent positive developments in the PV
market environment the Board have decided that it would be prudent
to extend the review period to assess the ongoing impact of these
changes on the Group's business.
PV market conditions have been extremely challenging for several
years with industry overcapacity depressing prices across the value
chain. However, the spot price for wafers, the Group's primary
product, has shown some modest recovery during recent months while
the price of polysilicon, the key raw material, has fallen to
historical lows and is still declining. The net result of these
divergent trends is that wafer prices now exceed the Group's cash
cost of production. The Group has significant polysilicon inventory
and under current circumstances conversion into wafers is now a
more favourable option than trading the surplus polysilicon at
market prices.
In common with most PV companies the Group has been burdened by
long term polysilicon purchase contracts with prices considerably
in excess of market prices. The Group has enjoyed good support from
its two suppliers and has been able to negotiate adjustments to
contract pricing. The Group has now concluded its obligations under
the largest contract and took delivery of the final shipment of
polysilicon under that contract in December 2015. Shipments under
the remaining contract are scheduled to continue until late 2018
but the planned quantities are consistent with current production
volumes.
The Group has one outstanding long term sales contract but the
customer which is one of the world's leading PV companies, has
failed to purchase wafers in line with its obligations. Despite
extensive negotiations it has not been possible to reach a mutually
acceptable agreement and a request for arbitration was filed in
March 2015 with the International Court of Arbitration of the
International Chamber of Commerce. The evidentiary hearing of the
arbitral tribunal is now scheduled to take place in Frankfurt in
July 2016.
In December 2015 the French government announced the results of
its CR3 tender and awarded 800MW of PV projects which must be
completed within a two year period. The carbon footprint of the
complete module is a critically important factor for these
projects. Accordingly, the Group expects to be well positioned to
benefit as the low carbon footprint of our wafers is more
favourable than product from competitors based in China and
Taiwan.
Previously the Group has carried out wafering at subcontractors
in Japan as well as at the Group's own in house facility in
Germany. In view of both the marked decline in cell manufacturing
and the Group's lack of an active customer base in Japan, wafering
in Japan was suspended during 2015. Instead the Group's focus has
shifted to in-house wafer production where considerable progress
has been achieved in cost reduction. As a consequence of these
changes the Group decided to wind up its Tokyo based subsidiary at
the end of 2015.
The Board remains mindful of the need to protect shareholder
value and accordingly believes that extending the period of the
strategic review is in the best interest of shareholders,
especially in view of the judgement of the arbitral tribunal which
is expected before the end of 2016.
The Group expects to release its preliminary results for the
year ended 31 December 2015 on Thursday 17 March 2016.
Enquiries:
PV Crystalox Solar plc +44 (0) 1235 437160
Iain Dorrity, Chief Executive Officer
Matthew Wethey, Chief Financial Officer and Group Secretary
This information is provided by RNS
The company news service from the London Stock Exchange
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