OSA-Direct
Wednesday, 26 Apr 2017

Thin Film Electronics Q4 2016 and full-year 2016 financials

Sales revenue was related to product development projects, delivery of prototypes and products to strategic customers and partners, technology transfer and product deliveries

3 Mar 2017 | Editor

Thinfilm’s revenue and other income in 2016 amounted to US$ 3,845,000, 13% lower than the same period in 2015 (2015: US$ 4,413,000). Excluding the other income recognised in the period, total revenue was US$ 3,424,000, a decrease of US$ 581,000, or 15%, compared to the preceding year (2015: US$ 4,005,000).

Sales revenue amounted to US$ 1,460,000 in 2016, compared to US$ 2,214,000 in 2015, and was largely related to product development projects, delivery of prototypes and products to strategic customers and partners, technology transfer revenue as well as product deliveries.

The decrease in sales revenue, year on year, is primarily due to lower EAS product sales in the period. Join Development Agreement (JDA) revenues from the partnership with a global pharmaceutical company continued also in the fourth quarter.

Revenue related to government grants and other funded projects amounted to USD 1,964,000 in the period (2015: US$ 1,791,000). The 10% increase is largely explained by new funded projects and higher activity in existing projects in 2016 as compared to 2015.

Other income amounted to US$ 421,000 in 2016 (2015: 408,000) and was entirely related to sublease income from the San Jose site. Sales revenue in the fourth quarter of 2016 amounted to US$ 466,000, a 53% reduction compared to the same period in 2015 (Q4 2015: 989,000).

Other operating revenue in Q4 2016 amounted to US$ 447 thousand, 8% lower than in the corresponding period last year (Q4 2015: US$ 485,000). Other income in the fourth quarter of 2016 was US$ 105,000 (Q4 2015: US$ 125,000).

The group's cash balance increased by US$ 58,265,000 in 2016 (compared to a decrease of US$ 14,914,000 in 2015). The increase in cash balance is explained by three principal elements:

  • an outflow of US$ 37,530,000 from operating activities
  • a US$ 5,262,000 outflow from investing activities
  • a US$ 101,124,000 inflow from financing activities*

* primarily as a result of the issuance of shares to Woodford Investment Management in Q1 2016 and the private placement in Q4 2016

The cash balance on 31 December 2016 amounted to US$ 74,205,000, while cash net of receivables and payables amounted to US$ 70,355,000. The cash balance on 31 December 2015 amounted to US$ 15,940,000, while cash net of receivables and payables amounted to US$ 13,888,000.

Thin Film Electronics reports financial results for Q4 2016 US$ ,000)

Financials 2016
Q4
2015
Q4
2016
FY
2015
FY
Sales 466 989 11,460 2,214
Others operating 447 485 1,964 1,791
Other income 105 125 421 408
Revenues - Total 1,019 1,599 3,845 4,413
Operating Costs (12,562) (10,859) (42,151) (34,664)
Operating Profit(loss) (12,669) (9,718) (41,482) (31,788)
Net (loss) Income (14,071) (9,350) (44,495) (29,382)
Net per share - basic($) (0.02) (0.02) (0.07) (0.05)

Outlook

Thinfilm is developing technology that is expected to be critical to the extension of the Internet of Things to ordinary objects. Thinfilm's NFC OpenSense and SpeedTap labels communicate wirelessly with appropriately configured NFC-enabled smartphones, and can be applied to consumables and other disposable objects.

The inclusion of NFC in smartphones increased dramatically over the past several years. According to NFC Forum, the number of smart phones with NFC reached 1.7 billion in 2016. Annual shipments of NFC devices are expected to exceed 2 billion by 2018.

In 2016, Thinfilm completed the technology transfer of its printed memory IP to Xerox, including process knowledge and testing technology. This transfer enabled Xerox to begin manufacturing Thinfilm memory. The transfer will lead to royalty payments to Thinfilm given that Xerox obtains sufficient commercial traction in the future.

Thinfilm began mass-production of wireless tags for electronic article surveillance (EAS) in 2015. It completed an original 13 million order in 2016. After re-qualification of the EAS product to include shipments of wet inlays, the Company received two follow-up orders from its go-to-market partner.

Thinfilm plans to continue to increase production capacity, which currently allows seven-figure monthly production of NFC labels and multi-million monthly production of EAS tags, corresponding to an overall 40-million annual unit production capacity, based on NFC label equivalents. This volume is expected to support further market introduction of NFC label products during 2017 in categories such as wines and speciality foods, and field trials in liquors, while also providing capacity for the expected demand from new EAS orders, currently under negotiation.

The process of migrating transistor manufacturing from sheet-based to roll-based PDPS production has progressed, and Thinfilm will relocate its San Jose, California-based NFC Innovation Center and current US headquarters in April 2017.

Thinfilm has leased a new facility for 12 years, and has made tenant improvements. Buffer stock build up of front-end die has commenced to allow for uninterrupted backend integration and assembly and sufficient supply to meet customer demand during the 10-week relocation of sheet-based production equipment to the new facility, located approximately one mile from the current Zanker Road site.

The new facility features a significantly larger manufacturing clean room, and enables Thinfilm to support the Company’s plans to scale current production and implement a high-volume roll-to-roll manufacturing line for EAS by year-end 2017 and for transistor-based products in 2018 – including NFC OpenSense and NFC SpeedTap labels.

By accelerating the transition to roll-to-roll printed electronics manufacturing through capex investment, Thinfilm expects to be prepared to support up to a billion-unit annual production volume in 2018.

In parallel, the Company will look to partner with scale-up qualified, industrial companies to maintain its low-capex business model, as exemplified by its Thinfilm Memory partnership with Xerox. Thinfilm expects to launch a new temperature sensor label in 2017 and announced the global launch of its CNECT cloud-based software portal in Q1 2017.

www.thinfilm.no   



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