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Singulus Throttles Back Blu-ray Expectations for 2012

Singulus Technologies announced that it is revising down its financial projections for 2012.

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Unedited press release follows:

SINGULUS TECHNOLOGIES Reports Preliminary Key Figures and Adjusts Full-Year Targets For 2012

• Negative result of the first half-year impacts 9-month and full-year results
• Q3 positive before extraordinary charges
• Balance sheet adjusted and still solid
• Positive earnings forecast for the business year 2013

Kahl am Main, October 25, 2012 – The development of the three segments Semiconductor, Solar and Optical Disc were mixed in the current business year. In particular, the Semiconductor segment has developed very favorably. In the Solar division business activities were difficult due to the lack of market recovery in 2012, which is now expected for 2013. Following talks with Optical Disc customers SINGULUS TECHNOLOGIES (SINGULUS) has to concede that despite a high utilization rate in disc manufacturing, larger investments in Blu-ray production equipment will not be realized this year anymore. This has a negative impact on the development of SINGULUS’ business results for the year 2012. Due to the disappointing development of this year’s sales levels for Blu-ray machines as well as the still difficult situation on the market for equipment for the production of solar cells, SINGULUS had to implement a couple of measures, which had an additional negative impact on the key financial figures.

The Executive Board has resolved drastic measures owing to the business situation. In the Optical Disc segment this mainly affects the foreign subsidiaries and the product segment “Mastering”. Furthermore, the work area of machines for wet-chemical production steps at the subsidiary SINGULUS STANGL SOLAR GmbH (“Wet-Chemical”) is affected by the decline in the market for silicon-based solar cells. Overall, in the Solar segment structures and capacities in the wet-chemical division as well as capitalized development expenses for traditional coating technology are therefore further adjusted. Accordingly, at the end of the business year 2012 the headcount at the Fürstenfeldbruck site will be reduced by about 40 %.

The impairment review of all balance sheet items resulted in provisions, write-offs on inventories and on accounts receivable as well as write-downs in the amount of € 43.3 million for the current quarter 2012. The majority of the necessary balance sheet adjustments do not result in additional cash outflows. SINGULUS has sufficient liquid funds. The balance sheet continues to remain stable and is still very solid with an equity ratio of approximately 40 %.

Against this background pursuant to preliminary results SINGULUS expects sales of about € 83.5 million (previous year: € 121.8 million) for the first nine months and a negative result of about € 10.9 million (previous year: € 6.3 million) excluding the aforementioned extraordinary charges. The order intake in the first nine months stood at € 110.6 million (previous year: € 137.0 million). The order backlog amounted to € 53.9 million as of September 30, 2012 (previous year: € 50.8 million). Due to the trends in the Optical Disc segment sales for the full-year 2012 will also fall short of expectations and will be in a range from € 100 to 115 million (previous year: € 160.0 million). This will lead to an overall negative result including extraordinary charges in a range from – € 54 to 56 million for 2012. On a favorable note, the course of business in the third quarter only (excluding extraordinary charges) resulted in positive earnings, however.

SINGULUS thus continues to gradually implement a structural change from a pure supplier of machines in Optical Disc to a leading provider for vacuum technology in different segments such as Optical Disc, Solar and Semiconductor. New application areas will be developed in the future. On the one hand, capacities have to be adjusted accordingly. On the other hand, investments in industries of the future and expansions into new work areas are made.

SINGULUS – solid finances for the future.
In the business year 2011 SINGULUS completely repaid its liability owed to banks. Except for a loan from the KfW in the amount of € 4.8 million there are currently no more bank liabilities. With the issue of a corporate bond on March 12, 2012 with a volume of € 60 million and a term to maturity of five years SINGULUS ensured that the financing of current projects, the growth in the existing divisions as well as the expansion into new work areas rests on a secure and stable foundation.

With the proceeds from the issue SINGULUS TECHNOLOGIES is able to finance larger projects in the Solar segment, the expansion of the system partnership with producers of thin-film solar cells, the development of new products in the Solar division and the development of manufacturing equipment for the next generation of Blu-ray Discs.

Establishment of new business areas – external growth
As already depicted, with the proceeds from the bonds SINGULUS intends to set-up new business areas in the vacuum coating technology through research and development as well as through acquisitions of companies and company divisions.

To strengthen SINGULUS’ existing business segments the Executive Board has elaborated a detailed portfolio strategy and is currently reviewing several concrete acquisition opportunities. It goes without saying that the Executive Board is analyzing the potential targets with the required diligence.

SINGULUS TECHNOLOGIES 2013 – good prospects for breaking-even in Optical Disc, Solar and Semiconductor – growth through new business areas

The trends in the individual segments are projected as follows:

Since the market for Blu-ray Disc continues to grow at double-digit rates in 2012, we expect stable sales and earnings contributions again.

In the thin-film technology CIS/CIGS SINGULUS is excellently positioned. Larger investment projects have already been announced for 2013. If they are realized according to plan, SINGULUS will surely succeed in delivering a significant number of machines.

In a difficult market we see us very well positioned technologically due to the good development efforts in the past years. The upgrade business in the area of crystalline solar cells to the PERC standard promises new demand for relevant production equipment in 2013.

The Semiconductor division will make positive earnings contributions this year. The potential of the various application areas for the machines suggests a further uptrend in the coming business years.

SINGULUS’ Executive Board sees a good chance for the existing segments Optical Disc, Solar and Semiconductor to generate positive earnings in the next year again.