13 Jul 2016 07:00
13 July 2016
e2v technologies plc
AGM Update
e2v technologies plc today provides an update, ahead of today's AGM.
Overview
Activity in the first quarter, typically a quiet period for the Group, was muted. We expect to deliver a strong improvement in the second quarter, supported by order intake secured in June. Good operational progress is being made across the business and we will continue to take action on costs as appropriate. Cash collection has been in line and we have targeted inventory reductions to improve on our planned year end net debt reduction. Our outlook for the current financial year, subject to the broader economic environment, remains unchanged, with an H1/H2 revenue split of approximately 40:60.
Divisional update
Imaging is arranged in two business streams: Professional Imaging and Space Imaging. Professional Imaging is seeing demand continuing to grow for industrial automation, particularly in Asia. Order intake across its activities increased in June for delivery in the second quarter and we have a good pipeline of opportunities which support the anticipated revenue profile for the remainder of the year. Space Imaging has good order cover in the short term. We are confident of securing the follow-on production orders where we are designed into major programmes. This underpins a significant step-up in revenue anticipated in the second half and builds the order book cover for the next financial year. Space Imaging is a long cycle business and continues to experience challenges on its technically demanding programmes.
RF Power is seeing improving demand in radiotherapy and continues to deliver to its OEM customers under the existing contracts, which are expected to be renewed before the year end. In commercial and industrial, we expect demand to remain steady. The defence business has the opportunity pipeline to support its anticipated revenue profile although we have seen some recent delays in programme awards.
In Semiconductors we achieved strong order intake in June for our component portfolio, and this supports the second quarter's revenue delivery. The anticipated revenue profile is expected to be supported by our partnership with Peregrine Semiconductors, product line acquisitions made in the prior year, NXP last time buy and SP Devices.
Financial position
Cash generation in the first quarter mainly reflected the expected collection of year end receivables, and net borrowings decreased by £11.2m to £9.9m (31 March 2016: £21.1m). We expect net borrowings at the half year to be broadly in line with the position as at 31 March 2016, reflecting the payment of dividends and tax.
We have increased our management team's ongoing focus on working capital management. We have reduced manufacturing cycle time in Space Imaging and we have made good progress with our reorganisation of the Chelmsford site. When completed within the next two years, it will provide further reductions in manufacturing cycle time and associated working capital. Semiconductors has implemented an inventory reduction plan, which is anticipated to deliver a reduction in inventory by the end of the financial year, and represents most of the incremental inventory improvement of £5m to enhance on our planned year end net debt reduction.
Over the next two years we see the opportunity for further reduction in working capital intensity by c.£10m coming from delivery of a more even revenue profile and further shortening of manufacturing cycle time.
Foreign Currency
A one cent strengthening in the US$ relative to Sterling is estimated to increase reported revenues by c.£1m with a c.40% drop through to adjusted operating profit. A one cent strengthening in the Euro relative to Sterling is estimated to increase reported revenue by c.£0.3m with a minimal drop through to profit given Euro denominated costs. We will provide an update on the possible effect of FX changes as the year progresses.
Interim results
The Group's next scheduled comment on trading will be the interim results announcement on 7 November 2016.
Further enquiries:e2v technologies plc | ||
Steve Blair, Group CEO Charles Hindson, Group Finance Director
| Tel: +44 (0)1245 493 493 | |
Website: www.e2v.com | ||
FTI Consulting | ||
Richard Mountain/Susanne Yule | Tel: +44 (0)20 3727 1340 |
Notes
1. e2v technologies plc is Bringing life to technology™. e2v partners with its customers to improve, save and protect people's lives. e2v's innovations lead developments in automation, healthcare, communications, safety, discovery and the environment..
2. All financial information included in this release is sourced from unaudited management accounts and excludes any specific items.
3. Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect the Group's current expectations concerning future events and actual results may differ materially from current expectations or historical results.
4. This announcement contains inside information regarding e2v technologies plc.