E2V.L Regulatory News (E2V)

18 May 2015

e2v technologies plc

Results for the year ended 31 March 2015

Delivering on 'our vision, our future'

e2v technologies plc, announces its results for the year ended 31 March 2015. Bringing life to technology™, e2v partners with its customers to improve, save and protect people's lives. e2v delivers innovative technology for high performance systems and equipment, leading developments in communications, automation, discovery, healthcare and the environment.

Results

· Good set of results with a steady performance across H1 and H2.

· Adjusted operating profit up 15.6%, reflecting a strengthening of the Group's operational foundations, reduced costs through reorganisation and FX benefit.

· Cash generated from operations of £49.5m. Net borrowings of £5.2m after the purchase and successful integration of AnaFocus.

· 12 month order book growth at 14%, supporting growth plans.

· Full year dividend increased 15.9%.

(1) Adjusted operating profit and adjusted profit before tax are before specific items.

(2) Net borrowings exclude debt issue costs.

(3) Adjusted earnings is profit before specific items less tax where applicable.

Commenting on the results, Steve Blair, Group CEO said:

"In my first year, I am pleased to report that we are delivering on 'our vision, our future'. We have continued to focus on our customers and strengthened our operational foundations by further simplifying the business and increasing divisional responsibility and empowerment. We are pleased with the performance of AnaFocus since its acquisition in September and it has already been successfully integrated. Overall, we have delivered a good performance, including a strong finish to the year, in what remained challenging markets.

"Over the forthcoming year our focus will continue to be on our customers, innovation and operating with excellence which, we believe, will enable us to deliver growth. Whilst we remain cautious about the broader economic environment, and assuming no deterioration in market conditions, our outlook for the current financial year remains unchanged."

CHAIRMAN'S AND GROUP CEO'S STATEMENT

Overview

During a year of substantial change we delivered a good financial performance and strengthened our operational foundations. In November we launched 'our vision, our future' focused on 'bringing life to technology™'. We are pleased with the progress we have made in delivering on this vision; this is being noticed by our customers and our people.

In May 2014, we set out our key operational foundations. Customers are our focus; the two of us have visited over 45 during the year. The business is listening more to our customers and we are actively responding to their feedback. The Group has improved its operational effectiveness as demonstrated by the improvement in the operating margin and also the successful integration of AnaFocus. We have simplified the way in which we operate and empowered the divisions, giving them ownership and responsibility for their end to end operations.

The year ended 31 March 2015 is the base year from which the Group will measure progress towards our goal of doubling operating profit by 2020. Our attention is focused on Industrial Vision, Space, Radiotherapy and Semiconductors, whilst continuing to support customers across our other activities including Scientific Imaging. The changes we have made and the increased size of our order book provide the platform for the growth we anticipate in the current financial year and beyond.

Performance

The Group reported revenues of £224.9m, an increase of 3.3% (2014: £217.7m), increased the adjusted(1) operating profit margin to 17.8%, that resulted in adjusted(3) earnings per share increasing 16.6% from 11.73p last year to 13.68p this year.

A number of factors contributed to our good performance in the past year: we increased our resources in the US and Asia; the change in culture is improving how we do business; and our self-funded research and development spend increased to £14.8m representing 6.6% of revenue, up from 5.9% last year. Adjusted operating profit increased from £34.7m to £40.1m (including £3.4m benefit from foreign exchange cover), growth of 15.6%. These results reflect a good performance throughout the year, with a particularly strong fourth quarter. Comparing year on year performance, we benefitted from the acquisition of AnaFocus and steady growth in our Industrial Vision, Radiotherapy, Commercial and Industrial businesses. The Space, Scientific Imaging and Semiconductors businesses have been steady, with lower revenues in RF Defence and Thermal Imaging.

Cash generation was strong, with cash generated from operations increasing £8.4m from £41.1m to £49.5m. In September, the Group acquired AnaFocus paying £19.7m and assuming debt of £3.3m in the year. This resulted in net borrowings as at 31 March 2015 of £5.2m compared with net cash of £0.8m at the end of last year. The deferred consideration for this acquisition is up to £4m.

We continue to simplify the Group, making the divisions more accountable for their performance and reorganising them so they can focus on delivery to their customers. With the remaining changes we have announced internally this year, this completes the reorganisation of the Group for our new vision and culture.

As part of the evolution of the Group we have refreshed the management and refocused our people to better meet our customers' needs. This aligns our people more closely with our strategy and provides them with more opportunity to share in the success of the Group.

We close the year with a good 12 month order book at £146m, a 14% increase over the prior year of £128m. This provides good order book coverage, particularly for our Space and Industrial Vision businesses, with full coverage from our Radiotherapy customers and an active pipeline of opportunities across our prioritised businesses for our current financial year.

Dividend

The Board has recommended a final dividend of 3.6p per share, bringing the full year dividend to 5.1p per share, an increase of 15.9% from last year's full year dividend of 4.4p and in line with our progressive dividend policy. The final dividend is scheduled for payment on 4 August 2015 to shareholders on the register at the close of business on the 10 July 2015.

Direction

In November, we launched our vision, 'bringing life to technology™', and set out our strategic drivers along with the key stages for their implementation.

As part of the Group's strategic cycle, the Board has reviewed progress in the implementation of our strategy with its refocus on customers, markets and opportunities. This has reaffirmed the attractiveness of our selected areas of investment priority.

Our strategic drivers bring together our vision. We are focusing on our customers, this is our core belief. We are listening carefully to feedback they are giving us and we are making changes to how we operate to improve our delivery to them. Through our gradual roll out of the new brand, internally and externally, we are embedding the new culture and making a number of small changes which will help our people understand more clearly how our vision translates into more effective support for our customers. We are investing in innovation where we see that there is strong customer pull and increasingly working with our customers as their trusted innovation partner. We have strengthened key management and simplified how our divisions operate, giving them increased responsibility and the ownership of their end-to-end processes. We are seeing the benefits of the reorganisation through cost reduction and improved operational delivery and this is being recognised by our customers. We have repositioned the platform to provide the opportunity for revenue growth that can be accelerated by acquisition.

Safety, health and environment

During the year, the Board placed further emphasis on reinforcing the importance of increased awareness of health and safety across the Group. More focused reporting has been introduced, including improvement in the early identification of risks or potential risks through proactive hazard spotting. This approach improves the safety of our working environment as we can take action before issues arise. The Group maintains its good health and safety record with no serious incidents and improved staff safety recognised in a decrease in the accident count during the year. The Group is committed to operating in an environmentally sustainable way and compared with 2013 we have reduced our normalised greenhouse gas emissions despite our growth.

People

We are delighted with the engagement of our employees, their openness, honesty and willingness to provide us with feedback. Over the last year we saw further improvement in our employee survey results. Our employees told us that they wanted change and they are being active in delivering it. Our staff are committed to putting the customer at the centre of everything that they do, simplifying how they do things and operating in an effective and efficient manner. With teams that are now empowered to deliver on their responsibilities, we are developing a culture in which we celebrate success, value everyone's contribution and constantly think about what we can do better and how we can work smarter.

Moving the core of Group operations into the divisions has been a significant change, leading to the size of Group operations decreasing by 85%. We have also aligned the central service functions with the divisions.

We remain committed to offering opportunities to our people and new joiners to develop their careers. Amongst our staff of 1,691, we welcome 196 new joiners, 25 of whom are on our graduate and apprentice schemes, and we congratulate 104 people who have been promoted.

We are grateful to all of our employees for their hard work during this year of transition and thank them for their commitment and success in growing the Group's businesses. This has been recognised by the various incentive schemes we have in the Group. Overall, we are pleased that we are delivering 'our vision, our future'.

Outlook

Whilst we remain cautious about the broader economic environment, and assuming no deterioration in market conditions, our outlook for our current financial year remains unchanged.

Strategic Report signed on behalf of the Board.

Neil Johnson Steve Blair

Chairman Group CEO

BUSINESS REVIEW

Summary

Our vision

Our vision of 'bringing life to technology™' is central to how we operate. It provides the Group with our common purpose we partner with our customers to improve, save and protect people's lives. It informs our decision making so that our innovations lead developments in communications, automation, discovery, healthcare and the environment.

During the year, we completed a thorough process to develop our vision. This involved obtaining detailed feedback from our customers and our people. The feedback from customers was that they value our technology and our people, although they are seeking greater reliability and consistency from us. Our people told us that they were proud to work for the Group and that they were ready for change. The clarity of the feedback enabled us to accelerate our process and we were pleased to have launched our vision ahead of schedule in November.

Our strategy

Our strategy is focused on our goal of doubling adjusted operating profit by 2020 starting from the year ended 31 March 2015. During that year we developed our strategic drivers to provide the framework for us to deliver our vision and our goal.

Our focus on our customers is at the core of this framework. We actively listen to our customers' feedback and we are responding to what they tell us through delivering what our customers value rather than what we seek to achieve technically. The changes we have made to how we are organised empower the divisions to focus on their customers' needs and have given the divisional management the power and the responsibility for end to end delivery to customers. Our customers are appreciating the changes we have made and this is changing the nature of the conversations we are having with them, widening the agenda from current needs to how we can also work together in the future.

We are embedding our new culture, retaining the best from our engineering heritage whilst simplifying processes to build a responsive and energetic organisation. Our people were ready for change, have embraced the vision and the new brand and are committed to making change happen. They understand how they make a difference to people's lives working in partnership with our customers. We have improved our internal communications, with a focus on the clarity and consistency of our messages. This means our people understand what is expected of them and can work more effectively.

Our people are encouraged to use their talents to sustain innovation and supply the solutions our customers seek. We have seen new product introductions in Imaging and Semiconductors which have been well received by our customers. In our Space Imaging and RF Power customer programmes we are working at the cutting edge of the technology, delivering high quality bespoke products.

We seek to operate with excellence, shown by rigorous execution driving responsiveness and agility. We have seen good engagement across the business, building a continuous improvement culture. Our people are open to doing things differently. They can see that their ideas for improvement are being listened to and are keen to share these, underpinning our drive for operational excellence throughout the Group. As a result, we have made significant improvements in areas which are critical to our customers, including on-time delivery and operational cycle times.

We will focus on delivering organic growth, with acceleration coming from acquisitions.

Our operating model

We operate in international markets, with global supply chains. We have eight main engineering facilities and five sales offices across Europe, the US and Asia Pacific to support our global customers. During the year we completed a significant re-organisation with the core of Group operations, supply chain and customer service being moved into the divisions. This significantly reduced the size of the Group functions and aims to empower the divisions to focus on delivery to their customers. The Group is organised according to the needs of our customers in three divisions: Imaging, RF Power and Semiconductors. The three divisions have full end-to-end profit and loss responsibility for their businesses; covering responsibility for product design and development, operations, sales and customer services. Since the year end, we have also repositioned the regional teams in the US and Asia so that they too are aligned with the divisions. The divisions are now customer-led and supported by the Group which provides guidance and support.

Over the last year we have strengthened our operational foundations. Through focusing on our customers, we have simplified our business processes, making us more agile as an organisation. We are embedding a culture of continuous improvement and we have refreshed our management with two thirds of the executive, reporting to the Group CEO, new to the Group or in new roles over the last two years. As part of simplifying how we operate we have established Space and Professional Imaging as two streams within our Imaging division. We have also taken the opportunity to simplify the names of all divisions. 

The divisions deliver value to their customers in global application segments. We supply solutions which address our customers' demands for higher resolution and greater accuracy driven by the growing complexity of the world and increasing environmental awareness.

The Group function provides strategic direction and support, and drives best practice. It also provides some common services aligned to the divisions.

Our markets

We focus our investment where we see strong customer demand for access to technology platforms for end market sectors with medium to high single digit medium term growth potential. These markets should also provide us with medium to high margin potential. We are prioritising our investment in four business areas: Industrial Vision, Space, Radiotherapy and Semiconductors. We will maintain our engagement in the segments where we see customer demand supporting an attractive financial profile where ongoing investment will usually be customer funded.

Our highly skilled workforce is trusted by our customers to supply technically complex solutions for our customers systems. We seek to generate growth through providing higher value solutions and new product development, platform life extension and upgrade, and new applications for our existing technologies.

The top two market sectors that our vision is focused on are automation and healthcare. Both of these sectors have the potential for strong growth in the medium term. In the automation sector we now have good market coverage within Professional Imaging. In healthcare, we have the potential to move into subsystems for Radiotherapy that strengthens the medium term growth potential of this market. In our other markets, communication includes both moving people and enabling direct communication around the world covering space, civil aviation, and marine sectors. Discovery is driven by mankind's thirst for knowledge and offers growth opportunities particularly for space, planetary observation, and science imaging. Safety includes our passive defence sectors and Thermal Imaging and is driven by the level of government spending in these sectors. The environmental market is driven by concern for our world and its finite resources and covers earth observation and Science sectors.

Market growth alone will not deliver the growth we are looking for. We will also work closely with our customers to innovate, to take market share and to make new markets with our innovations and new product introductions.  We are also continuing to expand our presence in the US and Asia.

Our performance

Revenue of £224.9m is up 3.3% compared with the last financial year. The business before the acquisition of AnaFocus grew 2.2% in volume terms and absorbed a foreign exchange headwind of 1.6%. We have seen good organic growth in Radiotherapy with increased demand from our key OEM customers. In Industrial Vision we have seen increased demand for sensors, and growth from the recently introduced cameras, offset by the anticipated decline from the older models. In Space the activity has been sustained with delivery on a number of our key programmes, although the technical nature of these programmes has resulted in a number of milestones being delayed. In Semiconductors underlying revenue is effectively flat after taking account of foreign exchange rates. Thermal Imaging saw lower demand from its core markets with the result revenue was lower than the prior year. In the first six months of ownership AnaFocus contributed revenue of £5.8m, ahead of our expectations at the time of the acquisition.

Adjusted(1) operating profit of £40.1m, reflects the contribution from organic revenue growth of £2.6m. We are starting to see the change in culture improve operational performance coming from reorganisation, with cost reduction in those areas where growth has been slower than anticipated. We have seen improved execution in RF Power with lower charges for inventory and improved delivery to customers. We have seen some margin deterioration on some of our more challenging Space programmes as we invest the time and resources necessary to improve delivery to our customers. We have seen a significant swing in FX with translation of working capital and realised gains on FX hedging offsetting the reduction in revenue due to FX. To support the growth we have increased our research and development activities, targeted in our areas of focus where we see the potential for market growth and strong demand from our customers. To support our customers in the US and Asia we have also continued to increase the selling and application engineering resources in these regions.

The stronger operating performance was reflected in operating cash generation, which at £49.5m, is up £8.4m compared with the prior year. We have managed working capital whilst supporting the revenue growth with good cash collections from customers offset by increased inventory in the UK to support delivery to key customers, in particular our Radiotherapy OEMs. We have also made strategic inventory purchases in the US to support long term availability of products for Semiconductors. Capital expenditure was broadly in line with depreciation. We have continued to invest in our facilities for Space. The reorganisation of the Chelmsford site has had a delayed start as we have aligned this programme with our vision and brand and anticipate that activity will step up in the coming year. The programme has been renamed Project Sunrise.

The cash out flow on the purchase of AnaFocus was £19.7m. We also assumed non-bank debt of £3.3m and the purchase of new design software licenses has been treated as a finance lease and therefore recognised on the balance sheet. There is the potential for further payments of contingent consideration of up to £4m depending on performance of the business.

Overall the Group is in a strong financial position with net borrowings of £5.2m after funding the purchase of AnaFocus.

Our closing order book at 31 March 2015 was £191m (2014: £184m) reflecting good order intake in Space and Professional Imaging. Our order book for delivery over the coming 12 months was £146m (2014: £128m) an increase of 14%. The order book provides a solid base for the coming year, with good order cover for Space, a full order book for Radiotherapy and good order cover in Professional Imaging. Within Space we have had a modest increase in our overdue orders during the year reflecting delayed milestones. Delivering on our programmes that are late and securing the orders on a timely basis to support continued growth in our shorter order cover business, such as Semiconductors, remains an area of focus.

Our goal

Our goal is to double the size of the Group by 2020, with reference to the adjusted operating profit of the financial year ended 31 March 2015. We will look to deliver this goal primarily through organic revenue growth, accelerated by acquisitions that may contribute up to a third of the anticipated growth.

We will consider acquisition opportunities that are a good fit with our strategy and that accelerate our ongoing organic growth through providing us with further technological know-how and that both strengthen our customer relationships and bring talented people.

In summary, our investment proposition is revenue driven growth, based on being our customer's trusted expert partner, whilst retaining a resilient financial profile in support of our progressive dividend policy.

Divisional Review

Imaging

Our value proposition - what we do and our key drivers

Imaging is now arranged into two business streams: Professional Imaging and Space. In Professional Imaging our value proposition is our proprietary technology and strong relationships with our major customers. In Space we have a long established heritage of over 150 space missions providing reliable, high quality and high performance solutions.

We provide high quality imaging sensors, cameras and subsystems delivering high performance for our customers across a range of applications in the automation, healthcare, environment and discovery markets.

For Professional Imaging we provide high performance, sensors and cameras. We also have the capability to develop custom solutions for our customers, as their innovation partner. We support a range of other specialist applications for our technology including CMOS dental intra-oral X-ray sensors and high resolution three dimensional imaging systems for ophthalmology based on CCD and CMOS sensor technology. In the automation and healthcare markets we produce high performance imaging sensors (high sensitivity, low noise, high speed) enabling a range of applications. We also deliver area array sensors for use in automatic data collection systems, including 2D barcode reading, and thermal imaging cameras.

For Space we provide high-performance and high quality space qualified imaging sensors and arrays for space science and astronomy applications and high speed, high resolution sensors for earth observation satellites. We design, manufacture and provide support to the largest space agencies including ESA, NASA, JAXA, CSA and the Russian-led World Space Observatory.

Customers and markets

In Professional Imaging demand is driven by the increased use of sensors in industrial automation. Growth is driven by the improvement in the industrial markets and recent product introductions, including our new CMOS based camera, the Uniiqa+. Further growth is anticipated from new product introductions planned in 2016. AnaFocus has brought new customers and strengthened our existing relationships. We work for specialised OEMs with customers such as Canon, Carl Zeiss, Meditec, Optopol, Orbotech and Basler. Additionally, we access integrators via distributors and our agents. Scientific imaging is anticipated to remain steady with the market highly concentrated, with three major customers. Our scientific imaging sensors are used in spectroscopy, microscopy, crystallography, fluoroscopy and broad scientific imaging applications. The market for high end scientific cameras is currently highly concentrated with three manufacturers, Andor, Hamamatsu and Roper, all of whom we support.

In Space, governments increasingly seek to maintain independent observation capabilities and the expansion of climate change monitoring is driving a growing demand for new observation satellite programmes. We have a strong position in Europe particularly in CCD sensors, and our offering remains attractive to customers due to its long proven performance in flight. The main end users are worldwide space agencies including ESA, NASA JAXA, CSA, as well as the prime satellite manufacturers, including Astrium, Ball Aerospace, Lockheed Martin and Thales.

We will continue to support our current and prospective customer base with new products and applications supporting their core markets and areas of higher growth.

Operational progress

Within the division we established two streams of Professional Imaging and Space. This reflects the different end-user markets and the different supply chains. As part of our drive to simplify the business the division now has end to end responsibility for the performance of the business including core operations, supply chain management and customer services with aligned group support.

We have continued to develop our relationships with the key OEMs with the ambition to be their trusted innovation partner. We have invested in our product portfolio and widened our scope of services through our acquisition of AnaFocus that provides custom and standard CMOS sensors for a range of applications. In Space, we work closely with our customers on their technically challenging programmes, providing innovative solutions that meet their demanding requirements on their next generation of projects, to understand their requirements better and innovate subject to their constraints.

We are continuing to develop our CMOS based technology platform for Space, which in part was funded by our £3.8m award from the UK Regional Growth Fund. This is aligned with our customers' future needs and underpins new programmes in the US and other international space markets. In the year, more than £40m of new orders were secured. Key wins included the first phases of the Large Synoptic Survey Telescope (LSST) contract in the US, a number of ESA contracts and new opportunities in Korea, China and Russia. Two major science projects have started including LSST and Plato for ESA with a potential combined total value of more than £50m. Within the Earth observation sector £11m of orders were booked in the year.

The acquisition and successful integration of AnaFocus accelerates the division's CMOS development road-map and deepens the Group's reach in the Professional Imaging market. In Space we have continued to invest in our Chelmsford facility to increase our wafer processing capability and expand our assembly area and characterisation laboratory. We will continue to invest in our production facilities in the coming year. In addition, we have strengthened our leadership with the appointment of Matt Perkins, who joined in March 2015, previously with Surrey Satellite Technologies Limited (SSTL).

Performance

Reported revenue increased by 9.4% to £88.7m (2014: £81.1m) showing the fastest growth in the Group and now representing 40% of Group revenue. Underlying growth came from strong demand in automatic data collection, machine vision sensors and optical inspection CMOS cameras in Asia as we introduced our Uniiqa+ camera. With growth also coming from the recently introduced Eliixa+ products. Scientific Imaging was steady reflecting end user demand remaining at similar levels to the prior year. In Space our activity was sustained, although these programmes remain technically challenging and we are committing the resources needed to improve delivery to our customers. Our Thermal Imaging business has seen lower demand in its core markets, with revenues significantly below the prior year.

The division's adjusted(1) operating profit was £9.3m (2014: £11.2m), a decrease of 17.0%. Lower margins in Space reflect delayed milestones, leading to cost increases on these programmes. In Thermal Imaging lower revenues have reduced operating margins; the cost base has been restructured to align with the current revenue profile. AnaFocus has performed strongly contributing £1.8m and ahead of our initial expectations. Research and development activities have been increased significantly to drive future growth, focusing on areas of strong customer demand, in particular machine vision and space.

The order book at 31 March 2015 was £90m (2014: £61m). The significant increase in the order book reflects key progamme wins in Space, including a c.£1m increase in the level of overdue orders, along with the growth coming from Industrial Vision and AnaFocus. The orders due for delivery in 12 months as at 31 March 2015 were £70m (2014: £50m), significantly up from the prior year, underpinning the anticipated revenue growth.

RF power

Our value proposition - what we do and our key drivers

We add value to our customers through consistently supplying reliable application specific products, addressing difficult engineering challenges and providing long-term continuity support.

We produce systems that deliver high performance and high reliability radio frequency power generation for healthcare, defence and industrial applications. The key growth drivers for the division are the increasing incidence of cancer worldwide, industrial growth and the level of defence spending.

In radiotherapy we produce systems that deliver power at radio frequencies used for the generation of high energy x-rays in the treatment of cancer. We provide high performance, high reliability products and with the continuity for long term spares that our customers need. We are established as the market leader, with a market share of approximately 90%, for the supply of magnetrons.

We provide electronic countermeasure protection of defence assets on land, at sea and in the air. In the period we delivered products such as magnetrons, coupled cavity and helix Travelling Wave Tubes (TWT's) to system OEMs such as BAE Systems, Airbus, Boeing, Raytheon, MBDA, Saab, LiGNex1, Selex, Galileo and Thales. The split of our production facilities between Europe and the US allows us to address the concerns of our customers in complying with our host countries licencing regimes. For some novel applications we contract directly with the end user or government laboratories through their technology groups.

Customers and markets

We sell to a broad cross-section of markets with a common need for high power radio frequency solutions. Our key market is medical radiotherapy where we work with all the leading systems suppliers. We also supply OEMs in the healthcare, automation safety and communication markets.

In radiotherapy we continue to anticipate spares revenue will grow in-line with the past expansion of the installed base over the last five to ten years. Revenue growth is anticipated to be driven by continued new build demand, which accounts for approximately one third of the growth, with two thirds driven by the growing installed base. We continue to engage with our customers on opportunities to move up the value chain and to develop new radio frequency generating sub-systems.

Key drivers for this business include the increasing incidence of cancer worldwide, for which radiotherapy is part of the cancer treatment journey, increasing demand in Asia, especially China and new equipment demand, which is dependent upon healthcare spending. Our principal customers are the radiotherapy system OEMs including Accuray, Elekta and Varian.

Other applications include our commercial and industrial markets, covering radar for commercial shipping and applications such as industrial heating, industrial and dielectric welding, lasers and cargo screening. Our Industrial Processing Systems business provides microwave and RF generators that provide power in the upper ranges of the radio frequency spectrum for the processing of bulk materials.

In defence, the key driver is the level of NATO defence spending. Defence budgets across the NATO countries are constrained and we do not anticipate this changing in the short term despite global and regional threats.

Operational progress

The majority of the growth in the division is anticipated to come from radiotherapy where we continue to prioritise our investment. Our other applications continue to be driven by the general industrial cycle. Defence will remain subdued reflecting defence budgets. We will continue to proritise our own investment in radiotherapy and support other areas where customer funding is available.

We have focused on improving our delivery to key customers. In response to feedback from them we have increased our inventory to improve our responsiveness to their requirements.

As part of our drive to simplify the business we have streamlined our processes and reorganised how we work. We have made a significant reduction in the number of active forms and reduced the number of approval loops. The division has consolidated core operations from the group into its structure. The division now has end to end responsibility for the performance of the business including operations, supply chain management and customer services with aligned Group support.

We launched our continuous improvement culture with a focus in the division on our operational footprint, supply chain, management and forecasting. During the year we reviewed our site restructuring programme to incorporate the new vision and brand, to drive further operational efficiency and consolidated the footprint of the activities that support the portfolio as well as providing options for the future use of space being vacated. This has been renamed Project Sunrise.

During the year we finished a further phase of our development programme with Rio Tinto, in our industrial processing systems business, covering the design and supply of large-scale ProWave® microwave and RF generators for use in projects to demonstrate the improvement in the efficiency of metals recovery. The customer is now in the process of deciding whether to take the project onto the next stage of development.

Performance

Revenue increased marginally to £84.2m (2014: £82.3m) driven by strong growth in Radiotherapy reflecting increased demand from our key OEM customers, along with good growth in our Commercial and Industrial markets particularly marine. This was partially offset by weakness in Defence with slower than anticipated programme wins and lower activity levels in Industrial Processing Systems.

The division's adjusted(1) operating profit was £19.4m (2014: £16.1m), an increase of 20.5%. This reflects the mix of revenue, improved operating effectiveness with good cost control and lower inventory write-offs. Research and development activities have been constrained below the prior year's level, focused primarily on Radiotherapy applications.

The order book at 31 March 2015 was £80m (2014: £100m).  The decrease reflects the cycle of the multi-year radiotherapy contracts with delivery against our contracts for our key OEM customers. We have also had a reduction in our defence order book reflecting our delivery on our key programmes. The orders due for delivery in 12 months as at 31 March 2015 were £58m (2014: £59m), effectively flat reflecting a full year order book for Radiotherapy, good order cover in Commercial and Industrial, offset by a decline in Defence.

Semiconductors

Value proposition - what we do and our key drivers

Our value proposition is to utilise our market leading test, packaging and screening technology to meet the demanding specifications that our aerospace and defence customers require. Our capabilities in design, supply chain management, packaging and test services, can extend the availability of otherwise obsolete semiconductors, providing our customers with the security of supply they require.

Through our strategic partnerships with Freescale, Everspin, Maxim and Micron we provide a range of high reliability versions of their standard products for use in civil, space and defence applications. Our own design high speed data converters provide market leading performance for analogue to digital (ADC) and digital to analogue converters (DAC) for space and radio frequency communications. We also provide our customers with continuity of supply of over four thousand Surface-Mount technology (SMD) components including many made obsolete by the original device manufacturer, including redesigned end-of-life military specification integrated circuits. This is in addition to providing safe long term storage, screening and testing, as well as providing assurance of supply from original sources, avoiding risks associated with counterfeit products.

Customers and markets

We have continued to focus on meeting our customers' requirements for high reliability, excellent service and on-time delivery. We have focused on our customers by increasing our business development resources to better understand our customers' needs, co-funded developments and strengthened our relationships. We have also continued our investment in growing our key strategic partnerships. The routes to market for semiconductor components are generally through distributors and we have strong relationships with Arrow and Avnet. We also have long term relationships with the large defence primes, including Raytheon Space and Airborne Systems and European OEMs. We support our customers across a range of applications in the communication and safety markets.

We see continued ongoing growth for high reliability products in civil aviation applications such as flight control computers, engine management systems and cockpit display systems. Coupled with this we see a growing demand for high reliability, radiation tolerant products tested for low earth orbit space applications including weather monitoring, earth observation and telecommunications satellites. The growth in these sectors has offset delayed demand for defence programs associated with Typhoon, F-16, F-18, and Joint Strike Fighter (JSF).

Operational progress

Semiconductors has made significant progress in the growing space market. We have been part of a NASA led consortium to develop the Qualified Manufactures List (QML) standard for non-hermetic space qualified products. Following the publication of this standard in December 2014 we have introduced a range of space qualified Microprocessors based on a popular Freescale power PC platform. These devices complement the range of our own design space qualified ADC and DAC's that form an integral part of the e2v data converter portfolio. We plan to introduce other complementary QML qualified semiconductor products over the coming months.

We have integrated all activities associated with semiconductor operations into the divisional structure. This provides much greater customer focus and alignment between the front end of the business and the operations organisation responsible for the manufacture and delivery of products. We have now organised our Grenoble facility by product teams to provide tighter alignment between business development, product engineering and operations for faster introduction of new products. Recognising the opportunity for growth in North America we have refreshed the sales team and during the last 12 months added dedicated semiconductor business development resources. In December 2014 we opened our new facility in Richardson, Texas in order to be closer to customers and attract specific engineering resources available in the Dallas area.

As part of our continuous improvement programme in our Milpitas Semiconductor facility we instigated a 100% on time in full (OTIF) delivery target. We ran programmes to improve communication between teams and optimise cross training and ensured objectives and practices were aligned with the needs of our customers. For the second half of 2015 we achieved 100% OTIF.

We utilise our packaging and test facilities to offer outsourced assembly and test services to customers who require high reliability components but do not have the in-house capability for packaging and test. We have seen revenue relating to this outsourcing activity reduce during the year reflecting demand fluctuations in our customers' end user markets. In the last 12 months we have been identified as being a critical part of the semiconductor supply chain by space agencies in both the USA and EU and in early 2015 we achieved QML certification for the Grenoble operations.

Our in-house designed high speed data converters provide market leading performance for ADCs and DACs for space radio frequency (RF) communications. Our data converters are used by most of the major space primes and tier one suppliers, including Boeing in the US and Thales in Europe where we enable high bandwidth radio frequency communication links. In the last 24 months we have seen increasing interest in our high reliability microprocessors for space applications that require increased levels of on-board processing.

We continue to support our customers for our legacy products for sensor signal conditioning Application Specific Integrated Circuits (ASICs) and Application Specific Standard Products (ASSPs) for applications in industrial automation, industrial detectors, automotive safety and security, engine management and climate control applications. We had previously decided that we would cease the research and development activities associated with these product lines and the revenue from these product lines now reflects the anticipated decline.

Performance

Reported revenue decreased by 4.2% to £52.0m (2014: £54.3m). Good growth from US based product lines, along with good growth coming from our own design high speed data converters for space applications has been offset by lower demand for microprocessors. In the other applications there was the anticipated decline in the legacy smart sensor business as these products approach the end of their lifecycle.

The division's adjusted(1) operating profit was £11.9m (2014: £11.8m), effectively flat despite the decline in revenue. This was due to improved product mix with growth in the higher margin lines, with good cost control along with improved operating performance. We have maintained our research and development activities in Grenoble building our future platform for the next generation of products as well as qualifying the supply chain and manufacturing facilities. We have benefited from grant funding from the Programme D'Investissement D'Avenir (PIA) in France.

The order book at 31 March 2015 was £20m (2014: £23m). The order book reflects the anticipated decline in the order book for the legacy smart sensor business along with the lower demand for microprocessors, partially offset by improved order cover in the US. The orders for delivery within 12 months as at 31 March 2015 are £18m (2014: £19m).

The majority of the goodwill in the Group is associated with this division, with £29.7m relating to the business based in France and £23.8m relating to the business in the US. The value in use calculation for the France based business has sufficient headroom for there to not to be a risk of impairment on the normal range of sensitivities. In the US in light of current performance headroom has increased to US$10m (2014: US$6m). Sensitivity levels on these calculations indicate impairment would need to be considered if forecast revenue were to reduce by 16% (2014: 10%); or forecast operating margin was reduced by 3.5 percentage points (2014: 2 percentage points).

FINANCIAL REVIEW

Revenue and adjusted(1) operating profit by division were as follows:

Review of trading performance and KPIs

The Group's revenue was 3.3% higher than the last financial year, after absorbing an FX headwind of 1.6% in the year. This reflects good growth in Radiotherapy and Industrial Vision, with sustained activity in Space and Semiconductors. By geographical spread, revenue was up in Asia Pacific and the rest of the world with North America and Europe where revenue was steady. Geographic reach, the proportion of revenue outside Western Europe increased to 57% (2014: 56%) reflecting the revenue growth Asia Pacific and the rest of the world. New business in the year, from new products or customers in the last three years, made up approximately 19% of revenue (2014:20%) and business mix, the percentage of revenue from sub-systems and solutions, was steady at 35% (2014: 35%).

Gross profit was £96.2m (2014: £83.9m) an increase of 15% and represented 43% of revenue (2014: 39%). The improvement in gross profit margin reflects in part the mix of the revenue with the majority of the growth coming from high to mid margin businesses, although there have been lower margins in Space reflecting increased costs on delayed programmes. Gross margins have benefited from improved operational performance in RF Power and Semiconductors with good cost control. The restarted re-organisation of our Chelmsford site will improve the working environment for our people and increase flexibility. We are also separating the defence businesses based in Lincoln to add further resilience as we manage the portfolio of RF businesses.

Net expenditure on research and development has increased to £14.8m (2014: £12.8m) and now represents 7% of revenue. The expenditure has been focused on investment in the key programmes supporting the growth opportunities. Of the spend during the year 86% of this was customer aligned. Grant funding has decreased as we have reached the end of the funded phase of two out of the three Regional Growth Fund programmes. We also received funding in France from the PIA. The main R&D programmes include, the next generation of RF generating sub-systems for radiotherapy, sensors for Industrial Vision, our CMOS platform, process capability, coatings and CMOS for Space and establishing the platform for next generation semiconductor products. We continue to use subcontract resource where necessary to deliver these key programmes and also provide agility and flexibility.

Selling and distribution costs increased by 4% to £17.6m (2014: £16.9m) reflecting the higher activity levels and continued expansion in the sales teams in the US and Asia.

Administrative costs increased to £32.7m (2014: £19.9m). Administrative costs include a number of the items excluded from adjusted(1) operating profit totaling c.£9m (2014: £0.5m) as detailed below. The remaining administrative costs of £23.8m (2014: £19.4m) increased by 23% including pay review and incentives along with building the platform with investment in our core IT systems and our expansion in Asia and the US.

Adjusted(1) operating profit

Adjusted(1) operating profit is considered to reflect more accurately the underlying performance of the business and is calculated as follows:

Adjusted(1) operating profit increased to £40.1m (2014: £34.7m) and represented 17.8% of revenue (2014: 15.9%). Return on capital employed (adjusted(1) operating profit divided by net operating assets and intangibles) was steady marginally up at 23% (2014: 22%), reflecting the increase operating profit and the increased intangible assets from the acquisition of AnaFocus.

Amortisation of acquired intangible assets of £2.3m has increased from the prior year (2014: £1.9m) and reflects the amortisation of the assets associated with the acquisition of AnaFocus. There is the potential for further payments of contingent consideration of up to £4m depending on performance of the business. The first payment under the earn out is likely to be £1.8m to be paid in the first half of the current financial year following the strong performance of the business in the first period of ownership and the achievement of integration targets. There is the potential for two further payments with the first due in the second half of the current financial year, and the final payment in the first half of the following year.

The Group completed the acquisition of AnaFocus in September 2014 and in connection with this the Group incurred one-off transaction costs and payments in connection with the acquisition that are dependent on future employment of key individuals. These costs were partially offset by FX gains relating to the contingent consideration.

During the year a restructuring of the Group's central operations, RF Power and Imaging teams has been undertaken. Prior to the year end the Group also announced its intention to cease manufacturing in Beijing, China in the first half of the current year and to the commencement of a consultation process regarding the potential closure of the sales office in Bievres, France. The Group has also incurred some costs relating to the re-organisation of its Chelmsford facility. We have put in hand a further set of changes to complete the reorganisation to implement our new vision and culture, to simplify our US operations and establish a separate organisation for the specialist defence activities of the Electronic Safety and Initiation and our Defence Microwave business.

The Group's overall foreign currency hedging policy is to put in place forward contracts to sell surplus currencies based on its trading forecasts, with the level of coverage decreasing over the next 12 months. The mark to market adjustment on this cover amounted to a loss of £1.9m (2014: gain £0.8m).

Finance charges

Net finance costs were £1.0m (2014: £1.2m), a reduction of 11% compared with the prior year reflecting the level of debt over the course of the year, lower margins on the new facility and lower debt issue costs. Of this £0.4m was non utilisation cost and amortisation of arrangement fees.

Taxation

The tax charge for the year was £6.3m (2014: £8.1m). The effective tax rate on reported profit for the year ended 31 March 2015 was 21%. This reflects a reduction in the UK tax rate to 21% (2014: 23%) partially offset by higher profits in France and Spain which are subject to higher rates of taxation. The tax charge in the current year has benefited from tax credits for research and development in the UK and France of £2.3m (2014: £2.7m). The effective tax rate on adjusted(1) profit before tax was 24%. Going forward we consider that the effective rate on adjusted(1) profit will be c.26% based on the planned distribution of profits across our locations and likely benefit of R&D tax credits.

The Group generated profits in the UK, France, Spain and the US which were subject to tax at 21%, c.34%, 30% and c.40% (including state taxes) respectively.

Profit for the year

The profit for the year is £23.8m (2014: £25.0m). The level of profitability reflects the higher level of specific items in the year primarily relating to the Groups restructuring programmes partially offset by lower financing and tax costs. We have increased our dividend by 15.9% in line with the increase in adjusted earnings per share, in line with our progressive dividend policy. An interim dividend of 1.5 pence per share, was paid in December 2014, and final dividend of 3.6 pence per share is proposed.

Currency

Our UK, Spanish and French manufacturing operations sell through the Group's global sales and distribution network and are therefore subject to transactional and translational risks particularly in relation to the US dollar which accounts for 45% (2014: 42%) of the Group's sales. Where US dollar receipts are forecast to exceed US dollar costs, sufficient surplus US dollars are sold under foreign exchange contracts to cover costs incurred in the UK and France in accordance with the Group's hedging policy.

Cash flow and net borrowings

At 31 March 2015, the Group had net borrowings of £5.2m (2014: net cash £0.8m) an increase of £6.0m over the year. The net cash inflow generated from operations was £49.5m, an increase of £8.4m compared with the prior year. Working capital, which has been managed whilst supporting the revenue growth, has generated £1.3m of cash. Inventory utilised £5.6m with increased strategic inventory to support our OEM customers in RF Power and strategic inventory purchases in Semiconductors to support long term availably of product. Work in progress on projects was steady. Trade and other receivables have generated some £9.7m reflecting good cash collections, partially offset by an increase in trade and other payables of £2.7m reflecting increased activity and accruals for incentives. The timing of tax payments in the UK results in tax payment in the year being higher at £8.7m (2014: £6.3m).

Working capital

We have a range of working capital cycles across the divisions and businesses. For example we support long term availably of product for Semiconductors, often holding inventory for a number of years. In some of our Imaging sensor lines much of the manufacturing is provided by third parties and we only hold finished goods to satisfy customer orders. As part of our focus on customers we have increased inventory levels to improve our responsiveness to their requirements. We look to agree reasonable payment terms with our customers for our products. Where we provide bespoke products or working on long term programmes we seek to obtain advance payments to maintain a positive profile. In terms of trade payables we pay our suppliers in accordance with our agreed terms. Overall we seek to manage working capital through the cycle and estimate that on average across the Group three to four months working capital is needed to support growth.

Borrowing facilities

On the 29 July 2014 the Group entered into a new revolving credit facility. The committed multi-currency revolving facilities are equivalent to £93.2m at 31 March 2015 exchange rates and are available for four years until 28 July 2018. Based on the Group's performance and net borrowings as at 31 March 2015, the margin payable is 100bps and non-utilisation fees at 40% of margin.

The facility is subject to leverage and interest cover covenants. Due to the performance of the Group during the year and that the Group has net borrowings of £5.2m as at 31 March 2015, there is significant headroom on both covenants.

Central functions

The costs of the central functions are allocated to the divisions. The central costs of £4.0m (2014: £4.0m) are the costs relating specifically to the management of e2v technologies plc which are not allocated.

Key performance indicators (KPIs)

Our KPIs to monitor financial performance have been covered in detail in the Business Review. The table below provides a summary of our KPIs. Non-financial KPIs will be discussed in detail in the Corporate Responsibility Review in the Annual Report and Financial Statements and include customer satisfaction, number of reportable accidents in the year, and percentage reduction in our carbon footprint.

Consolidated income statement

Year ended 31 March 2015

Consolidated statement of comprehensive income

Year ended 31 March 2015

Consolidated statement of financial position

As at 31 March 2015

Consolidated statement of cash flows

Year ended 31 March 2015

Consolidated statement of changes in equity

Year ended 31 March 2015

Notes to the audited results

Year ended 31 March 2015

1. Accounting policies

Basis of presentation

The audited results for the year ended 31 March 2015 have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and applied in accordance with the provisions of The Companies Act 2006. The preliminary announcement was approved by the Board of Directors on 15 May 2015.

The financial information set out in the audited results does not constitute the Group's statutory financial statements for the year ended 31 March 2015 within the meaning of section 435 of the Companies Act 2006 and has been extracted from the full consolidated financial statements for the year ended 31 March 2015.

Statutory consolidated financial statements for the year ended 31 March 2014, which received an unqualified audit report, have been delivered to the Registrar of Companies. The reports of the auditor on the consolidated financial statements for 31 March 2015 and 31 March 2014 were unqualified and did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their reports. The reports did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The consolidated financial statements for the year ended 31 March 2015 will be delivered to the Registrar of Companies and made available to all shareholders in due course.

The accounting policies applied in preparing these audited results are unchanged from those set out in the Group's 2014 Annual Report and Financial Statements, except as detailed below.

From 1 April 2014, the Group has adopted: IFRS 10, 'Consolidated Financial Statements', IFRS 11, 'Joint Arrangements', IFRS 12, 'Disclosure of Interests in Other Entities' and IAS 27 'Separate Financial Statements'. The Group has reviewed its investments in other entities to assess whether the conclusion to consolidate is different under IFRS 10 than under IAS 27. No differences were found for any of the Group's investments and therefore the application has had no effect on the amounts recognised in these consolidated financial statements for the year ended 31 March 2015.

In addition, the Group has adopted the following new standards, amendments to standards and interpretations issued under IFRS, the adoption of which has had no material financial effect on the Group for the current period:

· IAS 32, 'Offsetting Financial Assets and Financial Liabilities';

· IAS 36, 'Recoverable Amount Disclosures for Non-Financial Assets';

· IAS 39, 'Novation of Derivatives and Continuation of Hedge Accounting'; and

· IFRIC 21, 'Levies'.

The financial information is presented in Sterling. All values are rounded to the nearest thousand (£000) unless otherwise indicated.

In order to provide a more relevant presentation of the Group's underlying performance, profit for each financial year has been analysed between:

a) Trading results before specific items; and

b) The effect of specific items. Specific items are material items of income and expense which, in the opinion of the Directors, because of the nature or infrequency of the events giving rise to them, merit separate presentation to allow a better understanding of the elements of the Group's underlying performance for the financial year and are presented on the face of the income statement to facilitate comparisons with prior periods and assessments of trends in financial performance.

Specific operating items may include: business improvement programme expenses; last time build inventory provisions; gains and losses on sale of property; acquisition costs; impairments and fair value gains and losses on foreign exchange contracts; all operating items attributable to terminated or disposed operations and operations held for sale where there is a contractual agreement to sell; and amortisation of acquired intangible assets, including impairment.

Specific finance items may include: fair value gains and losses arising on interest rate swaps; realised exchange differences on the re-denomination of borrowings; and write-off of debt issue costs.

Specific tax items include the tax effect on specific operating items and specific finance items.

Further analysis of specific operating items are provided in note 3.

2. Segment information

The Group is organised into three operating divisions, which are organised and managed separately based on the key products that they provide. Each is treated as an operating segment and a reportable segment in accordance with IFRS 8, 'Operating Segments'.

The operating and reportable segments are:

· Imaging providing high quality imaging sensors, cameras and sub-systems which deliver higher performance for our customers across a range of applications in the industrial, scientific, space, surveillance and defence markets.

· RF Powerproviding high performance and high reliability radio frequency power generation for healthcare, defence and industrial applications.

· Semiconductors utilising its market leading test, packaging and screening technology to meet the demanding specifications of aerospace and defence customers. Our capabilities in design, supply chain management, packaging and test services can extend the availability of otherwise obsolete semiconductors, providing customers with the security of supply they require.

A more detailed description for each segment is included with the 'Value proposition - what we do and our key drivers' sections of the Business Review.

All other, reported below, includes items associated with the disposal of the Group's non-core businesses which were disposed of during the year ended 31 March 2013.

Centre-corporate includes those unallocated costs directly associated with the management of the Group's public quotation and other related costs arising from the corporate management of the Group along with treasury related activities.

Segment revenue and results

The following is an analysis of the Group's revenue and results by reportable segment. There was no inter-segment trading during the period covered by these financial statements.

Geographical information

The Group's revenue from external customers and information about its non-current assets by geographical location are detailed below:

3. Specific operating items

Acquisition of AnaFocus

As detailed in note 13, the Group completed the acquisition of AnaFocus in September 2014 and in connection with this, the Group incurred one-off transaction costs of £446,000. Where payments in connection with the acquisition are dependent on future employment they are treated as a cost of continuing employment, with £544,000 recognised in the period. These costs are net of foreign exchange gains of £231,000 relating to the outstanding contingent consideration.

Business improvement programme

During the year, restructuring of the Group's central operations, RF Power and Imaging teams has been undertaken. An announcement to cease manufacturing in Beijing, China during the first half of the following financial year was made prior to 31 March 2015, together with the commencement of a consultation process regarding the planned closure of the sales office in Bievres, France. A charge of £3,429,000 has been recorded during the year in respect of these activities, principally related to staff and onerous lease costs. The Group is also undertaking a reorganisation of the footprint at its Chelmsford facility and has incurred costs of £686,000 in the period.

During the year ended 31 March 2014, the Group completed a restructuring of the RF Power business, which had commenced in the prior year. This resulted in a net credit of £435,000 in that year, since the previously identified headcount reduction was achieved by the transfer of employees into the Imaging business, which had commenced a recruitment drive. The business improvement programme in Grenoble also drew to a close during the year ended 31 March 2014 with a net credit of £1,033,000 recorded, principally related to the release of receivables provisions, whilst reorganisation of the Group's US East Coast sales support office resulted in costs of £196,000.

Foreign currency losses/(gains) arising from fair value adjustments

The Group, in part, hedges its exposure to foreign currency risks through the use of forward exchange contracts. The changes in the fair value of the instruments are recorded as specific items in the income statement. Fluctuations in the exchange rates have resulted in a net fair value loss of £1,873,000 (2014: gain £796,000).

Disposal of non-core businesses

During the year, with the expiration of product warranties related to the Group's RF Satcom business, which was disposed in the prior year, a gain of £100,000 was recorded. During the year ended 31 March 2014, the net loss on disposal of businesses comprised a gain of £442,000 on the sales of the Group's RF Satcom business (being net proceeds of £684,000 less net assets disposed of £242,000) and a loss of £472,000 relating to the sales of the Group's non-core businesses which were completed during the year ended 31 March 2013 (being the write-off of deferred consideration, in part offset by a credit on the finalisation of net assets disposed).

Change in Chief Executive Officer

During the year ended 31 March 2014 the previous Chief Executive Officer, K Attwood, left the Group and S Blair was appointed Group CEO. In respect of this change, costs of £608,000 were incurred.

4. Finance costs and revenue

5. Income tax

Major components of income tax expense charged to the income statement for the years ended 31 March 2015 and 2014 are:

A reconciliation of income tax expense applicable to the accounting profit before income tax at the statutory income tax rate to income tax expense at the Group's effective income tax rate for the years ended 31 March 2015 and 2014 is as follows:

The UK government, with effect from 1 April 2014, reduced the main rate of UK corporation tax from 23% to 21%. In addition, the Finance Bill 2013, which was substantively enacted on 2 July 2013, will reduce the UK corporation tax rate to 20% from 1 April 2015. UK deferred tax balances as at 31 March 2015 have been calculated based on the reduced corporation tax rate of 20% which is the tax rate that is expected to apply to the period when the asset is realised or the liability is settled. The Spanish government, for financial periods beginning during 2015, reduced the main rate of Spanish corporation tax rate from 30% to 28%, and for financial periods beginning during 2016, reduced the rate further to 25%. Spanish deferred tax balances as at 31 March 2015 have been calculated based on the reduced corporation tax rates of either 28% or 25%, using the rates that are expected to apply to the period when the asset is realised or the liability is settled.

6. Earnings per share

Basic earnings per share is calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year adjusted for the effects of dilutive options.

Adjusted earnings per share is calculated on the basis of net profit for the year before specific items. In the Directors' judgement adjusted earnings per share is considered to more appropriately reflect the underlying performance of the business year on year.

The following reflects the net profit and share data used in the basic and diluted earnings per share computations:

7. Dividends paid and proposed

The EBT and the Company have waived their right to receive dividends.

The Board recommends that a final dividend in respect of the year ended 31 March 2015 of 3.6p per share will be paid on 4 August2015 to shareholders registered at the close of business on 10 July 2015. This dividend is subject to approval by shareholders at the Annual General Meeting and therefore the liability of approximately £7,853,000 has not been included in these financial statements. The amount is based on the number of shares in issue, excluding those held by the EBT and the Company, at the date that these financial statements have been approved and authorised for issue. The actual payment may differ due to increases or decreases in the number of shares in issue between the date of approval of these financial statements and the record date of the final dividend.

8. Property, plant and equipment

9. Borrowings

On 29 July 2014, the Group entered into a new revolving credit facility which expires on 28 July 2018, and which is denominated in Sterling (£62,500,000), US dollars ($40,000,000) and Euros (€5,000,000). At 31 March 2015 exchange rates, the total facility is £93,176,000. Provided covenants continue to be met, the draw down under the revolving credit facility is at the discretion of the Group and consequently the loan is treated as non-current. As at 31 March 2015, £22,500,000 was drawn down under this facility. At 31 March 2014, the Group's previous facility was, at 31 March 2014 exchange rates, £79,315,000 and £13,705,000 was drawn.

The revolving credit facility is repaid and re-drawn at periodic intervals ranging from one to six months, with the interest rate set at each draw down date. Interest is set by reference to LIBOR plus a margin which is determined based on the level of the reported leverage covenant (defined as net borrowings: earnings before interest, tax, depreciation and amortisation).

As at 31 March 2015, the Group had available £70,676,000 (2014: £65,610,000) of un-drawn committed borrowing facilities in respect of which all conditions precedent had been met.

As at 31 March 2015, unamortised debt issue costs were £547,000 (2014: £nil). As at 31 March 2015 and at 31 March 2014, the bank loans were unsecured.

Reconciliation of movement in net borrowings: