4 Nov 2013 07:00
e2v technologies plc
Half-year results for the six months to 30 September 2013
e2v technologies plc, the specialist provider of technology solutions for high performance systems announces its half-year results for the six months ended 30 September 2013:
Highlights
| 6 months ended 30 September 2013 £m | 6 months ended 30 September 2012 £m |
Revenue (excluding disposal businesses)(1) | 98.1 | 90.7 |
Adjusted(2) operating profit | 12.0 | 13.9 |
Adjusted(2) profit before tax | 11.4 | 13.1 |
Profit before tax | 10.8 | 14.4 |
Net borrowings | 11.0 | 28.3 |
Adjusted(3) earnings per share | 3.9p | 4.5p |
Earnings per share | 3.8p | 5.3p |
Interim dividend per share | 1.4p | 1.3p |
· Revenue(1) at £98.1m (H1 2013: £90.7m excluding the disposal businesses)
· Gross profit(1) margin at 36% (H1 2013: 41%) reflects in period revenue mix, with growth in HPI
· Adjusted(2) operating profit £12.0m down 14% as expected
· Order book at £189m (30 September 2012: £138m)
· Continued geographic expansion and increased R&D activity
· Recruited staff for increased activity in second half
· Chief Executive: Stephen Blair starts next quarter
· Interim dividend up 8% at 1.4p
The Board announces an interim dividend of 1.4 pence per share. This will be paid on 17 December 2013 to e2v shareholders on the register as at 29 November 2013.
Commenting on the results, Neil Johnson said:
"After a slow start to this financial year, activity levels improved and we have delivered earlier than planned on certain programmes. However, as previously indicated, profitability was below the level achieved in the same period last year. The order book is in line with our expectations and we have recruited additional staff for the expected increase in activity in the second half.
We continue to be cautious over the broader economic environment, in particular the ongoing uncertainty in the US defence sector. Assuming no further deterioration in market conditions, our expectations for the Group's full year trading performance remain unchanged.
We were delighted to announce on 18 October the appointment of Steve Blair as the new CEO. Steve brings a wealth of experience and a track record of delivering growth. He will lead development of the Group's strategy and delivery of international sales growth."
Further enquiries:
e2v technologies plc | ||
Neil Johnson, Chairman Charles Hindson, Group Finance Director | Tel: +44 (0)1245 493493 | |
Website: www.e2v.com | ||
Pelham Bell Pottinger | ||
Elly Williamson / Charles Goodwin | Tel: +44 (0)20 7861 2840 |
Notes
(1) Excludes the Group's non-core businesses disposed in May 2012 and October 2012.
(2) Adjusted operating profit is before operating specific items. Adjusted profit before tax is before all specific items.
(3) Adjusted earnings are profit before all specific items less tax where applicable.
Interim management report
Review of the half-year
SUMMARY AND OUTLOOK
e2v has performed well given the initial slow start to the period and the broader economic environment that continues to provide challenging trading conditions in some of our markets. We have made good progress during the period with the level of activity increasing in the second quarter and earlier than planned delivery on certain programmes.
Revenue was £98.1m (H1 2013: £90.7m excluding disposal businesses), representing growth of 8%. The growth reflected increased demand for industrial cameras for machine vision in Asia, our handheld thermal imaging cameras benefiting from new product introductions, along with delivery on programmes for space and electronic countermeasures in the US. Radiotherapy and the commercial and industrial RF business both experienced a slow start to the year but are now seeing some improvement in demand. In the US, we have experienced lower demand for semiconductors for defence applications and this is expected to continue into the second half, where order visibility is poor.
Gross profit margin was lower at 36% (H1 2013: 41% excluding disposal businesses), reflecting revenue mix in the period, with growth in imaging products that are at lower margins, along with delivery on space programmes and lower revenues in radiotherapy and US defence semiconductors. The contribution from the revenue growth was offset by: an increase in warranty and inventory provisions; the additional staff required for the increased activity levels planned for the second half; and increased foreign exchange losses.
Adjusted(1) operating profit of £12.0m (H1 2013: £13.9m), represents a margin of 12% (H1 2013: 15%), reflecting the lower gross profit and increased R&D for product development.
Our net borrowings at 30 September 2013 were £11.0m (H1 2013: £28.3m), reflecting improved operating cash generation compared with the prior period, though progress on inventory reduction was modest.
We have continued our geographic expansion in the US and Asia, building the teams of experienced professionals in these regions to develop these important markets. Our change programme for space projects has delivered growth in the first half and we have recruited staff to support the step up in activity anticipated for the second half. We have also increased R&D activity, by £1m to 7% of revenue (H1 2013: 6%), focused on new product development and process improvement activity.
The order book for delivery in the coming 12 months was £130m (H1 2013: £114m), an increase of £16m. This reflects strong order intake in High performance imaging for space and in Hi-rel semiconductors as a result of the Freescale's end-of-life programme for the 603 family of microprocessors. Compared with the year end, the 12 month order book is steady. This reflects underlying growth when taking into consideration the renewal cycle on a number of contracts in commercial and industrial markets and radiotherapy, where we anticipate new contracts to be booked in the second half.
Outlook
Our order book for the second half provides a lower order gap than the prior year and we have recruited the staff required to deliver the expected increase in levels of activity in the second half. We continue to be cautious over the broader economic environment, in particular the ongoing uncertainty in the US defence sector. Assuming no further deterioration in market conditions, our expectations for the Group's full year trading performance remain unchanged.
RECRUITMENT OF NEW CHIEF EXECUTIVE
The Company announced on 18 October 2013 that it had appointed Stephen Blair as Chief Executive of e2v. The Board is delighted to have recruited a leader of Stephen's high calibre to e2v. Stephen brings a wealth of international experience across both established and high growth emerging markets, in strategic planning and portfolio development, and he has a proven track record in driving growth. He is currently Business Group Director for Spectris plc (from May 2011) and from January 2013 has been the Executive Board member responsible for the In-Line Instrumentation and Industrial Controls segments. Prior to joining Spectris, Stephen was at Invensys plc, where his last position was President, Invensys Operations Management for North America based in Houston, Texas. Prior to joining Invensys, Stephen held various management positions at Silvertech Ltd. and Computing Devices Co. Ltd. He holds a B. Eng. (hons) in Electronic Engineering from the University of Sheffield in the UK.
BUSINESS OVERVIEW
RF power solutions
The RF power solutions division has three key applications: radiotherapy, electronic countermeasures and industrial processing systems.
Sales for RF power solutions were 1% lower at £37.5m (H1 2013: £37.9m). This reflects the anticipated lower demand in radiotherapy and our commercial and industrial business offset by good growth in electronic countermeasures.
In radiotherapy we support RF power systems for the delivery of high energy x-rays for the treatment of cancer, with high performance, high reliability products and provide the continuity for long term spares that our radiotherapy customers require. Original equipment manufacturers (OEM) demand in radiotherapy has been softer in the first quarter, in part reflecting some de-stocking by one of our major customers. We have seen increasing activity in the second quarter with Elekta and Varian and more recently with Accuray. Our 12 month order book reflects a number of multi-year contracts which were renewed during the last financial year, although we have one OEM contract with less than 6 months cover which we expect to renew in the second half.
We provide leading technology for platform life extension programmes and upgrades to enhance capability and provide electronic countermeasure protection of high value air, land and naval platforms. Electronic countermeasures has delivered good growth from the existing programmes, including the ALE-55 programme for the F18 Super Hornet and delivering most of the pre-production units for an F15 upgrade export programme. We are continuing to develop our microwave power modules and ultra wideband travelling wave tubes for opportunities in Europe and the US.
We provide microwave and RF generators for the processing of bulk materials, delivering transformational economics in process efficiency, energy consumption and material yield improvements in established sectors. In Industrial Processing Systems (IPS), we are working on the next phase of our development contract with Rio Tinto which will continue through the second half, covering the design and supply of large-scale ProWave® microwave and radio frequency generators for use in projects to improve the efficiency of mineral recovery.
The remaining portfolio of businesses in the division is principally focused on applications in commercial and industrial markets. Activity in these markets was slow in the first quarter as anticipated, and while it has recovered, it remains lower than the comparable period. Whilst remaining cautious, we anticipate improvement in orders for delivery in the second half.
Overall profit margin for the division reflects the change in revenue mix with a reduction in radiotherapy activities offset by growth in defence projects along with the additional spend on R&D.
High performance imaging solutions
The High performance imaging solutions division has three main applications: machine vision, space imaging and scientific imaging.
Sales for High performance imaging solutions were up by 28% at £35.4m (H1 2013: £27.7m). This reflects growth in machine vision in Asia, thermal imaging from new product introductions and delivery on space programmes; revenue for science was steady, as anticipated.
In machine vision, our camera platforms provide sensitive, high speed performance for demanding inspection processes where quality and reliability are key customer requirements for applications such as semiconductor and electronics manufacturing inspection, food and beverage processing, ophthalmology and document imaging. Machine vision demand experienced good growth in Asia reflecting some recovery of the industrial market as well as the growth driven by our new Complementary Metal Oxide Semiconductor (CMOS) based line scan camera (the Eliixa+), which is performing strongly.
We provide high sensitivity, low noise sensors enabling high end scientific instruments. The market for high end scientific cameras is currently highly concentrated with three manufactures, Andor, Hamamatsu and Roper, all of which we support. Demand in scientific imaging has been steady compared with the comparable period as anticipated. We anticipate that demand will remain at a similar level in the second half.
We are the world leading supplier for space qualified, visible range, high performance, high quality space imaging sensors and sub-systems for space science and ground based science applications. Space imaging has delivered strong growth on the comparable period reflecting progress on programmes for Thales, ISRO and US programmes. Order intake in space has been particularly strong with new orders for Lebedev Physical Institute of the Russian Academy of Sciences at the system level along with orders for sensors from CNES and the European Space Agency. We have recruited over 60 staff required to support the increased activity for the second half along with ongoing investment programme in the UK processing facility. The step up of activity anticipated in the second half, with a planned acceleration of the schedule recovery in the fourth quarter to follow the staffing, is underpinned by major programmes in the order book. The nature of this business is that it will remain technically challenging as we provide leading edge technologies for scientific discovery.
We support a range of other specialist applications with our imaging technology, such as CMOS dental intra-oral sensors, CMOS area array sensors for use in automatic data collection systems including 2D barcode readers and thermal imaging cameras. The remaining product lines in the division have shown good growth due to strong demand. In dental we launched our new product line in China with Runyes, one of the largest OEMs in the Chinese dental market. We have seen good growth in demand for our industrial sensors from Honeywell and Datalogic for automatic data collection systems and 2D barcode reading. Thermal imaging has seen growth from its fire and security products with US sales growth coming through an increased distributor base including Grainger along with the launch of new products for security, homeland security, police and marine applications.
Overall profit margins reflect the contribution from the additional revenue partly offset by provisions on some space programmes and higher warranty costs reflecting increased revenue and resolution of an issue with a dental product line in the first quarter.
Hi-rel semiconductor solutions
The Hi-rel semiconductor solutions division addresses two main sectors: aerospace and defence semiconductors and Semiconductor Lifecycle Management (SLiM™).
Sales for Hi-rel semiconductor solutions were steady at £25.1m (H1 2013: £25.1m). This reflects a slow start to the year with weak US order intake from the prior year, along with the continued decline in the smart sensors business, which we are withdrawing from, offset by growth in sales of our own design analogue data convertors into space applications.
We provide high reliability semiconductors and packaging and test services that meet the demanding specifications of our aerospace and defence customers. Aerospace and defence semiconductors has benefited from growth in our own design analogue data convertors into space programmes, with two programmes scheduled for delivery in the coming two years along with microprocessors in Europe, which have offset ongoing softness in demand for our legacy products in the US. Current trading includes the anticipated decline in the smart sensor business with our planned exit from the sector. Order intake in the second quarter has been strong in Europe due to Freescale's end-of-life programme for the 603 family of microprocessors, where we have contracts supporting seven major defence contractors, although delivery is likely to be in the final quarter and beyond.
SLiM™ is our approach to semiconductor obsolescence management and counterfeit mitigation for our aerospace and defence customers. This provides a proactive approach for managing critical components in aerospace and defence systems, where the original components can become obsolete during the lifetime of the system and offers the potential for lower cost and reduced risk of counterfeit goods entering the supply chain over the lifetime of the assets. The estimated future revenue from our portfolio of SLiM™ programmes has increased to c. £24m over the coming ten years and this is not yet reflected in the order book. We continue to support strategic programme initiatives with leading defence contractors covering their at risk components.
Overall profit margins for the division reflect the mix of revenue with a reduction in legacy products in the US, along with increased inventory provisions and R&D activity.
Geographic expansion
We have continued to recruit experienced professionals in the US to drive the growth of this business. In Asia, we continue to build the team across the region and have commenced manufacturing a range of thermal imaging cameras in China.
Central functions
The divisions are supported by group marketing and technology, group operations and support services including commercial, human resources, IT and finance, whose costs are largely included within divisional performance. Central costs not allocated relate to the management of e2v technologies plc; these were £2.0m (H1 2013: £1.7m).
FINANCIAL REVIEW
The results for the first half of the financial year ending 31 March 2014 reflect the initial slow start to the period following challenging market conditions particularly in the US defence market along with earlier than planned delivery on certain programmes.
Revenue was £98.1m (H1 2013: £90.7m excluding the disposal businesses), representing growth of 8%. New business, being new products or new customers supplied so far in this financial year, made up approximately 14% of sales (H1 2013: 10%), marginally above the 12% that we estimate is required to maintain renewal of our product portfolio. The proportion of sales generated from sub-systems and solutions in the period was approximately 32% (H1 2013: 28%), demonstrating the growth in our space projects and growth in machine vision and thermal imaging cameras. On a rolling 12 month basis the percentage of sales outside Western Europe have increased to 58% (H1 2013: 54%).
Gross profit before specific items decreased by 3% to £35.7m (H1 2013: £36.8m), reflecting the in period revenue mix, where growth in machine vision, space, dental and thermal imaging was offset by lower revenue in radiotherapy and US semiconductors. The gross profit performance also included increased warranty provisions, resulting from revenue growth from new products, resolution of an issue with a dental product line in the first quarter, and higher inventory provisions. Movements in exchange rates in the period resulted in exchange losses of £0.8m (H1 2013: gain £0.7m).
Net research and development expenditure increased to £6.7m (H1 2013: £5.7m), representing 7% of revenue. This includes the phasing of spend in IPS to complete the second generation demonstrator system and an increase in other programmes, and is after the benefit of increased grant funding both in the UK and France of £2.2m in the period (H1 2013: £1.1m). The use of subcontract resource has continued, where necessary, to deliver these key programmes and also to provide agility and flexibility.
Selling and distribution costs were steady at £8.0m (H1 2013: £8.0m). This reflects the continued expansion in the US and Asian platforms offset by some cost savings made in Europe.
Administrative costs, excluding amortisation of acquired intangibles, business improvement programme costs, and fair value movements on foreign exchange contracts, decreased marginally to £9.0m (H1 2013: £9.3m).
Amortisation of acquired intangible assets decreased marginally to £1.2m (H1 2013: £1.3m), as a result of a number of the acquired intangibles becoming fully amortised in the period. Fair value gains on foreign exchange contracts amounted to £1.1m (H1 2013: £0.2m).
The restructuring and site consolidation programme at the Chelmsford site is ongoing. The total cost of the consolidation programme is estimated at c. £5m.
The adjusted(1) operating profit was £12.0m (H1 2013: £13.9m) resulting in a margin at 12% (H1 2013: 15%).
Net finance costs before specific items decreased by 21% to £0.6m (H1 2013: £0.7m) reflecting the lower levels of borrowings. The resulting adjusted(1) profit before tax decreased by 13% to £11.4m (H1 2013: £13.1m).
Profit before tax decreased by 25% to £10.8m (H1 2013: £14.4m). The prior year included a one-off gain principally due to the recycling of the exchange differences on the sale of the non-core businesses.
The underlying tax rate for the first half was 26% (H1 2013: 28%) due to the lower corporation tax rate in the UK being partially offset by higher profits in France.
Adjusted(2) earnings per share decreased to 3.9p (H1 2013: 4.5p) and reported earnings per share amounted to 3.8p (H1 2013: 5.3p).
Operating cash flow before tax in the first half was £12.7m (H1 2013: £5.4m). The increase reflects a lower outflow on working capital of £4.1m (H1 2013: £13.3m). Of which, £0.9m relates to increased inventory, £2.1m relates to payment of trade and other payables and provisions absorbing £1.1m. The inventory increase reflects strategic inventory purchases to supporting the aerospace and semiconductors business and phasing on RF defence projects offset by some progress on space programmes. We have recruited the staff to deliver increased activity on projects in the second half which is anticipated to lead to lower work in progress in the second half. Tax payments were £3.3m (H1 2013: £2.1m), reflecting increased payments on account. After capital expenditure, other financing costs, final dividends of £6.0m and movements due to exchange rates, the overall increase in net borrowings in the period amounted to £1.2m.
At 30 September 2013 net borrowings amounted to £11.0m (H1 2013: £28.3m). The total drawings under the bank facility arrangement were £23.4m of which £16.0m was drawn in Sterling with the balance being drawn in US dollars. The unutilised facility (at 30 September 2013 exchange rates) is £56.5m.
The Group's total order book as at 30 September 2013 was £189m (30 September 2012: £138m), representing an increase of £51m. Similarly, the order book for delivery over the coming 12 months was £130m (30 September 2012: £114m), an increase of £16m. Our sequential 12 month order book is stable at £130m (31 March 2013: £130m) with growth in High performance imaging and Hi-rel semiconductors offset by the renewal cycle on certain contracts for radiotherapy and commercial and industrial applications, expected in the coming period.
Principal risks and uncertainties for the second half
In compliance with the UK Corporate Governance Code, the Group has processes in place for identifying, evaluating and managing the significant risks which could have an impact upon the Group's performance.
The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 26, 27 and 28 of the Annual Report and Financial Statements for the year ended 31 March 2013, a copy of which is available on the Group website at e2v.com. The Group has reviewed these risks and concluded that they adequately represent the current principal risks and uncertainties of the company and will continue to remain relevant for the second half of the financial year. In summary, the significant risks and uncertainties faced by the Group comprise: changing product demand, competition including advancement in technology, IT security, failure of suppliers, Euro destabilisation, supply chain disruption, intellectual property, legal and regulatory, people, acquisitions and treasury.
We note that the risk of Euro destabilisation has been reducing, though the level of uncertainty in our markets for US government related activities has increased.
Notice of general meeting
The Company intends sending out a notice to e2v shareholders to convene a general meeting, such general meeting is expected to be held at the end of November 2013. This general meeting is to seek shareholder approval of a proposed share incentive plan for the Group's new Chief Executive Stephen Blair.
N Johnson C Hindson
Chairman Group Finance Director
1 November 2013 1 November 2013
Notes
(1) Adjusted operating profit is before operating specific items. Adjusted profit before tax is before all specific items.
(2) Adjusted earnings are profit before all specific items less tax where applicable.
Independent review report to e2v technologies plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2013 which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Equity and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules (the DTR) of the United Kingdom's Financial Conduct Authority (the UK FCA). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of UK FCA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union (the EU). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of half-yearly financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2013 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Mike Barradell
for and behalf of KPMG LLP
Chartered Accountants
15 Canada Square, London E14 5GL
1 November 2013
Condensed consolidated income statement
Six months ended 30 September 2013
6 months ended 30 September 2013 | 6 months ended 30 September 2012 | Year ended 31 March 2013 | ||||||
Before specific items | Specific items (note 3) |
Total | Before specific items Restated | Specific items (note 3) | Total Restated | Total Restated | ||
Notes | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
Revenue | 2 | 98,107 | - | 98,107 | 90,677 | 3,280 | 93,957 | 200,363 |
Cost of sales | (62,400) | - | (62,400) | (53,917) | (2,697) | (56,614) | (122,259) | |
Gross profit | 35,707 | - | 35,707 | 36,760 | 583 | 37,343 | 78,104 | |
Research and development costs | (6,724) | - | (6,724) | (5,670) | (220) | (5,890) | (10,675) | |
Selling and distribution costs | (7,964) | - | (7,964) | (7,959) | (106) | (8,065) | (15,879) | |
Administrative costs | (9,044) | (615) | (9,659) | (9,263) | 987 | (8,276) | (15,905) | |
Operating profit | 11,975 | (615) | 11,360 | 13,868 | 1,244 | 15,112 | 35,645
| |
Finance costs | 4 | (591) | - | (591) | (752) | - | (752) | (1,448) |
Finance revenue | 4 | 6 | - | 6 | 12 | - | 12 | 20 |
Profit before taxation | 11,390 | (615) | 10,775 | 13,128 | 1,244 | 14,372 | 34,217 | |
Income tax expense | 5 | (3,015) | 362 | (2,653) | (3,646) | 554 | (3,092) | (7,480) |
Profit for the period | 8,375 | (253) | 8,122 | 9,482 | 1,798 | 11,280 | 26,737 | |
Attributable to: | ||||||||
Equity holders of the Company | 8,375 | (253) | 8,122 | 9,482 | 1,798 | 11,280 | 26,737 | |
Earnings per share | ||||||||
Basic | 6 | 3.88p | 3.76p | 4.47p | 5.32p | 12.53p
| ||
Diluted | 6 | 3.85p | 3.74p | 4.36p | 5.19p | 12.38p |
Condensed consolidated statement of comprehensive income
Six months ended 30 September 2013
6 months ended 30 September 2013 | 6 months ended 30 September 2012 Restated | Year ended 31 March 2013 Restated | ||||
£000 | £000 | £000 | ||||
Profit for the period | 8,122 | 11,280 | 26,737 | |||
Items that will not be reclassified to profit or loss | ||||||
Actuarial gains/(losses) on post-employment benefits | 131 | (318) | (296) | |||
Income tax relating to items not reclassified | (45) | 110 | 100 | |||
86 | (208) | (196) | ||||
Items that may be reclassified subsequently to profit or loss | ||||||
Exchange differences on retranslation of foreign operations | (1,737) | (3,200) | 1,774 | |||
Exchange differences on net investment hedges | (1,398) | (323) | 1,352 | |||
Less reclassification adjustments for: | ||||||
Exchange differences recycled to income statement on disposal of non-core businesses | - | (2,428) | (2,428) | |||
Income tax relating to items that may be reclassified | 320 | 79 | (316) | |||
(2,815) | (5,872) | 382 | ||||
Other comprehensive (expense)/income for the period | (2,729) | (6,080) | 186 | |||
Total comprehensive income for the period | 5,393 | 5,200 | 26,923 | |||
Attributable to: | ||||||
Equity holders of the Company | 5,393 | 5,200 | 26,923 | |||
Condensed consolidated statement of financial position
As at 30 September 2013
30 September 2013 | 30 September 2012 Restated | 31 March 2013 Restated | ||||
Notes | £000 | £000 | £000 | |||
ASSETS | ||||||
Non-current assets | ||||||
Property, plant and equipment | 8 | 37,150 | 37,936 | 38,045 | ||
Intangible assets | 77,881 | 78,161 | 81,643 | |||
Deferred income tax asset | 7,053 | 7,996 | 7,752 | |||
122,084 | 124,093 | 127,440 | ||||
Current assets | ||||||
Inventories | 43,505 | 47,895 | 43,954 | |||
Trade and other receivables | 45,154 | 41,647 | 45,208 | |||
Other financial assets | 805 | 423 | 40 | |||
Income tax receivable | 1,372 | 1,122 | 1,443 | |||
Cash at bank and in hand | 12,380 | 9,540 | 11,293 | |||
Assets held for sale | - | 613 | - | |||
Total current assets | 103,216 | 101,240 | 101,938 | |||
Total assets | 225,300 | 225,333 | 229,378 | |||
LIABILITIES | ||||||
Current liabilities | ||||||
Trade and other payables | (38,112) | (39,308) | (39,417) | |||
Other financial liabilities | - | - | (304) | |||
Income tax payable | (944) | (1,522) | (1,875) | |||
Provisions | (4,786) | (6,879) | (6,177) | |||
Total current liabilities | (43,842) | (47,709) | (47,773) | |||
Non-current liabilities | ||||||
Borrowings | 9 | (23,274) | (37,332) | (20,758) | ||
Provisions | (889) | (784) | (693) | |||
Employment and post-employment benefits | 11 | (4,440) | (4,150) | (4,514) | ||
Deferred income tax liabilities | (3,139) | (4,014) | (3,787) | |||
Total non-current liabilities | (31,742) | (46,280) | (29,752) | |||
NET ASSETS | 149,716 | 131,344 | 151,853 | |||
CAPITAL AND RESERVES | ||||||
Called up share capital | 10,925 | 10,750 | 10,925 | |||
Share premium | 42,922 | 41,828 | 42,913 | |||
Merger reserve | 44,557 | 44,557 | 44,557 | |||
Own shares reserve | (2,085) | (2,118) | (2,118) | |||
Capital redemption reserve | 274 | 274 | 274 | |||
Foreign currency translation reserve | (1,131) | (4,570) | 1,684 | |||
Retained earnings | 54,254 | 40,623 | 53,618 | |||
TOTAL SHAREHOLDERS' FUNDS ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY |
| 149,716 | 131,344 | 151,853 | ||
Condensed consolidated statement of cash flows
Six months ended 30 September 2013
6 months ended | 6 months ended | Year ended | ||||
30 September 2013 | 30 September 2012 Restated | 31 March 2013 Restated | ||||
Notes | £000 | £000 | £000 | |||
Cash flows from operating activities | ||||||
Profit before tax | 10,775 | 14,372 | 34,217 | |||
Net finance costs | 585 | 740 | 1,428 | |||
Operating profit | 11,360 | 15,112 | 35,645 | |||
Adjustments to reconcile to net cash flows from operating activities | ||||||
Depreciation of property, plant and equipment | 8 | 4,050 | 3,935 | 7,806 | ||
Profit on sale of property, plant and equipment | (28) | (12) | (4,532) | |||
Gain on disposal of non-core businesses | - | (2,333) | (2,320) | |||
Amortisation of intangible assets | 2,167 | 1,840 | 3,817 | |||
Fair value (gains)/losses on foreign exchange contracts | (1,070) | (239) | 449 | |||
Share based payment charges | 376 | 442 | 781 | |||
(Increase)/decrease in inventories | (939) | (5,152) | 196 | |||
Decrease in trade and other receivables | - | 3,868 | 1,331 | |||
Decrease in trade and other payables | (2,092) | (10,515) | (11,209) | |||
Decrease in provisions | (1,079) | (1,539) | (3,091) | |||
Cash generated from operations | 12,745 | 5,407 | 28,873 | |||
Income taxes paid | (3,349) | (2,090) | (6,783) | |||
Net cash flows from operating activities | 9,396 | 3,317 | 22,090 | |||
Cash flows from investing activities | ||||||
Proceeds from sale of property, plant and equipment | 41 | 12 | 5,934 | |||
Proceeds from disposal of non-core businesses | - | 11,380 | 11,983 | |||
Interest received | 6 | 12 | 20 | |||
Purchases of property, plant and equipment | 8 | (3,699) | (5,695) | (8,949) | ||
Purchases of software | (637) | (632) | (1,514) | |||
Expenditure on product development | (367) | (398) | (838) | |||
Net cash flows (used in)/from investing activities | (4,656) | 4,679 | 6,636 | |||
Cash flows from financing activities | ||||||
Interest paid | (377) | (543) | (1,041) | |||
Proceeds from issue of shares | 9 | 22 | 1,282 | |||
Dividends paid | 7 | (6,031) | (5,932) | (8,729) | ||
Net proceeds from/(repayment of) borrowings | 9 | 2,882 | (737) | (18,169) | ||
Net cash flows used in financing activities | (3,517) | (7,190) | (26,657) | |||
Net increase in cash and cash equivalents | 1,223 | 806 | 2,069 | |||
Net foreign exchange difference | (136) | (216) | 274 | |||
Cash and cash equivalents at beginning of the period | 11,293 | 8,629 | 8,629 | |||
Cash and cash equivalents at beginning of the period classified as assets held for sale | - | 321 | 321 | |||
Total cash and cash equivalents at beginning of the period | 9 | 11,293 | 8,950 | 8,950 | ||
Total cash and cash equivalents at end of the period | 9 | 12,380 | 9,540 | 11,293 |
Condensed consolidated statement of changes in equity
Six months ended 30 September 2013
|
Called up share capital |
Share premium |
Merger reserve |
Own Shares reserve |
Capital redemption reserve | Foreign currency translation reserve Restated |
Retained earnings Restated |
Total equity Restated |
£000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
1 April 2012 | 10,747 | 41,809 | 44,557 | (2,182) | 274 | 1,302 | 34,824 | 131,331 |
Other comprehensive income | - | - | - | - | - | (5,872) | (208) | (6,080) |
Profit for the period | - | - | - | - | - | - | 11,280 | 11,280 |
Total comprehensive income | - | - | - | - | - | (5,872) | 11,072 | 5,200 |
Contributions by and distributions to owners | ||||||||
Issue of shares | 3 | 19 | - | - | - | - | - | 22 |
Transfer on issue of treasury shares | - | - | - | 64 | - | - | (64) | - |
Dividends paid | - | - | - | - | - | - | (5,932) | (5,932) |
Share based payment | - | - | - | - | - | - | 442 | 442 |
Tax on share based payment | - | - | - | - | - | - | 281 | 281 |
30 September 2012 | 10,750 | 41,828 | 44,557 | (2,118) | 274 | (4,570) | 40,623 | 131,344 |
Other comprehensive income | - | - | - | - | - | 6,254 | 12 | 6,266 |
Profit for the period | - | - | - | - | - | 15,457 | 15,457 | |
Total comprehensive income | - | - | - | - | - | 6,254 | 15,469 | 21,723 |
Contributions by and distributions to owners | ||||||||
Issue of shares | 175 | 1,085 | - | - | - | - | - | 1,260 |
Dividends paid | - | - | - | - | - | - | (2,797) | (2,797) |
Share based payment | - | - | - | - | - | - | 339 | 339 |
Tax on share based payment | - | - | - | - | - | - | (16) | (16) |
31 March 2013 | 10,925 | 42,913 | 44,557 | (2,118) | 274 | 1,684 | 53,618 | 151,853 |
Other comprehensive income | - | - | - | - | - | (2,815) | 86 | (2,729) |
Profit for the period | - | - | - | - | - | - | 8,122 | 8,122 |
Total comprehensive income | - | - | - | - | - | (2,815) | 8,208 | 5,393 |
Contributions by and distributions to owners | ||||||||
Issue of shares | - | 9 | - | - | - | - | - | 9 |
Transfer on issue of treasury shares | - | - | - | 1,700 | - | - | (1,700) | - |
Treasury shares purchased | - | - | - | (1,667) | - | - | - | (1,667) |
Dividends paid | - | - | - | - | - | - | (6,031) | (6,031) |
Share based payment | - | - | - | - | - | - | 376 | 376 |
Tax on share based payment | - | - | - | - | - | - | (217) | (217) |
30 September 2013 | 10,925 | 42,922 | 44,557 | (2,085) | 274 | (1,131) | 54,254 | 149,716 |
Notes to the condensed consolidated half-yearly financial statements
Six months ended 30 September 2013
1. Basis of preparation and significant accounting policies
Basis of preparation
These condensed half-yearly financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' and the Disclosure and Transparency Rules (DTR) of the United Kingdom's Financial Conduct Authority. The condensed half-yearly financial statements have been prepared on the going concern basis as the Directors, having considered all relevant information including the level of its current facility and covenant requirements, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
In July 2013 at the Annual General Meeting, the board of directors appointed KPMG LLP as auditors of e2v technologies plc and subsidiary companies commencing with the 2014 financial year. Ernst and Young LLP consequently resigned as auditor.
These condensed half-yearly financial statements are unaudited but have been formally reviewed by the Company's auditor and their report to the Company is set out above. The financial information shown for the year ended 31 March 2013 in these condensed half-yearly financial statements does not constitute statutory financial statements as defined in Section 434 of the Companies Act 2006 and has been extracted from the Group's 2013 Annual Report which has been filed with the Registrar of Companies. The auditor's report on the financial statements contained within the Group's 2013 Annual Report was unqualified and did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006.
These condensed half-yearly financial statements were approved by the Board of Directors on 1 November 2013.
Accounting policies
In the current financial year, the Group has adopted the amendments to IAS 1, 'Presentation of Items of Other Comprehensive Income', IAS 19 (revised 2011) 'Employee Benefits' and IFRS 13, 'Fair Value Measurement'. Otherwise, the same accounting policies, presentation and methods of computation are followed in the condensed half-yearly financial statements as applied in the Group's 2013 Annual Report.
The amendments to IAS 1 require items of other comprehensive to be grouped by those items that will be reclassified subsequently to profit or loss and those that will never be reclassified, together with their associated income tax. The amendments have been applied retrospectively, and hence the presentation of items of comprehensive income has been restated to reflect the change. The effect of these changes is evident from the consolidated statement of comprehensive income.
IAS 19 (revised 2011) and the related consequential amendments have affected the accounting for the Group's defined benefit schemes, such that the unvested past service cost, which was being charged to the income statement over the average remaining service life of the employees in the scheme, is now required to be recognised immediately.
The effect of this change has been to increase both adjusted and total profit after tax by £4,000 and £8,000 for the 6 months ended 30 September 2012 and year ended 31 March 2013, respectively. The Group's employment benefit obligations have increased by £146,000 and £147,000 as at 30 September 2012 and 31 March 2013, respectively, and net assets have decreased by £96,000 and £97,000 as at those dates. As the Group has always recognised actuarial gains and losses immediately there has been no further effect on the prior periods defined employment benefit obligations.
IFRS 13 has changed the measurement of fair value for certain assets and liabilities as well as introducing new disclosures, as set out on note 12. The adoption of this standard has had no financial effect on the Group for the current or prior period.
2. Segment information
The Group is organised into three operating divisions. These three divisions are organised and managed separately based on the key products they provide and each is treated as an operating segment and a reportable segment in accordance with IFRS 8, 'Operating Segments'.
The operating and reportable segments are:
RF power solutions which provides high performance electron devices, sub-systems and solutions in three main applications: radiotherapy; electronic countermeasures; and industrial processing systems.
High performance imaging solutions which provides advanced Charged Coupled Devices (CCD) and Complimentary Metal Oxide Semiconductor (CMOS) imaging sensors, cameras and solutions in three main applications: machine vision; space imaging; and scientific imaging.
Hi-rel semiconductor solutions which provides hi-rel semiconductors and services in two main applications: aerospace and defence semiconductors, which includes assembly, packaging and test services, extended availability of obsolete and end-of-life integrated circuits and high speed data converters, and semiconductor lifecycle management under the Group's SLiMTM brand.
All other, reported below, includes the results of the Group's activities which were disposed of during the prior financial period. The results of these operations are treated as specific items. Specific revenue in the periods covered by these financial statements is comprised entirely of revenue from the disposed non-core businesses.
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.
RF power solutions | High performance imaging solutions |
Hi-rel semi-conductor solutions |
All other |
Centre - corporate |
Total operations | |
6 months ended 30 September 2013 | £000 | £000 | £000 | £000 | £000 | £000 |
Revenue | ||||||
Revenue from external customers | 37,545 | 35,436 | 25,126 | - | - | 98,107 |
Segment result | ||||||
Adjusted segment profit | 6,103 | 4,619 | 4,064 | - | - | 14,786 |
Corporate costs | - | - | - | - | (1,962) | (1,962) |
Exchange differences | - | - | - | - | (849) | (849) |
Adjusted operating profit/(loss) | 6,103 | 4,619 | 4,064 | - | (2,811) | 11,975 |
Specific operating items | 280 | (111) | (1,154) | - | 370 | (615) |
Operating profit/(loss) | 6,383 | 4,508 | 2,910 | - | (2,441) | 11,360 |
Net finance costs | (585) | |||||
Profit before tax | 10,775 | |||||
Tax charge | (2,653) | |||||
Profit for the period | 8,122 | |||||
Total assets | 20,274 | 31,879 | 90,955 | - | 82,192 | 225,300 |
6 months ended 30 September 2012 |
RF power solutions | High performance imaging solutions |
Hi-rel semi-conductor solutions |
All other |
Centre - corporate |
Total operations |
Restated | £000 | £000 | £000 | £000 | £000 | £000 |
Adjusted revenue | 37,885 | 27,668 | 25,124 | - | - | 90,677 |
Specific revenue | - | - | - | 3,280 | - | 3,280 |
Revenue from external customers | 37,885 | 27,668 | 25,124 | 3,280 | - | 93,957 |
Segment result | ||||||
Adjusted segment profit | 6,851 | 2,405 | 5,615 | - | - | 14,871 |
Corporate costs | - | - | - | - | (1,659) | (1,659) |
Exchange differences | - | - | - | - | 656 | 656 |
Adjusted operating profit/(loss) | 6,851 | 2,405 | 5,615 | - | (1,003) | 13,868 |
Specific operating items | (499) | 31 | (1,273) | 2,746 | 239 | 1,244 |
Operating profit/(loss) | 6,352 | 2,436 | 4,342 | 2,746 | (764) | 15,112 |
Net finance costs | (740) | |||||
Profit before tax | 14,372 | |||||
Tax charge | (3,092) | |||||
Profit for the period | 11,280 | |||||
Total assets | 23,268 | 30,346 | 87,046 | 490 | 84,183 | 225,333 |
Year ended 31 March 2013 |
RF power solutions | High performance imaging solutions |
Hi-rel semi-conductor solutions |
All other |
Centre - corporate |
Total operations |
Restated | £000 | £000 | £000 | £000 | £000 | £000 |
Adjusted revenue | 81,896 | 64,511 | 50,438 | - | - | 196,845 |
Specific revenue | - | - | - | 3,518 | - | 3,518 |
Revenue from external customers | 81,896 | 64,511 | 50,438 | 3,518 | - | 200,363 |
Segment result | ||||||
Adjusted segment profit | 16,857 | 7,285 | 11,337 | - | - | 35,479 |
Corporate costs | - | - | - | - | (3,493) | (3,493) |
Exchange differences | - | - | - | - | 245 | 245 |
Adjusted operating profit/(loss) | 16,857 | 7,285 | 11,337 | - | (3,248) | 32,231 |
Specific operating items | (1,226) | 270 | (2,549) | 3,001 | 3,918 | 3,414 |
Operating profit/(loss) | 15,631 | 7,555 | 8,788 | 3,001 | 670 | 35,645 |
Net finance costs | (1,428) | |||||
Profit before tax | 34,217 | |||||
Tax charge | (7,480) | |||||
Profit for the year | 26,737 | |||||
Total assets | 20,016 | 32,319 | 89,080 | - | 87,963 | 229,378 |
Geographical information
The Group's revenue from external customers and information about its non-current assets by geographical location are detailed below:
6 months ended | 6 months ended | Year ended | |
30 September 2013 | 30 September 2012 | 31 March 2013 | |
£000 | £000 | £000 | |
Revenue by destination | |||
United Kingdom | 14,709 | 15,171 | 31,626 |
North America | 36,279 | 37,770 | 78,555 |
Europe | 26,729 | 26,728 | 54,084 |
Asia Pacific | 19,054 | 12,779 | 33,161 |
Rest of the World | 1,336 | 1,509 | 2,937 |
98,107 | 93,957 | 200,363 |
30 September 2013 | 30 September 2012 | 31 March 2013 | |
£000 | £000 | £000 | |
Non-current assets (excluding taxes) | |||
United Kingdom | 36,391 | 36,608 | 36,788 |
North America | 36,113 | 37,676 | 39,454 |
Europe | 42,386 | 41,575 | 43,201 |
Asia Pacific | 141 | 238 | 245 |
115,031 | 116,097 | 119,688 |
3. Specific operating items
6 months ended | 6 months ended | Year ended | |
30 September 2013 | 30 September 2012 | 31 March 2013 | |
£000 | £000 | £000 | |
Amortisation of acquired intangible assets | 1,159 | 1,281 | 2,561 |
Change in Chief Executive Officer | 517 | - | - |
Business improvement programme expenses, net | 9 | 460 | 788 |
Foreign currency (gains)/losses arising from fair value adjustment | (1,070) | (239) | 449 |
Profit on the sale of properties | - | - | (4,499) |
Operating items associated with disposed non-core businesses | - | (413) | (393) |
Disposal of non-core businesses | - | (2,333) | (2,320) |
615 | (1,244) | (3,414) |
During the period the incumbent Chief Executive Officer left the Group and a process to identify his replacement has been completed with the announcement on 18 October 2013 of the appointment of Stephen Blair to the position. The costs incurred to date, of £517,000, associated with this change in senior management have been treated as a specific item.
The RF power solutions business restructuring at the Chelmsford site, which was commenced during the prior financial year, has continued, and a net credit of £285,000 (6 months ended 30 September 2012: charge £460,000 and year ended 31 March 2013: charge £1,216,000) has been reported in the period, as previously identified headcount reduction was achieved by the transfer of employees into the High performance imaging solutions business at Chelmsford, which has commenced a recruitment drive in the current financial year. The business improvement programme at Grenoble continues to draw to a close and costs of £111,000 were incurred during the period. Costs of £183,000 were incurred during the period in restructuring the Group's US East Coast sales support office.
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 in the period have resulted in net fair value gain of £1,070,000 (6 months ended 30 September 2012: £239,000; year ended 31 March 2013: loss £449,000).
On 30 November 2012, the Group completed the sale of its surplus land at the Grenoble facility resulting in a gain of £4,499,000. The surplus land had been classified as a disposal group held for sale at 30 September 2012.
During the year ended 31 March 2013 the Group disposed of its non-core businesses. For the period of ownership in that financial year, the trading results were treated as specific items. On recognising the disposal of these businesses, a gain of £2,428,000 was recognised relating to the recycling of the accumulated exchange differences in respect of the Swiss operations. These had previously been recognised through other comprehensive income on translation of foreign operations at each period end. The balance of this specific item relates to loss on disposal as net proceeds and net assets disposed were finalised and agreed. The assets of the gas sensors business which was sold in October 2012 were classified as a disposal group held for sale at 30 September 2012.
4. Finance costs and finance revenue
6 months ended | 6 months ended | Year ended | ||
30 September 2013 | 30 September 2012 | 31 March 2013 | ||
£000 | £000 | £000 | ||
Finance costs | ||||
Bank loan interest | 374 | 529 | 1,003 | |
Other interest | - | 5 | 5 | |
Interest on employment and post-employment benefits | 63 | 64 | 132 | |
Amortisation of debt issue costs | 154 | 154 | 308 | |
Total finance costs | 591 | 752 | 1,448 | |
Finance revenue | ||||
Bank interest receivable | 6 | 12 | 20 |
5. Income tax
The tax charge for the period has been calculated on the basis of the Directors' best estimate of the underlying annual effective tax rate for the year, consistent with the previous period.
The UK government, with effect from 1 April 2013, reduced the main rate of UK Corporation tax from 24% to 23%. In addition the Finance Bill 2013 was substantially enacted on 2 July 2013, which will reduce the corporation tax rate to 21% with effect from 1 April 2014 and to 20% with effect from 1 April 2015. The UK deferred tax balances as at 30 September 2013 have therefore been calculated based on the reduced corporation tax rates which are expected to apply on the reversal of the timing differences.
6. Earnings per share
Basic earnings per share is calculated by dividing net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period adjusted for the effects of dilutive options.
Adjusted earnings per share is calculated on the basis of net profit for the period before specific. In the Directors' judgment adjusted earnings per share is considered to more appropriately reflect the underlying performance of the business period on period.
The following reflects the net profit and share data used in the earnings per share computations:
6 months ended 30 September 2013 | 6 months ended 30 September 2012 Restated | Year ended 31 March 2013 Restated | |
£000 | £000 | £000 | |
Profit for the period attributable to ordinary shareholders | 8,122 | 11,280 | 26,737 |
Amortisation of acquired intangible assets | 1,159 | 1,281 | 2,561 |
Change in Chief Executive Officer | 517 | - | - |
Business improvement programme expenses, net | 9 | 460 | 788 |
Foreign currency (gains)/losses arising from fair value adjustment | (1,070) | (239) | 449 |
Profit on the sale of properties | - | - | (4,499) |
Operating items associated with disposed non-core businesses | - | (413) | (393) |
Disposal of non-core businesses | - | (2,333) | (2,320) |
Tax effect of the above | (362) | (554) | 301 |
Adjusted profit attributable to ordinary shareholders | 8,375 | 9,482 | 23,624 |
No. 000 | No. 000 | No. 000 | |
Weighted average number of ordinary shares | |||
For basic earnings per share | 215,815 | 211,833 | 213,246 |
Effect of dilution: | |||
Share options | 1,473 | 5,339 | 2,645 |
For diluted earnings per share | 217,288 | 217,172 | 215,891 |
Pence | Pence | Pence | |
Earnings per share | |||
Basic | 3.76 | 5.32 | 12.53 |
Adjusted basic | 3.88 | 4.47 | 11.07 |
Diluted | 3.74 | 5.19 | 12.38 |
Adjusted diluted | 3.85 | 4.36 | 10.94 |
7. Dividends paid and proposed
6 months ended 30 September 2013 | 6 months ended 30 September 2012 | Year ended 31 March 2013 | |||||
Pence | £000 | Pence | £000 | Pence | £000 | ||
Equity dividends on ordinary shares paid during period | |||||||
Final dividend in respect of the prior year | 2.8 | 6,031 | 2.8 | 5,932 | 2.8 | 5,932 | |
Interim dividend in respect of the current year | - | - | - | - | 1.3 | 2,797 | |
2.8 | 6,031 | 2.8 | 5,932 | 4.1 | 8,729 |
On 1 November 2013 the Board declared an interim dividend of 1.4p per share, with a total dividend payment of £3,025,000. The interim dividend is to be paid on 17 December 2013 to shareholders registered at close of business on 29 November 2013 and is based on the number of shares in issue, excluding those held by the Employee Benefit Trust 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 the financial statements and the record date of the interim dividend.
8. Property, plant and equipment
6 months ended | 6 months ended | Year ended | ||
30 September 2013 | 30 September 2012 | 31 March 2013 | ||
£000 | £000 | £000 | ||
Opening net book value | 38,045 | 36,616 | 36,616 | |
Additions | 3,699 | 5,695 | 8,949 | |
Depreciation | (4,050) | (3,935) | (7,806) | |
Disposals | (13) | - | (162) | |
Reclassifications | - | - | (22) | |
Exchange adjustment | (531) | (440) | 470 | |
Closing net book value | 37,150 | 37,936 | 38,045 |
9. Net borrowings
6 months ended | 6 months ended | Year ended | |
30 September 2013 | 30 September 2012 | 31 March 2013 | |
£000 | £000 | £000 | |
Total cash and cash equivalents at beginning of the period | 11,293 | 8,950 | 8,950 |
Loans at beginning of the period | (21,066) | (38,919) | (38,919) |
Net borrowings at beginning of the period | (9,773) | (29,969) | (29,969) |
Increase in cash | 1,223 | 806 | 2,069 |
Net (proceeds from)/repayment of borrowings | (2,882) | 737 | 18,169 |
Net foreign exchange difference - cash | (136) | (216) | 274 |
Net foreign exchange difference - loans | 520 | 388 | (316) |
Total movement in net borrowings | (1,275) | 1,715 | 20,196 |
Total cash and cash equivalents at end of the period | 12,380 | 9,540 | 11,293 |
Loans at end of the period | (23,428) | (37,794) | (21,066) |
Net borrowings at end of the period | (11,048) | (28,254) | (9,773) |
Net borrowings exclude unamortised debt issue costs, which amounted to £154,000 at 30 September 2013 (30 September 2012: £462,000 and 31 March 2013: £308,000).
The Group's revolving credit facility expires on 27 July 2015. At 30 September 2013 exchange rates, the facility was £79,964,000 (30 September 2012: £79,697,000 and 31 March 2013: £81,381,000). Provided covenants continue to be met, the draw downs under the revolving credit facility are at the discretion of the Group and consequently the loan is treated as non-current. At 30 September 2013, the Group had available £56,536,000 (30 September 2012: £41,903,000 and 31 March 2013: £60,315,000) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.
10. Capital commitments and contingent liabilities
At 30 September 2013, the Group had capital commitments of £5,193,000 (30 September 2012: £1,877,000; 31 March 2013: £2,215,000) principally relating to the acquisition of new plant and machinery.
In the ordinary course of business, the Group may issue performance and advance payment guarantees to third parties. As at 30 September 2013 £3,798,000 (30 September 2012: £2,759,000; 31 March 2013: £3,760,000) were outstanding. The Directors are of the opinion that the risk to the Group associated with these guarantees is not material and consequently no provision is recorded.
The Group has received grant assistance from the UK government's Regional Growth Fund which is conditional on certain job targets being achieved in future years. The Directors are of the opinion that the risk of not achieving these targets is not material and consequently no provision is recorded for the repayment of such grants
11. Employment and post-employment benefits
In addition to the state pension scheme, e2v semiconductors SAS has arrangements where there are obligations to provide termination allowances and 'Medailles du Travail' (long service awards), and e2v SAS has obligations to provide termination allowances. These are unfunded arrangements and the actuarial liability has been calculated at 30 September 2013 by a qualified actuary using the projected unit credit method. The cost of providing these benefits is charged to the income statement in the period in which those benefits have been earned by the employees. See note 1 for changes in accounting applied during the year.
12. Fair values
Set out below is a comparison by category of carrying amounts and fair values of the Group's financial instruments that are carried in the financial statements:
30 September 2013 | |||
Carrying value | Fair value | ||
£000 | £000 | ||
Financial assets | |||
Derivative financial instruments recognised at fair value through profit or loss | 805 | 805 | |
Cash and cash equivalents | 12,380 | 12,380 | |
13,185 | 13,185 | ||
Financial liabilities | |||
Floating rate borrowings | (23,274) | (23,428) |
The carrying value of interest bearing loans and borrowings is after a deduction for unamortised debt issue costs of £154,000.
Financial risk management
The risks associated with the Group's financial instruments are detailed in note 31 of the Group's 2013 Annual Report. There have been no changes in the risks and the management thereof since 31 March 2013.
Fair value hierarchy
The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of inputs used in making measurements of fair value. The fair value hierarchy has the following levels:
Level 1 quoted prices (unadjusted) in active markets for identifiable assets or liabilities;
Level 2 inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices); and
Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair value of forward currency contracts is calculated by management based on external valuations received from the Group's bankers which are based on forward exchange rates. The fair value measurement basis of the instruments is categorised within Level 2. The carrying amount of the other financial instruments of the Group, i.e. short term trade receivables, payables and provisions that are not included in the above table, is a reasonable approximation of fair value.
13. Related party disclosures
Transactions between Group subsidiaries have been eliminated on consolidation. A list of subsidiaries can be found in the notes to e2v technologies plc, the parent company, financial statements in the Group's 2013 Annual Report.
Directors' statement of responsibilities
The Directors confirm that to the best of their knowledge:
(a) the condensed set of financial statements has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union;
(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
The Directors of e2v technologies plc and their respective responsibilities are listed in the Group's Annual Report for the year ended 31 March 2013. The following changes have occurred since that date: Antony Reading retired and Keith Attwood resigned from the Board on 17 July 2013 and 30 August 2013, respectively. Alison Wood was appointed as a Director on 17 July 2013.
On behalf of the Board
N Johnson C Hindson
Chairman Group Finance Director
1 November 2013 1 November 2013