5 Nov 2012 07:00
5 November 2012
e2v technologies plc
Half-year results for the six months to 30 September 2012
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 2012:
Highlights
| 6 months ended 30 September 2012 £m | 6 months ended 30 September 2011 £m |
Revenue (excluding disposal businesses)(1) | 90.7 | 108.6 |
Adjusted(2) operating profit | 13.9 | 19.9 |
Adjusted(2) profit before tax | 13.1 | 18.2 |
Profit before tax | 14.4 | 13.1 |
Net borrowings | 28.3 | 32.0 |
Adjusted(3) earnings per share | 4.5p | 6.0p |
Earnings per share | 5.3p | 4.4p |
Interim dividend per share | 1.3p | 1.3p |
·; Disposal of non-core businesses, for total cash consideration of £14m
·; Revenue (excluding disposal businesses)(1) at £90.7m (H1 2012: £108.6m)
·; Operating cost savings of £5m achieved in H1
·; Adjusted(2) operating profit margin at 15% (H1 2012: 18%)
·; Order book for the second half at £88m (30 September 2011: £90m)
·; Strong second half anticipated
·; Interim dividend maintained at 1.3p
·; Successful migration of US operations to new facilities on time and on budget
The Board announces an interim dividend of 1.3 pence per share. This will be paid on 17 December 2012 to e2v shareholders on the register as at 30 November 2012.
Commenting on the results, Keith Attwood, Chief Executive said:
"The business has responded well to the challenges in our end user markets and the delays experienced in order bookings. The ongoing cost control, drawing on the flexible cost base we previously put in place and implementing further restructuring, results in a profit margin in line with management's expectations. We fully appreciate the contribution our staff are making.
We have made progress on strategic contracts, although no revenue is anticipated from vermiculite this year. Order book for delivery in the second half is £88m, which compares with last year at £90m, and provides good visibility of revenue for the second half. This, combined with ongoing cost control and the pipeline of opportunities, supports our view that the business remains in good shape to deliver a strong second half performance, and continues to be well positioned for growth thereafter."
Further enquiries:
e2v technologies plc | ||
Keith Attwood, Chief Executive Charles Hindson, Group Finance Director | Tel: +44 (0)1245 493493 | |
Website: www.e2v.com | ||
Pelham Bell Pottinger | ||
Archie Berens / Charles Goodwin | Tel: +44 (0)20 7861 3112 |
Notes
(1) Excludes the Group's non-core activities disposed in May 2012 and October 2012.
(2) Adjusted operating profit is before amortisation of acquired intangible assets and operating specific items. Adjusted profit before tax is before amortisation of acquired intangible assets and all specific items.
(3) Adjusted earnings is profit before amortisation of acquired intangible assets and all specific items less tax where applicable.
Interim management report
Review of the half-year
SUMMARY AND OUTLOOK
e2v has responded well to the challenges posed by the general external environment, lower demand from certain end user markets and delays in order bookings although technical issues have led to delayed revenue on space and defence programmes. We have drawn on the flexibility established in the cost base, with ongoing cost control and further restructuring underway, resulting in the profit margin of the business being in line with management's expectations. With improved order coverage for the second half and key actions for opportunity pipeline conversion to orders, we remain cautious but anticipate a strong trading performance for the remainder of this financial year.
Revenue excluding the disposal businesses was £90.7m (H1 2012: £108.6m), reflecting deferred orders for US and UK defence, lower demand in our commercial and industrial businesses, and delayed revenue in space.
Adjusted(1) operating profit of £13.9m (H1 2012: £19.9m) represents a margin of 15% (H1 2012: 18%). The actions management have taken have reduced the cost base by £5m in the period, demonstrating the resilience of the Group.
Our net borrowings at 30 September 2012 were £28.3m (H1 2012: £32.0m).
The disposal of our remaining non-core businesses on the 16 May 2012 for £14m completed our portfolio realignment programme. Operating costs savings of £5m were achieved through ongoing cost control and we have a further restructuring programme underway primarily in the UK at our Chelmsford facility. We have completed the transfer of our US operations into our new US facility, on time and budget, supporting our growth in this key market. Our change programme for space projects is progressing with ongoing recruitment and process improvement, recovering programme delays. We have also established an inventory reduction programme in the first quarter, with the benefit targeted for the second half of the year.
The order book for delivery in the coming 12 months was £114m (H1 2012: £120m), a decrease of £6m. Excluding the anticipated fulfilment of the last time buy orders, the disposal of the non-core businesses and delays in the cycle of radiotherapy orders, there has been modest growth in the rest of the order book. Our six month order book for our continuing business is £88m (H1 2012: £90m).
We have made progress on a number of key strategic initiatives during the period. We have received the initial order under a multi-year development agreement with Rio Tinto, covering the design and supply of large-scale ProWaveTM microwave generators for use in projects to improve the efficiency of copper recovery. In space, we were pleased to have booked a multi-year order with the China Academy of Space Technology (CAST). We were also pleased to have recently announced the signing of a memorandum of understanding with Micron Technology, to build upon our strategic partnerships with Freescale, Everspin and Maxim. In October we were awarded a further £3.8m of funding from the Regional Growth Fund in the UK to help support our strategic plan for growth within the space imaging business.
Outlook
Our order book for delivery in the second half of £88m, along with anticipated opportunity pipeline conversion, provides visibility of stronger second half revenue compared with the first half. Whilst we remain cautious, we anticipate a strong second half performance and therefore our outlook for the full year remains unchanged. The Group continues to be well positioned for growth thereafter.
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 lower by 5% at £37.9m (H1 2012: £39.9m). This reflects lower demand in our commercial and industrial business, partly offset by growth in electronic countermeasures, with radiotherapy being steady.
In radiotherapy we deliver high performance, high reliability products and provide the continuity for long term spares requirements that our radiotherapy customers require. OEM demand in radiotherapy has been strong in the second quarter and we anticipate that we will continue to supply two of our strategic customers under existing terms, whilst the multi-year contracts are being finalised, and we will provide updates on progress this quarter. The reduction in order book relating to these multi-year orders is £9m.
We provide components and sub-systems for 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. After project delays, progress is being made on our development contract for an F15 upgrade programme which we anticipate will move into production in the second half. This represents a significant opportunity for the Group and is a component in a large US/Saudi export contract.
Our novel application of microwave and high power RF to the industrial processing of bulk materials has the potential to deliver transformational economics in process efficiency, energy consumption and material yield improvements in established sectors. In industrial processing systems, we have signed a development agreement with Rio Tinto, covering the design and supply of large-scale ProWaveTM microwave and radio frequency generators for use in projects to improve the efficiency of mineral recovery. The agreement follows on from the signing of a memorandum of understanding earlier this year and forms a framework under which e2v will scale up microwave generation to that required by Rio Tinto. Successful completion of the development phase, anticipated at around two years, could then lead to the supply of mine-ready microwave equipment.
The vermiculite system's extended field trials have identified a number of technical challenges and we have a programme of work with the University of Nottingham to determine viability. No revenue from this application is now expected in the current financial year.
The remaining product lines in the division largely provide technology for commercial and industrial applications and activity has now steadied in these sectors, whilst being substantially lower than the comparable period. Whilst remaining cautious, we anticipate improvement in orders for delivery in the second half. The cost flexibility built into the business has been instrumental in materially improving operating margins. Reflecting changes in the markets for our component businesses generally, we have commenced some further restructuring of our Chelmsford based operation.
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 lower by 14% at £27.7m (H1 2012: £32.3m). Excluding one-off last time buys, sales were effectively flat.
In machine vision, our camera platforms provide sensitive, high speed performance for high end 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 some continued softening in the first quarter for industrial process control applications, although shows signs of steadying in the second quarter. Our new CMOS based line scan camera is well positioned for identified next generation flat panel inspection systems for installation in coming months and for smaller consumer electronics production applications.
We provide high performance sensors enabling high end scientific instruments. Scientific imaging is down on the comparable period reflecting lower end user demand for existing product lines although our new 8 micron high performance sensor for life science applications has performed well, securing preliminary orders from our major customers. We anticipate a return to the regular order call-offs in the second half.
We have a long established heritage of providing reliable, high performance, high quality space qualified imaging sensors and arrays for space science and astronomy applications and high speed, high resolution sensors for earth observation satellites. Space imaging is down on the comparable period despite the strong order book with technical issues resolved in the first quarter leading to the anticipated recovery of programme milestones in the second half. We were pleased to have booked a multi-year order for CAST for the provision of imaging sensors. Though later than planned, this programme will contribute revenue in the second half. We initiated last year specific programmes in the UK and France to recruit additional staff and improve processes in our space business. This has enabled us to recover programme delays although not as quickly as we intended with these initiatives. 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 applications for our imaging technology including CMOS dental 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 overall reflecting strong demand, primarily for our dental sensors as well as our industrial CMOS sensors. Overall margins in the division reflect the reduction in one-off revenue as well as the delayed milestones on space programmes.
Hi-rel semiconductor solutions
The Hi-rel semiconductor solutions division addresses two main sectors: Semiconductor Lifecycle Management (SLiM™) and aerospace and defence semiconductors.
Sales for Hi-rel semiconductor solutions decreased 31% to £25.1m (H1 2012: £36.4m). This reflects the anticipated reduction in 68k microprocessor revenue as well as the continued decline in the smart sensors business.
SLiM™ is our new approach to 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. In SLiM™, as anticipated, revenue is lower than the comparable period last year, which included the completion of the first phase of our 68k microprocessor SLiM™ programme. The estimated future revenue from our portfolio of SLiM™ programmes has remained stable at around £20m 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.
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 two new product line introductions, which have offset some softening in demand for our legacy products in the US. In Europe, customer demand is generating increased activity for assembly and test services in the second half. Current trading includes the anticipated decline in the smart sensor business with our planned exit from the sector. Order intake has remained steady, with the anticipated replenishment of the order profile in the second half, partly from an uncertain US A&D market.
We are pleased to announce that in October we signed a memorandum of understanding with Micron Technology to be an aftermarket provider of certain Micron memory products for aerospace, industrial and defence customers. This is in addition to our existing strategic partnerships with Freescale, Everspin and Maxim.
The staffing flexibility that we had established in our Grenoble business allowed us to largely accommodate the lower levels of activity, along with careful cost control in the US as we moved into the new facility in July, resulting in margins in line with our expectations despite the lower level of output.
Geographic expansion
The successful migration of our US operations to our new facility has been completed on time and budget. 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 we expect local manufacture in China to commence in the second half.
Central functions and other businesses
The portfolio of businesses that were managed in the corporate centre, covering x-ray detectors, gas sensors and air quality sensors was sold on the 16 May 2012 for initial net proceeds of £11.4m. There were deferred arrangements made for the industrial gas sensors business of e2v technologies (UK) Ltd which completed on 31 October 2012 generating net proceeds of £0.5m and at 30 September 2012 the net assets of this business continue to be recorded as assets held for sale.
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 and part of our sales expansion principally in Asia, these were £1.7m (H1 2012: £1.9m).
FINANCIAL REVIEW
The results for the first half of the financial year ending 31 March 2013 reflect the challenging market conditions, no contribution from our industrial processing systems business within RF power solutions with a slower start on Rio Tinto and no contribution from the vermiculite programme, and delays on space and US defence programmes partially offset by the ongoing cost reduction activities.
Revenue excluding the disposal businesses was £90.7m (H1 2012: £108.6m). The comparable period included one-off revenue of £3.9m. The revenue achieved from the rest of the business is therefore lower by 13% from the comparable period. New business, being new products or new customers supplied so far in this financial year, made up approximately 10% of sales (H1 2012: 15%), marginally below 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 28% (H1 2012: 32%), reflecting the delayed milestones in space programmes.
In the main application segments, sales were up in electronic countermeasures by 21% and revenue was maintained in radiotherapy. In machine vision revenue was down by 23%, scientific imaging was down 9% reflecting softer demand in the first quarter, with space down 24% due to delayed milestones and aerospace and defence semiconductors revenue was down 28% reflecting the anticipated reduction in 68k microprocessors. In the remainder of the Group's activities sales were down 14% reflecting the tough trading conditions. On a rolling 12 month basis the percentage of sales outside Western Europe have increased to 54% (H1 2012: 49%).
Gross profit before specific items decreased by 17% to £36.8m (H1 2012: £44.5m) reflecting the lower revenue although cost reduction activities maintained the gross margin at 41%. There has been ongoing cost reduction activity and continued action to address low margin product lines, including rationalisation of the product portfolio, selective price increases, along with yield and other production improvements.
Net research and development expenditure decreased to £5.7m (H1 2012: £7.6m) representing 6% of revenue with investment focused on the key growth programmes, and is after the benefit of increased grant funding both in the UK and France of £1.1m in the period. 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 increased marginally by £0.2m to £7.9m (H1 2012: £7.7m). This reflects the expansion in the US and Asian platforms offset by some cost savings made in Europe.
Administrative expenses, excluding amortisation of acquired intangibles, business improvement programme costs, profit on sale of businesses and fair value movements on foreign exchange contracts, were maintained at £9.3m (H1 2012: £9.2m).
Amortisation of acquired intangible assets decreased to £1.3m (H1 2012: £2.2m) 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 £0.2m (H1 2012: losses £0.8m). The trading results of the Group's non-core businesses of £0.4m, which were disposed in May 2012 and October 2012, have been treated as specific items for the period, with the prior period restated accordingly (see note 4). The profit recognised on the disposal is the net of exchange differences recycled from reserves of £2.4m and a loss on sale of £0.1m.
During the period, a restructuring and site consolidation programme has commenced at the Chelmsford site, with further restructuring ongoing. The total cost of the programme is estimated at c.£5m of which, £0.5m has been recognised in the first half.
The adjusted(1) operating profit margin at 15% (H1 2012: 18%) was in line with management's expectations.
Finance costs before specific items decreased by 54% to £0.8m (H1 2012: £1.6m) reflecting the lower levels of borrowings and the reduced margin payable on the bank facility entered into in July 2011. The resulting adjusted(1) profit before tax decreased by 28% to £13.1m (H1 2012: £18.2m).
Profit before tax increased by 10% to £14.4m (H1 2012: £13.1m) reflecting the gain in the period principally due to the recycling of the exchange differences on the sale of the non-core businesses as well as the lower amortisation and restructuring costs.
The underlying tax rate for the first half was 28% (H1 2012: 30%) due a combination of both the lower corporation tax rate in the UK and a higher proportion of taxable profits in the UK.
Adjusted(2) earnings per share decreased to 4.5p (H1 2012: 6.0p) and reported earnings per share amounted to 5.3p (H1 2012: 4.4p).
Operating cash flow in the first half was £5.4m (H1 2012: £17.0m). The reduction reflects the lower operating profit and increased working capital of £13.3m. Of which, £5.2m relates to increased inventory, the majority reflecting delays on projects, £4.1m relating to payment of non-trade payables and restructuring programmes absorbing £2.8m. We have established a programme for inventory reduction, which is anticipated to benefit the second half. Tax payments were £2.1m (H1 2012: £6.3m), reflecting reduced payments on account. Net proceeds from the disposal of the non-core businesses amounted to £11.4m. After capital expenditure, other financing costs, final dividends of £5.9m and movements due to exchange rates, the overall decrease in net borrowings in the period amounted to £1.7m. In the second half of this financial year, we anticipate that around £2.5m of the restructuring costs will be incurred.
At 30 September 2012 net borrowings amounted to £28.3m. The total drawings under the bank facility arrangement were £37.8m of which £24.4m was drawn in Sterling with the balance being drawn in US dollars. The unutilised facility (at 30 September 2012 exchange rates) is £41.9m, £30.5m of which is Sterling denominated, £4.4m is Euro dominated with the balance being US dollar denominated.
The order book has shown modest growth when compared with last year excluding the anticipated fulfilment of last time buy orders (reduction of £4m) and disposal of the non-core businesses (reduction of £6m), and delays in the cycle of radiotherapy orders (reduction of £9m). These continue under short term arrangements with two of our radiotherapy customers.
The Group's total order book as at 30 September 2012 was £138m (30 September 2011: £146m), representing a decrease of £8m. Similarly, the order book for delivery over the coming 12 months was £114m (30 September 2011: £120m), a decrease of £6m. Our sequential order book excluding the disposed of businesses is stable at £137m (31 March 2012: £136m) and our sequential 12 month order book on the same basis also remained stable.
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 23 and 24 of the Annual Report and Financial Statements for the year ended 31 March 2012, 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, Euro destabilisation, competition including advancement in technology, IT security, failure of suppliers, supply chain disruption, intellectual property, legal and regulatory, people, acquisitions and treasury.
The Group continues to monitor its exposure to risk associated with the continued uncertainty associated with the Eurozone. Trading exposure is limited, with sales into Greece, Ireland, Italy, Portugal and Spain representing 2.5% (£2.3m) of total revenue in the half year. The Group is not exposed to any major operational or supply chain dependencies in these countries. Nor does it have any significant liquidity or funding risk in relation to these countries.
C Geoghegan K Attwood
Chairman Chief Executive Officer
Notes
(1) Adjusted operating profit is before amortisation of acquired intangible assets and operating specific items. Adjusted profit before tax is before amortisation of acquired intangible assets and all specific items.
(2) Adjusted earnings is profit before amortisation of acquired intangible assets and 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 2012 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 notes 1 to 14. 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 guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
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 Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
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 condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
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 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Ernst & Young LLP
Cambridge
2 November 2012
1. The maintenance and integrity of the e2v website is the responsibility of the Directors; the work carried out by the auditor does not involve consideration of these matters, and accordingly, the auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Consolidated income statement (unaudited)
Six months ended 30 September 2012
6 months ended 30 September 2012 | 6 months ended 30 September 2011 | Year ended 31 March 2012 | ||||||
Before specific items & acquired intangible asset amortisation | Specific items & acquired intangible asset amortisation (Note 3) |
Total | Before specific items & acquired intangible asset amortisation Restated | Specific items & acquired intangible asset amortisation (Note 3) Restated | Total | Total | ||
Notes | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
Revenue | 2 | 90,677 | 3,280 | 93,957 | 108,633 | 6,588 | 115,221 | 234,615 |
Cost of sales | (53,924) | (2,697) | (56,621) | (64,177) | (6,898) | (71,075) | (144,634) | |
Gross profit | 36,753 | 583 | 37,336 | 44,456 | (310) | 44,146 | 89,981 | |
Research and development costs | (5,670) | (220) | (5,890) | (7,626) | (571) | (8,197) | (15,674) | |
Selling and distribution costs | (7,959) | (106) | (8,065) | (7,733) | (528) | (8,261) | (17,597) | |
Administrative costs | (9,263) | 987 | (8,276) | (9,235) | (3,023) | (12,258) | (21,504) | |
Operating profit | 13,861 | 1,244 | 15,105 | 19,862 | (4,432) | 15,430 | 35,206 | |
Finance costs | 5 | (752) | - | (752) | (1,627) | (779) | (2,406) | (3,252) |
Finance revenue | 5 | 12 | - | 12 | 7 | 59 | 66 | 89 |
Profit before taxation | 13,121 | 1,244 | 14,365 | 18,242 | (5,152) | 13,090 | 32,043 | |
Income tax expense | 6 | (3,643) | 554 | (3,089) | (5,473) | 1,631 | (3,842) | (8,503) |
Profit for the period | 9,478 | 1,798 | 11,276 | 12,769 | (3,521) | 9,248 | 23,540 | |
Attributable to: | ||||||||
Equity holders of the Company | 9,478 | 1,798 | 11,276 | 12,769 | (3,521) | 9,248 | 23,540 | |
Earnings per share | ||||||||
Basic | 7 | 4.47p | 5.32p | 6.04p | 4.37p | 11.12p | ||
Diluted | 7 | 4.36p | 5.19p | 5.97p | 4.32p | 10.86p |
Consolidated statement of comprehensive income (unaudited)
Six months ended 30 September 2012
6 months ended | 6 months ended | Year ended | |||
Notes | 30 September 2012 | 30 September 2011 | 31 March 2012 | ||
£000 | £000 | £000 | |||
Exchange differences on retranslation of foreign operations | (3,205) | (656) | (3,682) | ||
Exchange differences recycled on disposal of non-core businesses | 4 | (2,428) | - | - | |
Exchange differences on net investment hedges | (323) | 720 | 80 | ||
Current tax on exchange differences | 79 | (188) | (22) | ||
Actuarial losses on post-employment benefits | (318) | (111) | (333) | ||
Deferred tax on actuarial losses on post-employment benefits | 110 | 38 | 107 | ||
Other comprehensive expense for the period | (6,085) | (197) | (3,850) | ||
Profit for the period | 11,276 | 9,248 | 23,540 | ||
Total comprehensive income for the period | 5,191 | 9,051 | 19,690 | ||
Attributable to: | |||||
Equity holders of the Company | 5,191 | 9,051 | 19,690 |
Consolidated statement of financial position (unaudited)
As at 30 September 2012
30 September 2012 | 30 September 2011 | 31 March2012 | ||||
Notes | £000 | £000 | £000 | |||
ASSETS | ||||||
Non-current assets | ||||||
Property, plant and equipment | 9 | 37,936 | 32,140 | 36,616 | ||
Intangible assets | 78,161 | 92,727 | 80,375 | |||
Deferred income tax asset | 7,946 | 9,840 | 8,122 | |||
124,043 | 134,707 | 125,113 | ||||
Current assets | ||||||
Inventories | 47,895 | 47,773 | 43,584 | |||
Trade and other receivables | 41,647 | 44,914 | 45,051 | |||
Other financial assets | 423 | 21 | 193 | |||
Income tax receivable | 1,122 | 1,738 | 2,185 | |||
Cash at bank and in hand | 11 | 9,540 | 7,930 | 8,629 | ||
Assets held for sale | 613 | - | 15,050 | |||
Total current assets | 101,240 | 102,376 | 114,692 | |||
Total assets | 225,283 | 237,083 | 239,805 | |||
LIABILITIES | ||||||
Current liabilities | ||||||
Trade and other payables | (39,308) | (50,320) | (49,286) | |||
Other financial liabilities | - | (263) | (3) | |||
Income tax payable | (1,522) | (1,808) | (1,490) | |||
Provisions | (6,879) | (12,979) | (8,560) | |||
Liabilities directly associated with assets classified as held for sale | - | - | (1,918) | |||
Total current liabilities | (47,709) | (65,370) | (61,257) | |||
Net current assets | 53,531 | 37,006 | 53,435 | |||
Non-current liabilities | ||||||
Borrowings | 11 | (37,332) | (39,149) | (38,303) | ||
Provisions | (784) | (469) | (853) | |||
Employment and post-employment benefits | 12 | (4,004) | (3,156) | (3,468) | ||
Deferred income tax liabilities | (4,014) | (5,881) | (4,488) | |||
Total non-current liabilities | (46,134) | (48,655) | (47,112) | |||
NET ASSETS | 131,440 | 123,058 | 131,436 | |||
CAPITAL AND RESERVES | ||||||
Called up share capital | 10,750 | 10,743 | 10,747 | |||
Share premium | 41,828 | 41,791 | 41,809 | |||
Merger reserve | 44,557 | 44,557 | 44,557 | |||
Own shares reserve | (2,118) | (2,182) | (2,182) | |||
Capital redemption reserve | 274 | 274 | 274 | |||
Foreign currency translation reserve | (4,575) | 4,802 | 1,302 | |||
Retained earnings | 40,724 | 23,073 | 34,929 | |||
TOTAL SHAREHOLDERS' FUNDS ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY |
| 131,440 | 123,058 | 131,436 | ||
Consolidated statement of cash flows (unaudited)
Six months ended 30 September 2012
6 months ended | 6 months ended | Year ended | ||||
30 September 2012 | 30 September 2011 | 31 March 2012 | ||||
Notes | £000 | £000 | £000 | |||
Cash flows from operating activities | ||||||
Profit before tax | 14,365 | 13,090 | 32,043 | |||
Net finance costs | 740 | 2,340 | 3,163 | |||
Operating profit | 15,105 | 15,430 | 35,206 | |||
Adjustments to reconcile to net cash inflows from operating activities | ||||||
Depreciation of property, plant and equipment | 9 | 3,935 | 4,373 | 7,793 | ||
Reversal of previous impairment loss | - | (403) | (433) | |||
Profit on sale of property, plant and equipment | (12) | (146) | (774) | |||
Gain on disposal of non-core businesses | 4 | (2,333) | - | - | ||
Amortisation of intangible assets | 1,840 | 2,860 | 5,604 | |||
Impairment of assets held for sale | - | - | 1,650 | |||
Fair value (gains)/losses on foreign exchange contracts | (239) | 757 | 355 | |||
Share based payment charges | 442 | 322 | 559 | |||
Increase in inventories | (5,152) | (568) | (1,860) | |||
Decrease in trade and other receivables | 3,868 | 5,279 | 1,727 | |||
Decrease in trade and other payables | (10,515) | (6,770) | (4,925) | |||
Decrease in provisions | (1,532) | (4,104) | (7,511) | |||
Cash generated from operations | 5,407 | 17,030 | 37,391 | |||
Income taxes paid | (2,090) | (6,288) | (10,798) | |||
Net cash from operating activities | 3,317 | 10,742 | 26,593 | |||
Cash flows from investing activities | ||||||
Proceeds from sale of property, plant and equipment | 12 | 217 | 1,007 | |||
Interest received | 12 | 7 | 7 | |||
Proceeds from disposal of non-core businesses | 4 | 11,380 | - | - | ||
Purchases of property, plant and equipment | 9 | (5,695) | (4,218) | (14,419) | ||
Purchases of software | (632) | (764) | (1,532) | |||
Expenditure on product development | (398) | (403) | (767) | |||
Net cash from/(used in) investing activities | 4,679 | (5,161) | (15,704) | |||
Cash flows from financing activities | ||||||
Interest paid | (543) | (804) | (1,501) | |||
Proceeds from issue of shares (net of issue costs) | 22 | 9 | 31 | |||
Dividends paid | 8 | (5,932) | (7,621) | (10,373) | ||
Payment of cancellation fee on interest rate swap | - | (109) | (109) | |||
Net repayment of borrowings | 11 | (737) | (1,144) | (1,951) | ||
Transaction costs of new bank loans raised | - | (821) | (821) | |||
Net cash used in financing activities | (7,190) | (10,490) | (14,724) | |||
Net increase/(decrease) in cash and cash equivalents | 806 | (4,909) | (3,835) | |||
Net foreign exchange difference | (216) | (47) | (101) | |||
Cash and cash equivalents at beginning of the period | 8,629 | 12,886 | 12,886 | |||
Cash and cash equivalents at beginning of the period classified as assets held for sale | 321 | - | - | |||
Total cash and cash equivalents at beginning of the period | 11 | 8,950 | 12,886 | 12,886 | ||
Cash and cash equivalents at end of the period | 9,540 | 7,930 | 8,629 | |||
Cash and cash equivalents at end of the period classified as assets held for sale | - | - | 321 | |||
Total Cash and cash equivalents at end of the period | 11 | 9,540 | 7,930 | 8,950 |
Consolidated statement of changes in equity (unaudited)
Six months ended 30 September 2012
|
Called up share capital |
Share premium |
Merger reserve |
Own shares |
Capital redemption reserve | Foreign currency translation reserve |
Retained Earnings |
Total Equity |
£000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
1 April 2011 | 10,742 | 41,783 | 44,557 | (2,182) | 274 | 4,926 | 21,147 | 121,247 |
Other comprehensive income | - | - | - | - | - | (124) | (73) | (197) |
Profit for the period | - | - | - | - | - | - | 9,248 | 9,248 |
Total comprehensive income | - | - | - | - | - | (124) | 9,175 | 9,051 |
Issue of shares | 1 | 8 | - | - | - | - | - | 9 |
Dividends paid | - | - | - | - | - | - | (7,621) | (7,621) |
Share based payment | - | - | - | - | - | - | 322 | 322 |
Deferred tax on share based payment |
- |
- |
- |
- |
- |
- |
50 |
50 |
30 September 2011 | 10,743 | 41,791 | 44,557 | (2,182) | 274 | 4,802 | 23,073 | 123,058 |
Other comprehensive income | - | - | - | - | - | (3,500) | (153) | (3,653) |
Profit for the period | - | - | - | - | - | - | 14,292 | 14,292 |
Total comprehensive income | - | - | - | - | - | (3,500) | 14,139 | 10,639 |
Issue of shares | 4 | 18 | - | - | - | - | - | 22 |
Dividends paid | - | - | - | - | - | - | (2,752) | (2,752) |
Share based payment | - | - | - | - | - | - | 237 | 237 |
Deferred tax on share based payment | - | - | - | - | - | - | 232 | 232 |
31 March 2012 | 10,747 | 41,809 | 44,557 | (2,182) | 274 | 1,302 | 34,929 | 131,436 |
Other comprehensive income | - | - | - | - | - | (5,877) | (208) | (6,085) |
Profit for the period | - | - | - | - | - | - | 11,276 | 11,276 |
Total comprehensive income | - | - | - | - | - | (5,877) | 11,068 | 5,191 |
Issue of shares | 3 | 19 | - | - | - | - | - | 22 |
Loss on issue of treasury shares | - | - | - | 64 | - | - | (64) | - |
Dividends paid | - | - | - | - | - | - | (5,932) | (5,932) |
Share based payment | - | - | - | - | - | - | 442 | 442 |
Deferred tax on share based payment | - | - | - | - | - | - | 281 | 281 |
30 September 2012 | 10,750 | 41,828 | 44,557 | (2,118) | 274 | (4,575) | 40,724 | 131,440 |
Notes to the half-yearly financial statements
Six months ended 30 September 2012
1. Basis of preparation and significant accounting policies
Basis of preparation
These condensed half-yearly financial statements have been prepared in accordance with the accounting policies set out in the Group's 2012 Annual Report, except as detailed below with reference to the definition of specific items as utilised for reporting adjusted operating profit measures.
The Group's non-core activities comprised the businesses of e2v scientific instruments Ltd, MiCS Microchemical Systems SA and e2v microsensors SA, and the industrial gas sensors business of e2v technologies (UK) Ltd. These businesses did not constitute a separately reportable segment and were not considered a major line of business for the Group. Consequently for internal reporting purposes, these businesses were combined with the Centre-corporate activities and do not meet the definition of a discontinued operation under IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations'. These non-core activities were sold by the Group in May and October 2012. Following these disposals, to ensure the accurate reporting of the underlying performance of the Group, management has determined that it is appropriate to include the revenue and profits associated with the disposed businesses for the current and previous financial periods as specific operating items. Whilst total reported revenue, operating profit and profit after tax remain unchanged, adjusted revenue, adjusted operating profit and adjusted profit after tax are affected and the comparative information has been restated for these disposals. For the 6 months ended 30 September 2011 adjusted revenue, adjusted operating profit and adjusted profit after tax have decreased by £6,588,000, £132,000 and £74,000, respectively and for the year ended 31 March 2012 adjusted revenue, adjusted operating profit and adjusted profit after tax have decreased by £14,800,000, £842,000 and £735,000, respectively. Segmental information included in note 2, has been restated to take account of this.
These financial statements have also been prepared in accordance with IAS 34 'Interim Financial Reporting' and the Disclosure and Transparency Rules of the Financial Services 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.
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 2012 in these condensed half-yearly financial statements does not constitute statutory financial statements as defined in Section 435 of the Companies Act 2006 and has been extracted from the Group's 2012 Annual Report which has been filed with the Registrar of Companies. The auditor's report on the financial statements contained within the Group's 2012 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 2 November 2012.
Significant accounting policies
During the period the Group has adopted the following new standards, amendments to standards and interpretations issued under IFRS:
·; IFRS 1, 'Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters': to replace references to a fixed date of '1 January 2004' with the date of transition to IFRSs, and to provide guidance on how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation.
·; IFRS 7, 'Disclosures - Transfers of Financial Assets': Amendments introducing enhanced disclosure requirements to ensure that users are able to improve their understanding of transfer transactions of financial assets (for example, securitisations), including the possible effects of any risks that may remain with the entity.
·; IAS 12, 'Deferred Tax: Recovery of Underlying Assets' to provide a presumption that recovery of the carrying amount of an asset measured using the fair value model in IAS 40 will, normally, be through sale.
The adoption of these standards has had no financial effect on the Group for the current period. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
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 and sub-systems in three main application areas: 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 and cameras in three main application areas: machine vision; space imaging; and scientific imaging.
Hi-rel semiconductor solutions which provides high reliability semiconductors and services in two main application areas: semiconductor lifecycle management under the Group's SLiMTM brand; and aerospace and defence semiconductors.
All other, reported below, includes the results of the Group's activities which have been disposed of during the current financial period. The results of these operations, as detailed in note 3, 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 for 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 2012 | £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 | - | - | - | - | (1,666) | (1,666) |
Exchange differences | - | - | - | - | 656 | 656 |
Adjusted operating profit/(loss) | 6,851 | 2,405 | 5,615 | - | (1,010) | 13,861 |
Specific operating items and acquired intangible asset amortisation | (499) | 31 | (1,273) | 2,746 | 239 | 1,244 |
Operating profit/(loss) | 6,352 | 2,436 | 4,342 | 2,746 | (771) | 15,105 |
Net finance costs | (740) | |||||
Profit before tax | 14,365 | |||||
Tax charge | (3,089) | |||||
Profit for the period | 11,276 | |||||
Total assets | 23,268 | 30,346 | 87,046 | 490 | 84,133 | 225,283 |
6 months ended 30 September 2011 |
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 | 39,892 | 32,315 | 36,426 | - | - | 108,633 |
Specific revenue | - | - | - | 6,588 | - | 6,588 |
Revenue from external customers | 39,892 | 32,315 | 36,426 | 6,588 | - | 115,221 |
Segment result | ||||||
Adjusted segment profit | 4,564 | 4,722 | 11,483 | - | - | 20,769 |
Corporate costs | - | - | - | - | (1,868) | (1,868) |
Exchange differences | - | - | - | - | 961 | 961 |
Adjusted operating profit/(loss) | 4,564 | 4,722 | 11,483 | - | (907) | 19,862 |
Specific operating items and acquired intangible asset amortisation | 6 |
(1,629) | (1,847) | (256) | (706) |
(4,432) |
Operating profit/(loss) | 4,570 | 3,093 | 9,636 | (256) | (1,613) | 15,430 |
Net finance costs | (2,340) | |||||
Profit before tax | 13,090 | |||||
Tax charge | (3,842) | |||||
Profit for the period | 9,248 | |||||
Total assets | 24,031 | 27,638 | 86,896 | 14,083 | 84,435 | 237,083 |
Year ended 31 March 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 | 86,112 | 66,160 | 67,543 | - | - | 219,815 |
Specific revenue | - | - | - | 14,800 | - | 14,800 |
Revenue from external customers | 86,112 | 66,160 | 67,543 | 14,800 | - | 234,615 |
Segment result | ||||||
Adjusted segment profit | 12,533 | 10,297 | 21,059 | - | - | 43,889 |
Corporate costs | - | - | - | - | (3,854) | (3,854) |
Exchange differences | - | - | - | - | 990 | 990 |
Adjusted operating profit/(loss) | 12,533 | 10,297 | 21,059 | - | (2,864) | 41,025 |
Specific operating items and acquired intangible asset amortisation | (55) | (750) | (3,184) | (1,444) | (386) |
(5,819) |
Operating profit/(loss) | 12,478 | 9,547 | 17,875 | (1,444) | (3,250) | 35,206 |
Net finance costs | (3,163) | |||||
Profit before tax | 32,043 | |||||
Tax charge | (8,503) | |||||
Profit for the year | 23,540 | |||||
Total assets | 22,729 | 29,636 | 86,886 | 14,922 | 85,632 | 239,805 |
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 2012 | 30 September 2011 | 31 March 2012 | |
£000 | £000 | £000 | |
Revenue by destination | |||
United Kingdom | 15,171 | 16,520 | 36,949 |
North America | 37,770 | 40,699 | 82,672 |
Europe | 26,728 | 40,197 | 76,855 |
Asia Pacific | 12,779 | 15,862 | 34,063 |
Rest of the World | 1,509 | 1,943 | 4,076 |
93,957 | 115,221 | 234,615 |
30 September 2012 | 30 September 2011 | 31 March 2012 | |
£000 | £000 | £000 | |
Non-current assets (excluding taxes) | |||
United Kingdom | 36,608 | 36,416 | 35,799 |
North America | 41,575 | 34,979 | 37,319 |
Europe | 37,676 | 53,452 | 43,862 |
Asia Pacific | 238 | 20 | 11 |
116,097 | 124,867 | 116,991 |
3. Specific operating items and acquired intangible assets amortisation
6 months ended | 6 months ended | Year ended | |
30 September 2012 | 30 September 2011 restated | 31 March 2012 restated | |
£000 | £000 | £000 | |
Amortisation of acquired intangible assets | 1,281 | 2,158 | 3,795 |
Business improvement programme expenses, net | 460 | 192 | (1,008) |
Pre-disposal trading results associated with disposed non-core businesses | (413) | (132) | (842) |
Disposal of non-core businesses (see note 4) | (2,333) | - | 1,650 |
Fair value (gains)/losses foreign exchange contracts | (239) | 757 | 355 |
Last time build inventory provision | - | 1,665 | 2,510 |
Reversal of previous impairment loss | - | - | (433) |
Profit on sale of Lincoln site | - | (208) | (208) |
1,244 | 4,432 | 5,819 |
In response to the changing market conditions, principally for the RF power solutions component businesses, the Group has commenced a restructuring in Chelmsford during the period. The business improvement programme expenses of £460,000, which were incurred during the period, principally relate to termination and site consolidation costs.
The business improvement programme expenses/(credits) and reversal of the previous impairment loss recorded in the prior financial year relate to the programmes at Grenoble and Lincoln that had been initially provided in the year ended 31 March 2010. Whilst these programmes were principally complete at 31 March 2012, a provision of £2,108,000 remained in relation to the programme at the Grenoble facility. French termination payments are made for a period of up to 12 months after a person has the left the business and as such payments are expected to continue until December 2012.
During the period ended 30 September 2012 payments of £869,000 (6 months ended 30 September 2011: £4,218,000 and 6 months ended 31 March 2012: £2,951,000) have been made in respect of the Grenoble and Lincoln programmes. Payments of £246,000 have been made in respect of the Chelmsford programme during the period.
As detailed in note 1, the trading results of the Group's non-core businesses, which were disposed in May 2012 and October 2012, have been treated as specific items for the periods being reported. Note 4 provides details relating to the disposal of the Group's non-core businesses.
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 £239,000 (6 months ended 30 September 2011: loss £757,000; year ended 31 March 2012: loss £355,000).
4. Disposal of non-core businesses
As at 31 March 2012, the Group's non-core businesses were classified as a disposal group held for sale and on 16 May 2012, the Group disposed of e2v scientific instruments Ltd, MiCS Microchemical Systems SA and e2v microsensors SA. The net assets of these businesses on the date of disposal are detailed below.
£000 | |
Net assets | |
Property, plant and equipment | 1,349 |
Intangible assets | 6,528 |
Deferred tax assets | 115 |
Inventories | 3,092 |
Trade and other receivables | 3,467 |
Cash | 875 |
Trade and other payables | (2,045) |
Income tax payable | (109) |
Provisions | (45) |
Deferred tax liabilities | (277) |
Total net assets disposed | 12,950 |
Loss on disposal | (95) |
Total consideration | 12,855 |
Satisfied by: | |
Cash and cash equivalents | 12,255 |
Deferred consideration | 600 |
Total consideration | 12,855 |
Net cash inflow arising on disposal: | |
Cash, net of costs of disposal | 12,255 |
Cash transferred with the businesses | (875) |
Net cash proceeds on disposal | 11,380 |
Included in income statement: | 6 months ended | 6 months ended | Year ended |
30 September 2012 | 30 September 2011 | 31 March 2012 | |
£000 | £000 | £000 | |
Loss on disposal | (95) | - | - |
Exchange differences recycled from foreign currency translation reserve on disposal of non-core businesses | 2,428 | - | - |
Impairment of assets held for sale | - | - | (1,650) |
Net gain/(charge) (note 3) | 2,333 | - | (1,650) |
The effect of this disposal on the Group's results in the current and prior periods is disclosed in note 3. On recognising the disposal of the Swiss business, a gain of £2,428,000 has been recognised relating to the recycling of the accumulated exchange differences in respect of that operation. These had previously been recognised through other comprehensive income on translation of foreign operations at each period end. An impairment loss of £1,650,000 arising from the remeasurement of the disposal group's net assets to fair value less costs to sell had previously been recognised as a specific item for the year ended 31 March 2012. Therefore the net profit recognised with respect to the disposal over both periods is £683,000.
The industrial gas sensors business of e2v technologies (UK) Ltd was sold on 31 October 2012 for estimated net proceeds of £0.5m and at 30 September 2012 the net assets of this business continue to be recorded as assets held for sale.
5. Finance costs and finance revenue
6 months ended | 6 months ended | Year ended | ||
30 September 2012 | 30 September 2011 | 31 March 2012 | ||
£000 | £000 | £000 | ||
Finance costs | ||||
Bank loan interest | 529 | 891 | 1,493 | |
Other interest | 5 | - | 19 | |
Interest on employment and post-employment benefits | 64 | 74 | 145 | |
Amortisation of debt issue costs | 154 | 662 | 816 | |
Finance costs before specific costs | 752 | 1,627 | 2,473 | |
Specific costs | ||||
Write-off of debt issue costs | - | 779 | 779 | |
Total finance costs | 752 | 2,406 | 3,252 | |
Finance income | ||||
Bank interest receivable | 12 | 7 | 7 | |
Finance income before specific income | 12 | 7 | 7 | |
Specific income | ||||
Fair value adjustments to interest rate swaps | - | 59 | 82 | |
Total finance revenue | 12 | 66 | 89 |
6. 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 of 27% (30 September 2011: 29%), consistent with the previous period.
The UK government, with effect from 1 April 2012, reduced the main rate of UK Corporation tax from 25% to 24%. In addition the Finance Bill 2012 was substantially enacted on 3 July 2012, which will reduce the corporation tax rate to 23% with effect from 1 April 2013. The UK deferred tax balances as at 30 September 2012 have therefore been calculated based on the reduced corporation tax rate of 23%.
A further reduction in the main rate of UK corporation tax has been announced which will reduce the rate to 22% from 1 April 2014. This change had not been substantively enacted at the balance sheet date and consequently the effect of this is not included in these half-yearly financial statements.
7. 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 items and acquired intangible amortisation. 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 | 6 months ended | Year ended | |
30 September 2012 | 30 September 2011 | 31 March 2012 | |
Restated | Restated | ||
£000 | £000 | £000 | |
Profit for the period attributable to ordinary shareholders | 11,276 | 9,248 | 23,540 |
Amortisation of acquired intangible assets | 1,281 | 2,158 | 3,795 |
Business improvement programme expenses, net | 460 | 192 | (1,008) |
Operating items associated with disposed non-core activities | (413) | (132) | (842) |
Disposal of non-core activities | (2,333) | - | 1,650 |
Fair value (gains)/ losses on financial instruments | (239) | 698 | 273 |
Last time build inventory provision | - | 1,665 | 2,510 |
Reversal of previous impairment loss | - | - | (433) |
Profit on the sale of Lincoln site | - | (208) | (208) |
Write-off of debt issue costs | - | 779 | 779 |
Tax effect of the above | (554) | (1,631) | (1,755) |
Adjusted profit attributable to ordinary shareholders | 9,478 | 12,769 | 28,301 |
No. 000 | No. 000 | No. 000 | |
Weighted average number of ordinary shares | |||
For basic earnings per share | 211,833 | 211,689 | 211,710 |
Effect of dilution: | |||
Share options | 5,339 | 2,449 | 4,975 |
For diluted earnings per share | 217,172 | 214,138 | 216,685 |
Pence | Pence | Pence | |
Earnings per share | |||
Basic | 5.32 | 4.37 | 11.12 |
Adjusted basic | 4.47 | 6.04 | 13.37 |
Diluted | 5.19 | 4.32 | 10.86 |
Adjusted diluted | 4.36 | 5.97 | 13.06 |
8. Dividends paid and proposed
6 months ended | 6 months ended | Year ended | ||
30 September 2012 | 30 September 2011 | 31 March 2012 | ||
£000 | £000 | £000 | ||
Equity dividends on ordinary shares paid during period | ||||
2011 Interim dividend: 1.20p per share | - | 2,540 | 2,540 | |
2011 Final dividend: 2.40p per share | - | 5,081 | 5,081 | |
2012 Interim dividend: 1.30p per share | - | - | 2,752 | |
2012 Final dividend: 2.80p per share | 5,932 | - | - | |
5,932 | 7,621 | 10,373 |
On 2 November 2012 the Board declared an interim dividend of 1.3p per share, with a total dividend payment of £2,791,000. The interim dividend is to be paid on 17 December 2012 to shareholders registered at close of business on 30 November 2012 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.
9. Property, plant and equipment
6 months ended | 6 months ended | Year ended | ||
30 September 2012 | 30 September 2011 | 31 March 2012 | ||
£000 | £000 | £000 | ||
Opening net book value | 36,616 | 31,977 | 31,977 | |
Additions | 5,695 | 4,218 | 14,419 | |
Depreciation | (3,935) | (4,373) | (7,793) | |
Reversal of previous impairment loss | - | 403 | 433 | |
Disposals | - | (62) | (316) | |
Transfer to assets held for sale | - | - | (1,551) | |
Reclassifications | - | - | (92) | |
Exchange adjustment | (440) | (23) | (461) | |
Closing net book value | 37,936 | 32,140 | 36,616 |
10. Contingent assets, liabilities and capital commitments
The Group has signed an option to sell a vacant building and land at its facility in Grenoble, which at 30 September 2012 and 31 March 2012 are disclosed as assets held for sale. The option, which expires on 10 March 2013, includes a minimum sale price, net of anticipated costs, of £4 million; however this amount can increase depending upon the level of development achieved. Should the option not be exercised, and subject to certain conditions having been met, the Group will receive £0.8 million for non-exercise of the option. To facilitate this disposal the Board has authorised, at 30 September 2012, capital expenditure of £0.4 million, which is in addition to the capital commitments below.
In the ordinary course of business, the Group may issue performance and advance payment guarantees to third parties. As at 30 September 2012 £2,759,000 (30 September 2011: £2,519,000; 31 March 2012: £2,927,000) 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.
At 30 September 2012, the Group had capital commitments of £1,877,000 (30 September 2011: £1,825,000; 31 March 2012: £2,047,000) principally relating to the acquisition of new plant and machinery.
11. Net borrowings
6 months ended | 6 months ended | Year ended | |
30 September 2012 | 30 September 2011 | 31 March 2012 | |
£000 | £000 | £000 | |
Total cash and cash equivalents at beginning of the period | 8,950 | 12,886 | 12,886 |
Loans at beginning of the period | (38,919) | (40,972) | (40,972) |
Net borrowings at beginning of the period | (29,969) | (28,086) | (28,086) |
Increase/(decrease) in cash | 806 | (4,909) | (3,835) |
Repayment of borrowings | 737 | 1,144 | 1,951 |
Net foreign exchange difference - cash | (216) | (47) | (101) |
Net foreign exchange difference - loans | 388 | (91) | 101 |
Total movement in net borrowings | 1,715 | (3,903) | (1,884) |
Total cash and cash equivalents at end of the period | 9,540 | 7,930 | 8,950 |
Loans at end of the period | (37,794) | (39,919) | (38,919) |
Net borrowings at end of the period | (28,254) | (31,989) | (29,969) |
Net borrowings exclude capitalised borrowings costs which amounted to £462,000 at 30 September 2012 (30 September 2011: £770,000 and 31 March 2012: £616,000)
The Group's revolving credit facility expires on 27 July 2015. At 30 September 2012 exchange rates, the facility was £79,697,000 (30 September 2011: £80,886,000 and 31 March 2012: £80,128,000). 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 2012, the Group had available £41,903,000 (30 September 2011: £40,967,000 and 31 March 2012: £41,209,000) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.
12. Other post-employment and other employment benefits
In addition to the state pension scheme, e2v semiconductors SAS based in Grenoble has arrangements where there are obligations to provide termination benefits and benefits 'Medailles du Travail' - long service awards, and e2v SAS based in Paris has obligations to provide termination payments. These are unfunded arrangements and the actuarial liability has been calculated at 30 September 2012 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.
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 2012 Annual Report.
14. Post balance sheet event
On 31 October 2012, the Group sold, for estimated net proceeds of £0.5 million, the industrial gas sensors business, which at 30 September 2012 was recorded as an asset held for sale. This transaction completed the disposal of the Group's non-core businesses.
Directors' statement of responsibilities
The Directors confirm, to the best of their knowledge, that this condensed set of financial statements has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union, and that the interim management report includes a fair review of the information required by the Disclosure and Transparency Rules of the Financial Services Authority, paragraphs DTR 4.2.7R and DTR 4.2.8R.
The Directors of e2v technologies plc and their respective responsibilities are listed in the Group's Annual Report for the year ended 31 March 2012. There have been no changes since that date.
On behalf of the Board
K Attwood C Hindson
Chief Executive Officer Group Finance Director
2 November 2012 2 November 2012