E2V.L Regulatory News (E2V)

10 November 2014

e2v technologies plc

Half-year results for the six months ended 30 September 2014

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 2014:

· Good first half performance

· FY15 guidance on trading performance unchanged

· 12 month order book at £138m (30 September 2013: £130m)

· Strengthening operational foundations, management refresh

· AnaFocus acquired September 2014

· Today, launched "Our vision, our future"

The Board announces an interim dividend of 1.5 pence per share. This will be paid on 17 December 2014 to e2v shareholders on the register as at 28 November 2014.

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

"It is pleasing to report a good performance for the first half, consistent with our full year expectations. We continue to be cautious over the broader economic environment, including further adverse movements in exchange rates. Assuming no further deterioration in market conditions, our current expectations for the Group's full year trading performance remain unchanged.

My initial impressions of the business have been reinforced through engagement with customers, employees and shareholders. Customers value our technology and our people, and we look to become their trusted expert partner. Our employees are proud to work for e2v and are enthusiastic about driving change. "Bringing life to technology" captures our vision and provides clear direction for our future.

Going forward we will continue to focus on our customers, embed our new culture, grow organically with acceleration from acquisitions, sustain innovation and operate with excellence to unleash the potential of the business. We believe that these strategic drivers will enable us to achieve our goal of doubling the Group's adjusted operating profit by 2020."

Further enquiries:

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.

Interim management report

Review of the half-year

SUMMARY AND OUTLOOK

e2v has performed well in the first half, delivering results in line with expectations and completing the acquisition of AnaFocus, in a broader economic environment that continues to provide challenging trading conditions in some of our markets. We have made good progress during the period strengthening the operational foundations along with a management refresh within the senior team. We have launched "Our vision, our future". "Bringing life to technology" captures our vision and provides clear direction for our future.

Revenue was £102.3m (H1 2014: £98.1m), representing growth of 4%, after absorbing translational FX headwinds of 5%. In RF Power, growth reflects increased demand in radiotherapy, commercial and industrial, and defence. In Imaging, growth has come from industrial vision in Asia along with delivery of projects in space, with lower demand for thermal imaging. We have seen improved demand for semiconductors in the US offset by lower demand for microprocessors and assembly and test services in Europe, along with the anticipated decline in the smart sensor business.

Gross profit margin was higher than the comparable period, at 42% (H1 2014: 36%), reflecting the contribution from organic growth and changing revenue mix, with growth in higher margin product lines. Improved execution and delivery on space imaging programmes resulted in lower charges for inventory, and warranty costs were lower than the comparable period. Movement in exchange rates resulted in gains on the translation of working capital and on FX contracts of £1.5m, a swing of £2.3m compared to the loss of £0.8m in the comparable period.

Adjusted(1) operating profit of £17.5m (H1 2014: £12.0m) represents a margin of 17% (H1 2014: 12%), reflecting the increased gross profit, as reduced by increased costs from our continued expansion in the US and Asia.

Our net bank borrowings at 30 September 2014 were £8.5m (H1 2014: £11.0m), after the acquisition of Anafocus, with which we also assumed non-bank debt of £3.3m. Operating cash generation was £23.9m (H1 2014: £12.7m), with a significant reduction in receivables offset by increased inventory to support delivery to customers, strategic inventory purchases in the US and increased work in progress in space to support the step up in revenue anticipated in the second half.

The Board has put safety at the top of its agenda. In the period we have strengthened the Health, Safety and Environmental team and launched our new Safety Health Environmental Leadership Team (SHELT) programme at our Chelmsford site, as part of a Group wide roll out programme.

Our initial impressions of the business that we communicated in July 2014 have been reinforced. We have a strong and loyal customer base that appreciates the strength of our technology and expertise, and expects us to be flexible, open and transparent. We have highly talented and qualified employees who are ready for change and we have identified the opportunities we have to improve performance across the business.

We operate in international markets with global supply chains. We have facilities across Asia Pacific, the US and Europe. The growing complexity of the world and increasing environmental awareness is driving our customers' demands for higher resolution and greater accuracy. Our highly skilled workforce is trusted by our customers to supply technically complex solutions into our customers' systems. The support and enthusiasm for change we see from employees is encouraging as we seek to embed our new culture, moving from our traditional engineering heritage to become more agile to our customers' requirements. We have opportunities to simplify the business and to build the flexibility and responsiveness that our customers demand. Through focused research and development (R&D), we seek to address specialist requirements with our high end technology and manage the risk of competing technologies. We have a strong balance sheet that, together with our approach for a flexible cost base, provides us with a resilient financial profile that allows us to respond to changes in the macroeconomic environment.

Our emphasis over the last six months has been to strengthen our operational foundations. Our focus on customers has led to more agile business processes. We launched our continuous improvement culture with the new Group Director of Operations as part of our drive to deliver operational excellence including improving operational cycle times. There has been a management refresh covering one third of the senior management team and we have taken prompt action to restructure the cost base, in particular in the UK space business where growth is not being achieved as quickly as anticipated last year. As part of our drive for simplification we have established space and professional imaging as two streams within our Imaging division. The divisions have been given end to end profit and loss responsibility, with the core of group operations moving into the divisions. The names of the divisions have been simplified as part of the overall drive for simplification across the Group. As a further example of simplification, we have seen a 90% reduction in active forms in the UK and eliminated multiple approval loops.

We were pleased to have completed the acquisition of AnaFocus in September 2014. AnaFocus provides custom and standard CMOS imaging sensors for a range of applications. It has leading technology, strong customer relationships and talented people and accelerates our road map by 2-3 years for industrial vision. The net cash outflow of £16.4m in September was part of the initial consideration, with a further £2.8m paid in October of which the majority was paid into escrow. We also assumed non-bank debt of £3.3m on acquisition and there is also potential for further payments of up to £4.0m dependant on the performance of the business.

We have completed a thorough process to develop "Our vision, our future" that principally involved our customers and our employees. We completed an extensive voice of the customer exercise, with 34 customer interviews covering a mix of established, high growth, new and potential customers. The interviews were conducted by senior people within the Group, along with a number that were completed on our behalf by independent advisors. The overall feedback was that customers value our technology and our people, although they are seeking greater reliability and consistency from us. The feedback from our employees is that they are proud to work for e2v and enjoy what they do; they are also enthusiastic about change.

We are pleased to launch our vision ahead of schedule: "Bringing life to technology". We partner with our customers to improve, save and protect people's lives and our innovations lead developments in communications, automation, discovery, healthcare and the environment. Our strategic drivers are:

· Focus on our customers and their end markets;

· Embed our new culture, retaining the best from our engineering heritage whilst simplifying processes to build a responsive,energetic organisation;

· Engage the talents of our people to sustain innovation and supply the solutions our customers seek;

· Operating with excellence, with rigorous execution, driving responsiveness and agility; and

· Grow organically with acceleration from acquisitions.

The strategic drivers strengthen our foundations: focus on the customer, operational excellence, simplification of the business, energising our people and our commitment to deliver our results with a resilient financial profile, in support of our progressive dividend policy.

We will continue to invest in attractive markets with customer led technology platforms providing us with medium to high margin potential. Key segments where we believe investment will accelerate growth are industrial vision, space imaging and radiotherapy. We will maintain our engagement in the segments of semiconductors, scientific imaging and industrial processing systems, where we see customer demand that supports an attractive financial profile and where ongoing investment is usually customer funded. Other segments will be managed for their cash contribution. We have the goal of doubling the size of the Group by 2020, as measured by adjusted operating profit, with two thirds of this through organic growth and the balance from acquisitions.

The order book for delivery in the coming 12 months was £138m (H1 2014: £130m), an increase of £8m, reflecting strong order intake particularly in space. Compared with the year end, the 12 month order book has grown 8%. In the second half underlying growth is anticipated with specific orders to be secured in space and RF defence.

Outlook

We continue to be cautious over the broader economic environment, including further adverse movements in exchange rates. Assuming no further deterioration in market conditions, our current expectations for the Group's full year trading performance remain unchanged.

BUSINESS OVERVIEW

RF Power

The RF Power division has three key applications of radiotherapy, electronic countermeasures and industrial processing systems.

Sales for RF Power grew 11% at £41.8m (H1 2014: £37.5m). This reflects strong growth in demand in radiotherapy and good growth in commercial and industrial, and defence.

In radiotherapy, we deliver RF power systems for the generation of high energy x-rays for the treatment of cancer, high performance, high reliability products and provide the continuity for long term spares that our radiotherapy customers require. Demand from Original Equipment Manufacturers (OEMs) in radiotherapy has been strong in the first half. Our 12 month order book reflects a number of multi-year contracts which were renewed during the last two financial years.

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. Revenue in electronic countermeasures is lower than the comparable period reflecting the timing of programmes. We have completed our development programme for a microwave power module for the SAAB Gripen. We have a number of specific defence programmes to be secured in the second half, for delivery within the year.

In industrial processing systems we provide microwave generators for the processing of bulk materials; the current focus is in applications for mining where we are providing microwave generators and development support. We are working on the next phase of our development contract with Rio Tinto, covering the design and supply of large-scale ProWave® microwave generators for use in projects to improve the efficiency of mineral recovery. We anticipate continuing to support this development programme through the second half.

The remaining portfolio of businesses in the division is principally focused on applications in commercial and industrial markets. We have seen good growth in these markets, particularly in marine radar.

Overall profit margin for the division reflects the change in revenue mix, with the growth being delivered in the higher margin product lines, and improved project delivery.

Imaging

Within the Imaging division two streams have been established of space imaging and professional imaging, which includes industrial vision, science, thermal and dental imaging lines.

Sales for Imaging were up by 6% at £37.4m (H1 2014: £35.4m). This reflects growth in space imaging with delivery on programmes and growth in industrial vision in Asia, partially offset by lower revenue in thermal imaging. Revenue for science was steady.

We are the world leading supplier for space qualified, visible range, high performance imaging sensors and sub-systems for space and ground based science applications. Space imaging has delivered strong growth on the comparable period reflecting progress on its projects portfolio. Order intake in space imaging has been particularly strong with new orders for sensors from the US for the Large Synoptic Survey Telescope (LSST) and from the European Space Agency for Planetary Transits and Oscillations of stars (PLATO) and further orders from the Lebedev Physical Institute of the Russian Academy of Sciences at the system level. We have implemented restructuring in UK space imaging to ensure that the cost base is aligned to the level of growth being delivered. The step up of activity anticipated in the second half is largely underpinned by major programmes in the order book, although there are specific programmes that are to be secured for delivery in the year. The nature of this business is that it will remain technically challenging as we provide leading edge technologies for scientific discovery.

In professional imaging, 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.  Industrial vision demand experienced good growth in Asia, reflecting some recovery of the industrial markets, as well as the growth driven by recent product introductions, with further growth anticipated from new product introductions in the second half including our new CMOS based camera, the Uniiqa+.

We provide high sensitivity, low noise sensors used in high-end scientific instruments. The market for high-end scientific cameras is currently highly concentrated with three manufacturers, all of which we support. As anticipated, demand in scientific imaging has been steady. We expect that demand will remain at a similar level in the second half.

We support a range of other specialist applications with our imaging technology, including CMOS dental intra-oral sensors, CMOS area array sensors for use in automatic data collection systems, and thermal imaging products. We have seen steady demand for our industrial sensors for automatic data collection systems, including 2D barcode reading. Thermal imaging has seen revenue significantly lower than the comparable period due to lower end user demand particularly in its core UK market and we have also experienced a modest decline in dental imaging.

Overall profit margins reflect the contribution from the additional revenue, lower provisions on space programmes and product warranty, offset by increased R&D and increased resources in the US and Asia.

Semiconductors

The Semiconductors division addresses two main sectors, as a value added channel partner with our strategic semiconductor suppliers and our own design high speed data converters. We also provide continuity of supply for legacy products along with specialist packing and test services.

Sales for Semiconductors were 8% lower at £23.0m (H1 2014: £25.1m). This reflects lower demand for microprocessors and assembly and test services in Europe along with the continued decline in the smart sensor business. This was partially offset by good growth in our US legacy lines, and growth in sales of our own design analogue data converters into space applications.

With our semiconductor supply partners, we provide a range of high reliability versions of their standard products for use in civil, space and defence applications. We utilise our market leading test, packaging and screening technology to meet the demanding specifications that our aerospace and defence customers require. We have seen lower revenue from microprocessors in Europe, partially offset by increasing demand in the US for our legacy products. Current trading includes the anticipated decline in the smart sensor business with our planned exit from the sector.

Order intake has been lower than the comparable period in part reflecting the timing of last time buy orders which were secured in the first half last year. We anticipate securing last time buy orders for the Freescale 68040 family of microprocessors in the second half. In the second half we expect to introduce new products in the US to expand our range of multi-chip modules.

Our own design data converters provide market leading performance for analogue to digital and digital to analogue conversion for space radio frequency communications and we have seen good growth into space programmes.

Overall profit margins for the division reflect the mix of revenue with growth, in higher margin segments, including legacy products in the US and data converters.

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.

Central functions

The divisions now have end to end P&L responsibility with the core of group operations moved into the divisions. Where practical, support services are either now under divisional control or aligned with divisions. Group provides support services to the divisions across marketing and technology, operations, 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 these costs were £2.2m (H1 2014: £2.0m).

FINANCIAL REVIEW

The results for the first half of the financial year ending 31 March 2015 reflected modest organic revenue growth and ongoing operational improvement.

Revenue was £102.3m (H1 2014: £98.1m), representing growth of 4%, after absorbing translational FX headwinds of 5%. New business, defined as new products or new customers supplied so far in this financial year, made up approximately 12% of sales (H1 2014: 14%), with new customers providing the growth in existing product lines.  The proportion of sales generated from sub-systems and solutions in the period was approximately 35% (H1 2014: 32%), reflecting the growth in our space imaging projects and industrial vision. On a rolling 12 month basis the percentage of sales outside Western Europe, at 55%, has decreased marginally from the position at the end of the financial year.

Gross profit before specific items increased by 21% to £43.3m (H1 2014: £35.7m), reflecting the revenue mix, with growth in radiotherapy, US semiconductors, space imaging and industrial vision, and lower revenue in microprocessors, thermal and dental imaging. The gross profit performance also reflects lower charges for warranty and inventory reflecting improved operational performance. Movements in exchange rates in the period resulted in exchange gains of £1.5m on the retranslation of working capital and realised gains on FX contracts (H1 2014: loss £0.8m).

Net R&D expenditure decreased marginally to £6.2m (H1 2014: £6.7m), representing 6% of revenue. Net R&D expenditure is after the benefit of increased grant funding both in the UK and France of £2.4m in the period (H1 2014: £2.2m). 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 up at £8.3m (H1 2014: £8.0m). This reflects the continued expansion of the US and Asian platforms. Administrative costs, excluding specific items, increased to £11.2m (H1 2014: £9.0m), reflecting changes in the US and increased IT activity.

The adjusted(1) operating profit was £17.5m (H1 2014: £12.0m), resulting in a margin of 17% (H1 2014: 12%).

Specific items included in administrative costs were £4.1m (H1 2014: £0.6m). Amortisation of acquired intangible assets decreased to £0.9m (H1 2014: £1.2m), as a result of certain items becoming fully amortised during the previous year. This included £0.1m relating to the acquisition of AnaFocus in September, and the provisional valuations for AnaFocus result in an annualised amortisation charge of £1.3m in future. The costs associated with the acquisition of AnaFocus were £0.4m. Fair value losses on foreign exchange contracts amounted to £1.2m (H1 2014: gains £1.1m).

During the period a restructuring of the Group's management and space imaging teams has commenced and a charge of £1.4m has been recognised. In the second half further restructuring is anticipated with a cost of £3m. Of this overall programme, half of the expense is expected to lead to ongoing cost reduction. The site consolidation programme at the Chelmsford facility is ongoing with £0.3m incurred in the period.

Net finance costs before specific items decreased to £0.4m (H1 2014: £0.6m), reflecting the lower levels of borrowing during the period. The resulting adjusted(1) profit before tax increased by 50% to £17.1m (H1 2014: £11.4m).

Profit before tax increased by 20% to £13.0m (H1 2014: £10.8m), reflecting the improved performance partially offset by the level of specific items.

The underlying tax rate for the first half was 24% (H1 2014: 26%) due to the lower corporation tax rate in the UK and a higher proportion of UK profits. In the second half, we anticipate a higher proportion of profits in the US and France, which is likely to result in a higher effective tax rate for the full year of approximately 26%.

Adjusted(2) earnings per share increased to 6.0p (H1 2014: 3.9p) and reported earnings per share amounted to 4.6p (H1 2014: 3.8p).

Operating cash flow before tax in the first half was £23.9m (H1 2014: £12.7m). The increase reflects an inflow on working capital of £3.6m (H1 2014: outflow of £4.1m). Strong collection of receivables generated £13.6m which was partially offset by an outflow of £4.9m relating to trade and other payables, along with a £6.4m increase in inventory. The increase in inventory is to service improved customer delivery, a strategic inventory purchase in the US, and in space programmes' work in progress that supports the anticipated step up in reveue in the second half. Tax payments were £4.6m (H1 2014: £3.3m), reflecting increased payments on account. After the cash outflow relating to the purchase of Anafocus of £16.4m, capital expenditure, other financing costs, final dividends of £6.5m and movements due to exchange rates, the overall net outflow amounted to £9.3m.

At 30 September 2014 net bank borrowings amounted to £8.5m (H1 2014: £11.0m).  The total drawings under the bank facility arrangement were £28.2m of which £22.0m was drawn in Sterling with the balance being drawn in US dollars. The unutilised facility (at 30 September 2014 exchange rates) is £62.9m.

The Group's total order book as at 30 September 2014 was £190m (30 September 2013: £189m), representing an increase of £1m with strong order intake, in particular in space imaging, being offset by the cycle on certain contracts for radiotherapy. The order book for delivery over the coming 12 months was £138m (30 September 2013: £130m), an increase of £8m. Over the last 6 months, our 12 month order book has increased by £10m (31 March 2014: £128m).

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 adverse effect upon the Group's performance.

The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 16 and 17 of the Annual Report and Financial Statements for the year ended 31 March 2014, 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: delivery of our strategic plan, the wider political and macroeconomic conditions, advancement in technology, long term contract execution, cyber security, product quality and liabilities, failure of suppliers, supply chain disruption, laws and regulations, people and fluctuations in exchange rates.

Neil Johnson Steve Blair

Chairman Group CEO

7 November 2014 7 November 2014

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 2014 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 interim 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 2014 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

7 November 2014

Condensed consolidated income statement

Six months ended 30 September 2014

Condensed consolidated statement of comprehensive income

Six months ended 30 September 2014

Condensed consolidated statement of financial position

As at 30 September 2014

Condensed consolidated statement of cash flows

Six months ended 30 September 2014

Condensed consolidated statement of changes in equity

Six months ended 30 September 2014

Notes to the condensed consolidated half-yearly financial statements

Six months ended 30 September 2014

1. Basis of preparation and significant accounting policies

Basis of preparation

The Group's Annual Financial Statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

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.

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 2014 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 2014 Annual Report which has been delivered to the Registrar of Companies. The auditor's report on the Annual Financial Statements contained within the Group's 2014 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 7 November 2014.

Accounting policies

The accounting policies, presentation and methods of computation adopted are consistent with those followed in the preparation of the Group's Annual Financial Statements for the year ended 31 March 2014, except as described below.

From 1 April 2014, the Group has adopted: IFRS 10, 'Consolidated Financial Statements', IFRS 11, 'Joint Arrangements', IFRS 12, 'Disclosure of Interests in Other Entities' and IAS 27 'Separate Financial Statements'. This has had no effect on the amounts recognised in these half-yearly financial statements and the additional disclosures will be presented in the Group's financial statements for the year ending 31 March 2015.

Key sources of estimation uncertainty

In applying the accounting policies management has made appropriate estimates in many areas, and the actual outcomes may differ from those calculated. With the acquisition of AnaFocus during the period (note 14), management has identified that the fair value of intangible assets acquired on acquisition is an additional source of estimation uncertainty for the period ended 30 September 2014. This arises since the fair value of these intangible assets is dependent on estimates of attributable future revenues, profitability and cash flows. The other key sources of estimation uncertainty at the balance sheet date remain the same as those that applied to the Consolidated Financial Statements for the year ended 31 March 2014.

The Directors have considered the facts and circumstances as at 30 September 2014 and concluded that there are no indicators of impairments that require an impairment review to be undertaken on goodwill at the interim statement of financial position date. The annual impairment review will be undertaken later in the financial year consistent with the timing in previous years.

2. Segment information

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

The operating and reportable segments are:

RF Power which provides high performance electron devices, sub-systems and solutions in three key applications of radiotherapy; electronic countermeasures; and industrial processing systems.

Imaging which provides advanced Charged Coupled Devices (CCD) and Complementary Metal Oxide Semiconductor (CMOS) imaging sensors through space imaging and professional imaging, which includes industrial, scientific, thermal and dental imaging lines.

Semiconductors which addresses two main sectors, as a value added channel partner to our strategic semiconductor suppliers in civil, space and defence applications, and our own design high speed data converters. We also provide continuity of supply for legacy products along with specialist packing and test services.

All other, reported below, includes items associated with the disposal of the Group's non-core businesses which were disposed of during the year ended 31 March 2013. The results of these operations are treated as specific items.

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.

The following is an analysis of the Group's revenue, results and net assets and other information by reportable segment. There was no inter-segment trading during the period covered by these financial statements. During the year ended 31 March 2014, segment asset and liability information that is provided to the chief operating decision maker was extended and the periods ended 30 September 2014 and 31 March 2014 have been disclosed on this basis. It is not possible to prepare the information for the period ended 30 September 2013 on this basis and therefore that information is included on the basis that it was previously prepared.

Geographical information

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

3. Specific operating items

As detailed in note 14, the Group completed the acquisition of AnaFocus in September 2014 and in connection with this incurred one-off transaction costs of £340,000. Where payments in connection with the acquisition are dependent on future employment, they are treated as a cost of continuing employment, with £50,000 recognised in the period ended 30 September 2014.

During the period a restructuring of the Group's management and space imaging teams has commenced and a charge of £1,377,000 has been recorded. The Group is also undertaking a reorganisation of the footprint at its Chelmsford facility and has incurred costs of £281,000 in the period.

During the year ended 31 March 2014 the Group completed the restructuring of the RF power business, which had been commenced in the previous year and which resulted in net credits of £285,000 and £435,000 in the period ended 30 September 2013 and year ended 31 March 2014, respectively, as the previously identified headcount reduction was achieved by the transfer of employees into the Imaging business, which had commenced a recruitment drive. The business improvement programme at Grenoble drew to a close with costs of £111,000 incurred in the period ended 30 September 2013 (year ended 31 March 2014: net credit of £1,033,000, principally related to the release of receivables provision). A reorganisation of the Group's US East Coast sales support office resulted in costs of £183,000 in the period ended 30 September 2013 (year ended 31 March 2014: £196,000).

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 loss of £1,221,000 (6 months ended 30 September 2013: gain £1,070,000; year ended 31 March 2014: gain £796,000).

During the year ended 31 March 2014 the previous Chief Executive Officer, K Attwood, left the Group and S Blair was appointed CEO. In respect of this change costs of £517,000 were incurred in the period ended 30 September 2013 (year ended 31 March 2014: £608,000).

During the year ended 31 March 2014 the net loss on disposal of businesses comprised a gain of £442,000 on the sale of the Group's RF Satcom business (being net proceeds of £684,000 less net assets disposed of £242,000) and a loss of £472,000 (being write off of deferred consideration in part offset by a credit of £128,000 on the finalisation of the net assets disposed) relating to the sales of the Group's non-core businesses which were completed during the year ended 31 March 2013.

4. Finance costs and finance revenue

5. Income tax

The tax charge for the period has been calculated on the basis of the Directors' best estimate of the annual effective tax rate for the year, consistent with the previous period.

The UK government, with effect from 1 April 2014, reduced the main rate of UK Corporation tax from 23% to 21%. In addition the Finance Bill 2013 was substantively enacted on 2 July 2013, which will reduce the corporation tax rate to 20% with effect from 1 April 2015. The UK deferred tax balances as at 30 September 2014 are calculated based on the 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 items. 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:

7. Dividends paid and proposed

On 7 November 2014 the Board declared an interim dividend of 1.5p per share, with a total dividend payment of £3,259,000. The interim dividend is to be paid on 17 December 2014 to shareholders registered at close of business on 28 November 2014 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

9. Net borrowings

Net borrowings exclude unamortised debt issue costs, which amounted to £631,000 at 30 September 2014 (30 September 2013: £154,000 and 31 March 2014: £nil).

On 29 July 2014, the Group entered into a new revolving credit facility which expires on 28 July 2018. At 30 September 2014 exchange rates, the facility was £91,097,000 (30 September 2013: £79,964,000 and 31 March 2014: £79,315,000). Provided covenants continue to be met, the drawdowns under the revolving credit facility are at the discretion of the Group and consequently the loan is treated as non-current. At 30 September 2014, the Group had available £62,920,000 (30 September 2013: £56,536,000 and 31 March 2014: £65,610,000) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

10. Capital commitments and contingent liabilities

At 30 September 2014, the Group had capital commitments of £3,383,000 (30 September 2013: £5,193,000; 31 March 2014: £2,079,000) 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 2014 £3,400,000 (30 September 2013: £3,798,000; 31 March 2014: £4,713,000) 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.