E2V.L Regulatory News (E2V)

e2v technologies plc

Interim Management Statement

e2v technologies plc, the specialist provider of technology solutions for high performance systems, today provides an Interim Management Statement covering the period from 1 October 2012 to 31 January 2013.

Current year-to-date trading and outlook

The Group's trading performance has shown less growth than we had expected at the time of the announcement of our half year results. We now anticipate that our revenue growth rate for the six months ending 31 March 2013 will be approximately half that previously expected. The main factors are:

·; deferral of anticipated orders for defence programmes in the US where funds are not flowing down the supply chain and lead times now extend delivery beyond this financial year.

·; more modest than planned improvement in our space imaging projects business.

·; customer deferral of the start date for the initial order on our development programme with Rio Tinto.

·; slower growth in our imaging industrial process control markets with slower build-out of industrial capacity for tablets and smartphones.

We anticipate delivering a second half trading performance above the first half, when we reported operating profit margins of 15%, but a full year trading performance below current market expectations.

The order book at 31 December 2012 was £153m and was stronger than at the half year due to the booking of two large multi-year radiotherapy orders. Net borrowings at 31 December 2012 reduced by £11m to approximately £17m and we anticipate reducing net borrowings further by our financial year end.

The Board intends, absent unforeseen circumstances, to recommend, at the time of announcing the full year results, a final dividend of 2.8p per share, thus maintaining the full year dividend.

Keith Attwood, CEO said:

"The full year trading performance of the business will be reduced by the factors listed above, the largest of which is in the US defence market. We have made good progress in rebuilding our order book, aligning our cost base with the lower level of activity and continuing to generate cash. Management remain focussed on our ongoing business renewal and restructuring programmes and we continue to invest in a number of key development programmes to position the business for growth."

RF power solutions

OEM demand in radiotherapy has remained steady with growth anticipated in the final quarter from new orders with our key customers. As previously announced, we signed two multi-year contracts with Accuray worth a minimum of £20m over the next five years and are currently finalising a multi-year contract with another customer.

Electronic countermeasures has delivered good growth from its continuing programmes including the ALE-55 programme for the F18 Super Hornet, although its growth rate is now reduced by delays in order placement for European programmes and continuing technical challenges on our development contract for the F15.

In industrial processing systems, we have commenced work on the initial order of our development programme with our strategic partner Rio Tinto, although its start date was delayed by the customer.

Activity in the remaining product lines within the division is down on the comparable period reflecting softness in commercial and industrial markets. We expect that this limits the potential for revenue improvement for the remainder of the year.

High performance imaging solutions

Scientific imaging revenue is lower than anticipated, reflecting softer end user demand. In addition, our new 8 micron sensor has experienced technical problems which will delay delivery against initial orders.

Machine vision is experiencing more modest growth in demand for industrial process control applications than anticipated. Our new CMOS based line scan is starting to build a solid market position in high end applications, though at lower volumes, due to continued softness in the build-out of new industrial capacity for tablets and smartphones in Asia.

The space imaging recovery programme has delivered growth reflecting recovery of milestones on a number of programmes, although slower than we had anticipated. This remains a technically challenging business where we provide leading edge technologies for scientific discovery and which management actively review.

The remaining product lines within the division have shown good growth reflecting strong demand, primarily for our dental sensors.

Hi-rel semiconductor solutions

In Semiconductor Lifecycle Management (SLiM™), revenue is lower than last year, which included the completion of the first phase of our 68k microprocessor SLiM™ programme.

In the other aerospace and defence product lines, demand for our products is expected to be lower than we had anticipated, mainly in the US. This reflects deferral of anticipated orders on defence programmes as funds have not been flowing down the supply chain, reflecting market uncertainty with the potential for sequestration in the US, and where lead times now extend delivery beyond this financial year.

Current trading includes the anticipated decline in the smart sensor business, as we support customers during product withdrawal.

Order Book

The Group's total order book as at 31 December 2012 was £153m (31 December 2011: £156m), representing an increase of £15m since the half year (30 September 2012: £138m).

The order book for delivery over the coming 12 months was £118m (31 December 2011: £131m), a decrease of £7m after excluding the non-core businesses sold in 2012. This represents an improved position for the current order book once the completed last time buy orders and outstanding radiotherapy contract renewal are taken into account.

Net Borrowings

Net borrowings (see note 2) at 31 December 2012 were approximately £17m (30 September 2012: £28m). The decrease reflects operating cash generation and the gross proceeds of £5.8m received from the sale of land in Grenoble announced in December 2012.

Our inventory reduction programme has delivered a modest net reduction through improvement in general inventory levels, though this has been offset by increases relating mainly to the slower than anticipated progress in space imaging projects.

Dividend

The Board intends, absent unforeseen circumstances, to recommend, at the time of announcing the full year results, a final dividend of 2.8p per share.

Further enquiries:

Notes to editors

1. The full year results will be announced on 20 May 2012

2. Net borrowings exclude capitalised borrowing costs.

3. All financial information included in this release is sourced from unaudited management accounts and excludes any exceptional items.

4. Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect the Group's current expectations concerning future events and actual results may differ materially from current expectations or historical results.