E2V.L Regulatory News (E2V)

19 April 2012

e2v technologies plc

2012 Year end trading update

e2v technologies plc, the specialist provider of technology solutions for high performance systems, is today providing a period end trading update for the financial year ended 31 March 2012.

Highlights

·; Full year trading performance now expected to be at the upper end of management's previous expectations

·; Positive progress in executing our key growth programmes in the US and Asia

·; Similar progress in building our market positions in our key application segments

·; 10% underlying turnover growth (note 3), 3% reported

·; Net borrowings of c. £30m after site acquisition in US of £4m

Keith Attwood, Chief Executive Officer, said

"We expect to deliver a solid performance for the year, and our underlying sales growth (see note 3) equates to c.10% for the second consecutive year.

We are making positive progress in executing our key growth programmes and continue to anticipate that these will convert to material future sales. Consequently, we believe the Group is well positioned for continued growth."

Group Performance and Strategy Summary

Group revenue for the financial year ended 31 March 2012 is expected to be around £234m, up 3% compared with the last financial year, reflecting the combination of 10% underlying growth (see note 3) and last time buy revenues being significantly reduced. A stronger revenue profile, combined with expecting to exceed the Group's operating profit margin of 17%, should now result in a full year trading performance at the upper end of management's previous expectations.

Interest expense in the financial year ended 31 March 2012 is anticipated to be around £2.5m, reflecting the benefit of reduced financing costs as a result of the new facility arranged in July 2011. Our adjusted effective tax rate for the year is estimated to be c.28% before favourable prior year items.

Our business is built on two core technologies: RF (Radio Frequency)/microwave and semiconductor based products and solutions which we apply to deliver technology solutions for high performance systems at a component, subsystem and service level. Our strategy leverages our strong technology and market position in eight key application areas, including the two new sectors with high growth potential, of semiconductor lifecycle management (SLiM™) and industrial scale RF/microwave processing systems. Within this strategy, we are currently investing to build our market share.

We remain committed to our progressive dividend policy.

Divisional performance in the financial year ended 31 March 2012

Compared to last year, RF Power Solutions revenue is expected to have grown at around 5% at reported levels and 6% on an underlying basis. Radiotherapy sales grew strongly, reflecting both new build and spares growth. Electronic countermeasures in the US benefited in the second half from a further order for the ALE-55 programme for the F18 Super Hornet, and we are progressing development work on one other US fast jet aircraft programme. The other product lines in the division have shown good overall revenue growth.

In industrial processing systems we announced in February 2012 that we had signed a strategic partnership with Rio Tinto to develop large-scale ProWave™ RF/microwave generators for use in mineral recovery. In addition, the first vermiculite system has been installed and is now in an extended trial programme. In March 2012 we received the first payment of £2m from the Regional Growth Fund which is accelerating our technology development.

High Performance Imaging Solutions is expected to report revenue around 6% lower than the prior year, reflecting a significant reduction in last time buy revenues. On an underlying basis, revenue is expected to have grown by around 12%. Demand within machine vision is steadying. Scientific imaging continues to be steady, with end user demand being maintained. Order intake in space has remained strong with two contracts secured at the subsystem level for a focal plane array for a Korean land based telescope and to provide the camera for a Brazilian ground based telescope for a space science application. Strong revenue growth in space reflects progress on our technically challenging programmes. Other product lines, including dental products, have delivered good underlying growth.

In Hi-Rel Semiconductor Solutions revenue grew by around 8%, with SLiM™ revenues continuing to benefit from existing programmes. In the second half, revenue was lower as anticipated, reflecting the completion of phase one of the 68k microprocessor end of life programme. The division's European operation has seen steady demand for its test and packaging services. In the US, we continue to see some softening of demand for defence applications.

The businesses managed in the corporate centre are expected to have grown by around 13% and have moved from loss making to being profitable.

As part of our geographic expansion, we purchased a new facility for e2v Aerospace and Defense Inc. for c. £4m and fit out has commenced. In the Asia Pacific region, we have substantially increased our presence with new offices in Japan, Korea and China and have appointed a new regional president. Over 51% of our expected revenue for the year ended 31 March 2012 is now with customers outside Western Europe, up from 48% for the year ended 31 March 2011.

Order Book

The Group's total order book is £143m (31 March 2011: £167m), representing a decrease of £24m. Similarly, the order book for delivery over the coming 12 months is £118m (31 March 2011: £137m), a decrease of £19m. This decrease arises from, as anticipated, the fulfilment of last time buy orders, the delivery of the first phase of our major SLiM™ programme for the 68k microprocessors, along with short term arrangements for one of our radiotherapy customers, totalling £22m. This is offset by modest growth in the remaining order book.

Net Borrowings

Net borrowings (see note 2) at 31 March 2012 were approximately £30m (31 March 2011: £28m). The increase of £2m in net borrowings is after the purchase of the US facility for £4m, three dividend payments in the year (the first payment of £2.5m being the interim dividend for the prior year) and reorganisation costs of c.£7m.

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Notes to editors

1. The full year results will be announced on Monday 21 May 2012

2. Net borrowings exclude capitalised borrowing costs.

3. The continuing products exclude "one off" revenue in the year arising from last time buys on the Grenoble front end fab, and non core product areas to our strategy, mainly serving the automotive sector representing approximately 13% of revenue.

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

5. 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.