E2V.L Regulatory News (E2V)

5 Jun 2006 07:01

e2v technologies PLC05 June 2006 5 June 2006 e2v technologies plc Unaudited preliminary results for the year ended 31 March 2006 e2v, a specialist developer and manufacturer of high-technology electroniccomponents and subsystems, announces its unaudited results for the year ended 31March 2006. HIGHLIGHTS •Revenue up 11.7% to £112.3m (2005: £100.5m) •Closing order book up by 23.0% from £74.4m to £91.5m •Reported profit before tax has more than doubled from £5.6m to £11.9m •Adjusted* profit before tax up 39.4% to £13.6m (2005: £9.7m) •Net cash from operating activities was £23.2m (2005: £10.2m) •Net debt down from £21.8m to £17.8m •Final dividend of 4.25p per share (2005: 3.9p) •Total dividends in respect of the year of 6.25p (2005: 4.53p) •Successful integration of e2v scientific instruments (formerly Gresham Scientific Instruments) *Before amortisation of acquired intangibles, initial public offering costs,voluntary severance costs, share-based payment charges and abnormal interestcharges. Keith Attwood, Chief Executive commented: "I am pleased to report an excellent set of results for our first full year as apublic company. We have seen strong sales growth in our electronic tube productgroup and continued progress for our sensor product group. These sales, combinedwith our continued drive for internal efficiencies, underpin this performance. Our record order book suggests continued positive progress through the currentfinancial year, despite the pressures of rising input costs, particularly inenergy and materials. We continue to pursue acquisition targets in both Europeand North America following the successful integration of e2v scientificinstruments." Enquiries: e2v technologies plcKeith Attwood, Chief Executive Today: 020 7554 1400Mike Hannant, Finance Director Thereafter: 01245 493493 Website: www.e2v.com Gavin Anderson & CompanyKeith Brookbank/Charlotte Stone Tel: 020 7554 1400 NOTES FOR EDITORS: e2v technologies plc e2v is a leading developer and manufacturer of high-technology electroniccomponents and subsystems, which it supplies into three core areas: •Medical & Science : Sensor technology includes Dental X-ray, Mammography, life science applications and X-ray microscopy. Electronic tubes are the enabling technology behind radiotherapy cancer treatments, microwave medical therapy and high-energy physics. •Aerospace & Defence : Sensor technology includes military surveillance, targeting and guidance; space-based imaging and astronomy and radar & electronic warfare. Electronic tubes provide the enabling technology behind radars, electronic countermeasures (ECM), electronic warfare and satellite communications. •Commercial & Industrial : Sensor technology includes marine radars, industrial safety sensors, automotive radars and alarms and thermal imaging cameras used by fire fighters. Electronic tubes provide enabling technology behind TV broadcast, satellite communications, marine radar and food & industrial processing. e2v has 1,300 employees worldwide with offices in UK, USA, Germany, France,Canada and a presence in China through the China Britain Business Council, aswell as a network of distributors covering other key territories. Further information on e2v technologies plc is available from its website,www.e2v.com RESULTS OVERVIEW Overall, sales grew by 11.7% to £112.3m in the year at reported exchange rates.At constant exchange rates the growth would have been 10.3%. Sales in thesensors group grew by 4.3% in the year, reflecting the strong second halftrading anticipated at the half year. The electronic tube group saw excellentgrowth at 18.4%. Gross profit increased by £3.1m to £37.8m (2005: £34.7m) and represented 33.6%of revenue (2005: 34.5%). Whilst productivity improvements increased margins by2.6%, this was more than offset by the adverse impact of exchange rates, productmix and increased material and energy costs. Profit before tax and net finance costs increased by 31.1%. Excluding itemisedadministrative expenses as detailed in the Group income statement, the increaseon an adjusted* basis is an impressive 22.1% reflecting both sales growth andthe benefits of our continued attention to internal efficiencies. Reported basic earnings per share amounted to 14.81 pence (2005: 6.93 pence). Adjusted* basic earnings per share were up at 16.89 pence (2005: 13.72 pence)per share. The Group order book at 31 March 2006 was a record £91.5m (2005: £74.4m). The sensors product group order book was £43.4m (2005: £34.6m) reflectingincreases within the Aerospace and Defence sector. The electronic tube productgroup order book amounted to £48.1m (2005: £39.8m) reflecting the anticipatedplacement of multi year orders for radiotherapy equipment within the Medical andScience sector. Net borrowings at 31 March 2006 were £17.8m (2005: £21.8m), showing asignificant reduction, despite the all-cash acquisition of e2v scientificinstruments for £5.2m in the first half. Net cash flow from operating activitieswas a healthy £23.2m (2005: £10.2m). The difference compared to last year isprimarily due to excellent cash collection in the last quarter mainly driven bythe accelerated completion of a large Ministry of Defence electronic subsystemcontract. Net cash inflow before financing activities was £9.3m (2005: £1.8m). BUSINESS OVERVIEW SENSORS Following the decrease in sales reported in the first half year, second halfsales in this product group showed significant improvement, closing the yearwith growth of 4.3% to £50.2m (2005: £48.1m). This growth is derived from theMedical and Science sector, which performed very strongly. Medical and Science Sales in this sector continued the strong performance seen in the first half ofthe year, growing by a significant 34% to £20.7m (2005: £15.5m). This excellent sales growth results from increased demand for our imagingproducts, particularly for intra oral X-Ray dental sensors, L3VisonTM sensorsfor life sciences applications, and from additional sales of £2.3m through e2vscientific instruments. This acquisition also contributed £0.6m of profit beforetax and amortisation. *Before amortisation of acquired intangibles, initial public offering costs,voluntary severance costs, share-based payment charges, abnormal interestcharges and the tax impact of these items. Aerospace and Defence Due mainly to contract phasing in the Aerospace and Defence sector, salesreduced by 8.6% to £15.3m (2005: £16.8m). The decrease was partially offset bygrowth in the L3VisionTM camera and sensor business. Strong order intake in thissector has resulted in a closing order book of £26.7m (2005: £14.7m) which isencouraging for the new financial year. The Group confirmed its position as a key supplier to the Eurofighter Typhoonprogramme with orders for solid-state sensors worth £2.5m and a contract tosupply sensors for the second tranche of the Eurofighter Typhoon MissileApproach Warning System worth £1.5m. e2v's Charged Coupled imaging Device (CCD) technology continues to makesignificant contributions to space science. During the year various CCDs frome2v have been successfully launched into space with both NASA's New Horizonsmission to Pluto and ESA's fact-finding mission to Venus utilising ourstartracker CCD's. The first images from e2v sensors were also returned from theMars Reconnaissance Orbiter in March 2006 and ESA's Mars Express programme inApril 2006 showing unparalleled resolution and confirming our position as aleader in this field. Commercial and Industrial Sales in this sector decreased by 11.0% to £14.1m (2005: £15.9m). This was broadly in line with expectations due to a decrease in our firefighting business, which benefited last year from the final phase of a large UKGovernment procurement project. Following the success of our Argus(R) 3 camera,which was used to great effect by fire-fighters at the Buncefield oil depotblast earlier this year, we anticipate good progress in the fire fightingbusiness in the new financial year following the successful launch of our newArgus(R) 4 camera in April 2006, at the Fire Department Instructors Conference(FDIC), the largest fire trade show in the USA. The shortfall noted above was partly offset by an increase in the marine radarbusiness for radar components and sales of gas sensors. Our automotive businesswas flat, reflecting a slower than anticipated take-up of adaptive cruisecontrol technology by consumers. ELECTRONIC TUBES Sales in the electronic tube product group were £62.1m (2005: £52.4m)representing a healthy 18.4% increase at reported rates of exchange. This increase is consistent with the position reported in our interim resultsand was largely driven by a contract for the UK Ministry of Defence, an increasein our supply of modulators into radar upgrade projects and a strong performancein radiotherapy for radio frequency (RF) subsystems. Medical and Science Sales in this sector showed growth of 3.2% to £18.8m (2005: £18.2m). This was due to growth in the radiotherapy cancer treatment market borne out ofour strategy to increase the scope of products supplied to now include compactmodulators. This market also contributed to the strong order book through theplacement of multi-year orders. This more than offset a decline in the supply ofRF subsystems for another, different medical therapy application (Endometrialablation). During the second half, we won our first contract for RF power couplers,utilised in accelerators for advanced industrial research. Although relativelysmall, this project helps to establish our credentials in the 'Big Science'market for RF subsystems. Aerospace and Defence Sales in this sector showed exceptionally strong growth of 76.8% to £19.0m(2005: £10.8m). This was largely due to the rapid completion of the specific £6.7m contract tosupply vital defence electronic subsystems to the UK Ministry of Defence. Also of note was an increase in our compact modulator business for radarsystems.Sales to China declined due to export licenses not being awarded for productspreviously supplied under granted licences. In July 2005, we won a £4.5m order to supply Travelling Wave Tubes for theDefensive Aids Sub System (DASS), which are designed to enhance aircraftsurvival through advanced self-defence sensors and countermeasures. Commercial and Industrial Sales in this sector showed growth of 3.5% to £24.3m (2005: £23.5m). This was largely due to an increase in sales of marine magnetrons in line withthe general growth in the commercial fleet worldwide and for inductive outputtubes, used in US digital television transmitters, as a result of a firming upof the programme to convert from analogue to digital services. INTERNATIONAL DEVELOPMENT In the year ended 31 March 2006, 72% (2005: 75%) of sales were derived fromexports to over 50 different countries. We saw significant growth in UK sales of25.5%, largely related to the Ministry of Defence contract mentioned earlier.Sales to the US at £37.5m (2005: £35.8m) represent a year on year growth of 4.7%at reported exchange rates. This remains our largest single geographic market. Sales to Europe grew by 14.8%, primarily across the sensors product group. Sales to the rest of the world were £10.4m (2005: £11.0m). Sales to Asia Pacifichave increased, in particular to Japan, where e2v scientific instrumentscontinues to perform strongly. We continue to focus on improving customer access to our distributors anddeveloping the skills within our distributor base, either through targetedtraining or by appointing specialist distributors, in order to better servethose customers. This year we have established two new gas-sensing distributorsin China to take advantage of the region's advances in industrial safetyrequirements. A training road show was held in India this year focussing onimaging and electronic tube technologies. e2v provide regular newslettersupdating our partners on worldwide business developments. All of ourdistributors keep up to date on current e2v Group affairs, including exhibitiongraphics, contact information and product presentations, via a tailored'extranet'. As the costs of manufacturing in the UK continue to increase, additionalemphasis has been placed on seeking suppliers who can offer competitive pricing.This initiative will be accelerated through the new financial year, as part ofour continued drive to mitigate increasing input costs. CAPITAL INVESTMENT AND RESEARCH AND DEVELOPMENT Expenditure on capital equipment can broadly be categorised as £2.5m (2005:£0.6m) on infrastructure, clean rooms and building maintenance, £3.4m (2005:£4.7m) on manufacturing plant expansion, replacement or maintenance, £1.5m(2005: £1.5m) on IT, including the ongoing SAP system implementation and £0.4m(2005: £0.8m) on other items. The main areas of investment have been in the fabrication, post processingequipment and facilities, for our CCD capability, supporting our growing highperformance imaging business. Other notable capital projects include our ITsystems, where investment has been made in the network infrastructure and therollout of our SAP implementation, which continues through 2006. The Group's Research and Development spend into product maintenance/support andnew products was broadly divided into £2.1m (2005: £2.0m) for electronic tubesand £3.3m (2005: £3.3m) for sensors. Major programmes have included Argus(R) 4 fire-fighting cameras, L3VisionTMCCDs; for which the Company received a Queen's Award for innovation in April2006, transitioning CCD production to 6" wafers, magnetron development,StellarcoolTM satellite amplifiers and defence electronic subsystems with somelonger term investment in Biosensor technology. Over the coming year our imaging business will focus on broadening thetechnology base from CCDs to include CMOS technology, which offers the potentialfor increased on chip functionality, radiation hardness and higher speedperformance over CCDs. However, conventional CMOS based image sensors arecurrently not able to achieve the highest performance levels in somecircumstances, so there will be a role for both technologies going forward inthis expanding market. In this context we also continue to support the e2vCentre for Electronic Imaging at Brunel University. Our RF systems programme is focussed on increasing our scope of supply intoscience applications by incorporating electronic tube technology into full RFsystems. Although the fundamental technology is relatively mature, there areincreasing and significant new and emerging applications for high power RF inthe markets in which e2v serves. To capitalise on this new opportunity we havestrengthened our links with Nottingham and Strathclyde Universities. At 31 March 2006, 82 (2005: 69) patent families had been granted and a further56 were pending. In the year, there were over 15 new British patent applicationsfiled. Our patent management processes are based on the principles of protectionof our intellectual property, where appropriate, to maintain and develop ourmarket position. OUTLOOK There are a number of emerging organic top line opportunities for us to pursue,and the outlook is generally positive across all market sectors. In addition, we have a significant operational review in progress focussed onlean/agile best practice and we have introduced new skills and personnel intothe business to deliver tangible improvement in this regard. Further, we areundertaking a thorough facilities review during the course of the next 12months, to identify how best to realise value from any under-utilised assets inthe form of land and buildings. Today, we occupy 30 acres in Chelmsford andLincoln. Following the successful integration of our first acquisition, we continue topursue a number of bolt-on and more significant targets in both Europe and NorthAmerica. We have a full pipeline of complementary businesses to consider.Finally, despite the impact of increasing input costs, particularly in energyand materials, the outlook is for continued progress, underpinned by oursubstantial order book. GROUP INCOME STATEMENT Unaudited AuditedFor the year ended 31 March 2006 Year ended Year ended 31 March 2006 31 March 2005 Notes £000 £000 Revenue 112,276 100,547Cost of sales (74,521) (65,831)---------------------------------- ----- --------- ---------Gross profit 37,755 34,716 Research and development costs (4,928) (5,195)Selling and distribution costs (9,463) (9,357)---------------------------------- ----- --------- ---------Amortisation of intangible assets arisingon acquisitions (369) (10)Initial public offering costs - (1,901)Voluntary severance payments (819) (61)Share based payment charges (450) (142)Other administrative costs (7,961) (7,550)---------------------------------- ----- --------- ---------Administrative expenses (9,599) (9,664)---------------------------------- ----- --------- ---------Profit before tax and finance costs 13,765 10,500Finance costs (1,944) (5,095)Finance revenue 95 154---------------------------------- ----- --------- ---------Profit before tax 11,916 5,559Income tax expense 3 (3,768) (2,167)---------------------------------- ----- --------- ---------Profit for the year attributable to equityholders of the parent 8,148 3,392---------------------------------- ----- --------- --------- Earnings per share- basic 4 14.81p 6.93p- diluted 4 14.74p 6.92pAdjusted earnings per share- basic 4 16.89p 13.72p- diluted 4 16.82p 13.69p GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE---------------------------------- ----- --------- --------- Unaudited Audited Year ended Year ended 31 March 2006 31 March 2005 £000 £000 Losses on cash flow hedges taken directlyto equity (715) -Exchange differences on retranslation offoreign operations 322 (144)Tax on items taken directly to ortransferred from equity 3 220 121---------------------------------- ----- --------- ---------Net expense recognised directly in equity (173) (23)Profit for the year 8,148 3,392---------------------------------- ----- --------- ---------Total recognised income and expense forthe year 7,975 3,369---------------------------------- ----- --------- --------- Effects of changes in accounting policyNet gain on cash flow hedges on first timeadoption of IAS 39 308 ----------------------------------- ----- --------- --------- GROUP BALANCE SHEET Unaudited Auditedas at 31 March 2006 31 March 2006 31 March 2005 £000 £000ASSETSNon-current assetsProperty, plant and equipment 21,320 19,486Intangible assets 22,372 16,862Deferred income tax asset 2,006 970-------------------------------- --------- --------- 45,698 37,318Current assetsInventories 20,839 19,053Trade and other receivables 25,561 26,358Other financial assets 11 -Cash 8,087 4,069-------------------------------- --------- --------- 54,498 49,480-------------------------------- --------- ---------TOTAL ASSETS 100,196 86,798-------------------------------- --------- --------- LIABILITIESCurrent liabilitiesTrade and other payables (22,138) (17,418)Other financial liabilities (6,607) (6,158)Income tax payable (1,505) (502)Provisions (2,691) (2,557)-------------------------------- --------- --------- (32,941) (26,635)-------------------------------- --------- ---------Net current assets 21,557 22,845-------------------------------- --------- ---------Non-current liabilitiesOther financial liabilities (19,905) (19,693)Provisions (1,070) (1,207)Deferred income tax liabilities (2,543) (1,021)-------------------------------- --------- --------- (23,518) (21,921)-------------------------------- --------- ---------NET ASSETS 43,737 38,242-------------------------------- --------- --------- SHAREHOLDERS' EQUITYOrdinary share capital 2,796 2,796Share premium 27,309 27,301Other reserves 265 264Hedge reserve (134) -Foreign currency translation reserve 221 (101)Retained earnings 13,280 7,982-------------------------------- --------- ---------Total shareholders' equity attributable toequity holders of the parent company 43,737 38,242-------------------------------- --------- --------- GROUP CASH FLOW STATEMENT Unaudited Auditedfor the year ended 31 March 2006 Year ended Year ended 31 March 2006 31 March 2005 £000 £000 Cash flows from operating activitiesProfit from continuing operations beforetax and net finance costs 13,765 10,500Adjustments to reconcile to net cashinflows from operating activities:Depreciation of property, plant and 4,863 4,736equipmentAmortisation of intangible assets 2,371 1,777Share based payment charges 450 142(Increase)/decrease in inventories (1,125) 2,604Decrease/(increase) in trade and otherreceivables 1,957 (1,100)Increase/(decrease) in trade and otherpayables 4,204 (5,811)Decrease in provisions (16) (1,059)--------------------------------- ------ --------- ---------Cash generated from operations 26,469 11,789Income taxes paid (3,266) (1,560)--------------------------------- ------ --------- ---------Net cash flows from operating activities 23,203 10,229--------------------------------- ------ --------- ---------Cash flows from investing activitiesProceeds from sale of property, plant andequipment 55 22Interest received 95 154Purchase of property, plant and equipment (6,525) (6,113)Purchase of software (1,278) (1,455)Expenditure on product development (1,308) (1,000)Acquisition of subsidiary, net of cashacquired (4,974) ---------------------------------- ------ --------- ---------Net cash flows used in investing activities (13,935) (8,392)--------------------------------- ------ --------- ---------Cash flows from financing activitiesInterest paid (1,852) (4,271)Proceeds from issue of shares 8 27,707Dividends paid to equity shareholders ofthe parent (3,246) (347)Redemption of ordinary share capital - (12)Payment of finance lease liabilities (42) -Proceeds from borrowings 5,100 27,500Transaction costs of new bank loans raised - (460)Repayment of borrowings (5,250) (52,207)--------------------------------- ------ --------- ---------Net cash flows used in financing activities (5,282) (2,090)--------------------------------- ------ --------- --------- Net increase in cash and cash equivalents 3,986 (253)Net foreign exchange difference 32 (153)Cash and cash equivalents at 1 April 4,069 4,475--------------------------------- ------ --------- ---------Cash and cash equivalents at 31 March 8,087 4,069--------------------------------- ------ --------- --------- NOTES TO THE PRELIMINARY RESULTS 1. Basis of preparation The unaudited preliminary results for the year ended 31 March 2006 have beenprepared in accordance with International Financial Reporting Standards (IFRS)as adopted by the European Union and applied in accordance with the provisionsof the Companies Act 1985. This is the first year in which the Group hasprepared its financial statements under IFRS and the comparatives have beenrestated from UK Generally Accepted Accounting Practice (UK GAAP) to comply withIFRS. An explanation of the transition to IFRS together with reconciliationsfrom the previously published UK GAAP financial statements to IFRS werecontained in the Press Release issued by the Group in November 2005. Theaccounting policies applied in preparing these preliminary results are containedin that Press Release. As previously announced, as permitted under IFRS1 "First-time adoption of IFRS",the Group has elected to apply IAS 32 "Financial Instruments: disclosure andpresentation" and IAS 39 "Financial Instruments: recognition and measurement"prospectively from 1 April 2005 without restating comparative periods. Theprincipal impact of these standards is in respect of derivative financialinstruments which are used to manage economic exposure to movements in currencyrates. Such instruments are now required to be recognised in the balance sheetas financial assets or financial liabilities measured at their fair value withchanges in their fair value being recognised in the income statement, exceptwhere hedge accounting is used. Where hedge accounting is applied changes in thefair value of hedge instruments is recognised directly in equity and recycled tothe income statement when the hedged item is recognised. The net effect of theadjustment at 1 April 2005 was an increase in equity of £308,000. These unaudited preliminary results for the year ended 31 March 2006 do notconstitute accounts as defined in Section 240 of the Companies Act 1985.Financial statements for the year ended 31 March 2005, prepared under UK GAAP,have been delivered to the Registrar of Companies. The auditors' report on thesefinancial statements was unqualified and did not contain any statement undersection 237(2) or (3) of the Companies Act 1985. This preliminary announcement was approved by the Board on 2 June 2006. 2. Segment information The Group's primary reporting format is business segments and its secondaryformat is geographical segments. The operating businesses are organised andmanaged separately according to the nature of the products and servicesprovided, with each segment representing a strategic business unit that offersdifferent products and serves different markets. The sensors segment products include image sensor charged coupled imagingdevices (CCDs), cameras, solid-state microwave components, thermal imagingcameras, gas sensors and x-ray detectors. This also includes e2v scientificinstruments which was acquired during the year.The electronic tubes segment products include magnetrons, thyratrons, klystrons,inductive output tubes (IOTs), modulators, travelling wave tubes (TWTs) andsatcom amplifiers. The Group's geographical segments are determined by the location of the Group'sassets and operations. Business segments The following tables present revenue and profit information, certain asset andliability and other information regarding the Group's business segments for theyears ended 31 March 2006 and 2005.Year ended 31 March 2006 Sensors Electronic Total tubes operations £000 £000 £000RevenueMedical and Science 20,707 18,768 39,475Aerospace and Defence 15,316 19,042 34,358Commercial and Industrial 14,135 24,308 38,443-----------------------------------------------------------------------------------------------Total segment revenue 50,158 62,118 112,276----------------------------------------------------------------------------------------------- ResultSegment result 14,765 11,891 26,656-----------------------------------------------------------------------------------------------Exchange differences (631)Voluntary severance payments (819)Share based payment charges (450)Other unallocated expenses (10,991)-----------------------------------------------------------------------------------------------Total unallocated expenses (12,891)-----------------------------------------------------------------------------------------------Profit from continuing operationsbefore tax and finance costs 13,765Net finance costs (1,849)-----------------------------------------------------------------------------------------------Profit before income tax 11,916Income tax expense (3,768)-----------------------------------------------------------------------------------------------Profit for the year 8,148----------------------------------------------------------------------------------------------- Sensors Electronic tubes Central unallocated Total items operations £000 £000 £000 £000 Assets and liabilitiesAssets 24,371 21,535 54,290 100,196Liabilities (2,623) (2,252) (51,584) (56,459)-----------------------------------------------------------------------------------------------Net assets 21,748 19,283 2,706 43,737----------------------------------------------------------------------------------------------- Other segment informationCapital expenditure: Property, plant and equipment 3,474 1,275 1,776 6,525 Software - - 1,278 1,278 Capitalised product development 816 492 - 1,308 Depreciation 2,051 1,431 1,381 4,863Amortisation 508 729 1,134 2,371Warranty provision 657 1,813 221 2,691 Year ended 31 March 2005 Sensors Electronic Total tubes operations £000 £000 £000RevenueMedical and Science 15,457 18,182 33,639Aerospace and Defence 16,753 10,770 27,523Commercial and Industrial 15,890 23,495 39,385-----------------------------------------------------------------------------------------------Total segment revenue 48,100 52,447 100,547----------------------------------------------------------------------------------------------- ResultSegment result 12,559 9,299 21,858-----------------------------------------------------------------------------------------------Difference on exchange 1,689Voluntary severance payments (61)Share based payment charges (142)Initial public offering costs (1,901)Other unallocated expenses (10,943)-----------------------------------------------------------------------------------------------Total unallocated expenses (11,358)-----------------------------------------------------------------------------------------------Profit from continuingoperations before tax andfinance costs 10,500Net finance costs (4,941)-----------------------------------------------------------------------------------------------Profit before income tax 5,559Income tax expense (2,167)-----------------------------------------------------------------------------------------------Profit for the year 3,392----------------------------------------------------------------------------------------------- Sensors Electronic tubes Central unallocated Total items Operations £000 £000 £000 £000 Assets and liabilitiesAssets 16,961 19,390 50,447 86,798Liabilities (2,404) (2,060) (44,092) (48,556)--------------------------- -------- -------- -------- --------Net assets 14,557 17,330 6,355 38,242--------------------------- -------- -------- -------- -------- Other segment informationCapital expenditure: Property, plant and equipment 2,597 2,065 1,451 6,113 Software - - 1,455 1,455 Capitalised product development 100 900 - 1,000Depreciation 2,165 1,346 1,225 4,736Amortisation 72 853 852 1,777Warranty provision 812 1,560 185 2,557 Geographical segments The following table presents revenue, capital expenditure and certain assetinformation regarding the Group's geographical segments for the years ended 31March 2006 and 2005. Year Year ended ended 31 March 31 March 2006 2005 £000 £000Group turnoverRevenue by destinationUnited Kingdom 31,472 25,081United States 37,492 35,802Europe 32,924 28,679Rest of the world 10,388 10,985-------------------------------------------------------------------------------- 112,276 100,547-------------------------------------------------------------------------------- Revenue by originUnited Kingdom 66,124 56,824United States 37,415 36,836Europe 8,737 6,887-------------------------------------------------------------------------------- 112,276 100,547-------------------------------------------------------------------------------- Segment assetsUnited Kingdom 85,291 71,104United States 10,511 11,640Europe 4,394 4,054-------------------------------------------------------------------------------- 100,196 86,798-------------------------------------------------------------------------------- Capital expenditure including productdevelopmentUnited Kingdom 9,058 8,402United States 48 158Europe 5 8-------------------------------------------------------------------------------- 9,111 8,568-------------------------------------------------------------------------------- 3. Income tax Major components of income tax expense for the years ended 31 March 2006 and2005 are: Year Year ended ended 31 March 31 March 2006 2005 £000 £000Consolidated income statementCurrent income taxCurrent income tax charge - UK corporation tax 2,861 792Current income tax charge - foreign tax 1,006 1,054--------------------------------------------------------------------------------Current income tax charge 3,867 1,846--------------------------------------------------------------------------------Adjustments in respect of current income tax of previousyears 320 15--------------------------------------------------------------------------------Total current income tax 4,187 1,861-------------------------------------------------------------------------------- Deferred income taxRelating to origination and reversal of temporarydifferences (419) 306--------------------------------------------------------------------------------Income tax expense reported in the group incomestatement 3,768 2,167-------------------------------------------------------------------------------- Tax relating to items charged or credited to equityDeferred income tax--------------------------------------------------------------------------------Net gain on adoption of IAS 32 and IAS 39 132 --------------------------------------------------------------------------------- Net loss on revaluation of cash flow hedges (214) -Credit in respect of share based payments (48) (78)Net deferred income tax retranslation of foreignoperations 42 (43)--------------------------------------------------------------------------------Tax credit in the statement of recognised income andexpense (220) (121)-------------------------------------------------------------------------------- A reconciliation of income tax expense applicable to accounting profit beforeincome tax at the statutory income tax rate to income tax expense at the Group'seffective income tax rate for the years ended 31 March 2006 and 2005 is asfollows: Year Year ended ended 31 March 31 March 2006 2005 £000 £000 Accounting profit before income tax 11,916 5,559 At UK statutory income tax rate of 30% (2005: 30%) 3,575 1,668Adjustments in respect of current income tax of previousyears 320 15Adjustments in respect of deferred income tax ofprevious years 76 29Expenditure not allowable for income tax 88 476Tax relief on research and development (280) (225)Tax relief on share options exercised (54) -Impact of higher taxes on overseas earnings 43 204--------------------------------------------------------------------------------Total tax expense reported in the income statement 3,768 2,167-------------------------------------------------------------------------------- 4. Earnings per share Basic earnings per share amounts are calculated by dividing profit for the yearattributable to ordinary equity holders of the parent by the weighted averagenumber of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the profitattributable to ordinary shareholders by the weighted average number of ordinaryshares outstanding during the year adjusted for the effects of dilutive options. The following reflects the income and share data used in the basic and dilutedearnings per share computations: Year Year ended ended 31 March 31 March 2006 2005 £000 £000--------------------------------------------------------------------------------Profit attributable to ordinary shareholders 8,148 3,392-------------------------------------------------------------------------------- Adjusted earnings per share is arrived at using the following earnings: Year Year ended ended 31 March 31 March 2006 2005 £000 £000 Profit for the year 8,148 3,392Initial public offering costs - 1,901Abnormal interest charges - 2,050Amortisation of acquired intangible assets 369 10Share based payment charges 450 142Voluntary severance costs 819 61Tax impact of the above (491) (843)-------------------------------------------------------------------------------- 9,295 6,713-------------------------------------------------------------------------------- The adjusted earnings per share is considered to more appropriately reflect theunderlying performance of the business. This reflects that the costs highlightedabove are expected to be either non-recurring or not comparable between periods. Year Year ended endedWeighted average number of ordinary shares 31 March 31 March 2006 2005 No. 000 No. 000 For basic earnings per share 55,018 48,944Effect of dilution:Share options 250 94--------------------------------------------------------------------------------For diluted earnings per share 55,268 49,038-------------------------------------------------------------------------------- 5. Dividends paid and proposed Year Year ended ended 31 March 31 March 2006 2005 £000 £000Declared and paid during the year:Equity dividends on ordinary shares: Final dividend for 2005: 3.90p (2004: 0.00p) 2,145 - First dividend for 2006: 2.0p (2005: 0.63p) 1,101 347-------------------------------------------------------------------------------- 3,246 347--------------------------------------------------------------------------------Proposed for approval at AGM (not recognised as a liability as at 31 March) Equity dividends on ordinary shares:Final dividend for 2006: 4.25p (2005: 3.90p) 2,340 2,143 The final dividend is payable on 15 September 2006 to shareholders registered atthe close of business on 25 August 2006 and is based on the number of shares inissue, excluding those held by the Employee Benefit Trust, at the date thefinancial statements are approved and authorised for issue. The final dividendmay differ due to increases or decreases in the number of shares in issuebetween the date of approval of the financial statements and the record date forthe final dividend. 6. RECONCILIATION OF MOVEMENTS IN EQUITY Ordinary Share Other Hedge Foreign Retained Total share premium reserves reserve currency earnings equity capital translation reserve £000 £000 £000 £000 £000 £000 £000At 1 April 2004 278 2,376 - - - 4,729 7,383Conversion of shares pre IPO 1,835 (1,835) - - - - -Redemption of shares pre IPO (262) - 274 - - (12) -Issue of shares on IPO 945 28,442 - - - - 29,387Initial Public Offering costs (1,682) - - - - (1,682)Investment in own shares byEmployee Benefit Trust - - (10) - - - (10)Total recognisedincome/(expense) for theyear - - - - (101) 3,470 3,369Dividend - - - - - (347) (347)Share based payment charge - - - - - 142 142----------------------------------------------------------------------------------------------------------At 31 March 2005 aspreviously stated 2,796 27,301 264 - (101) 7,982 38,242Effect of adopting IAS32 and 39 - - - 367 - (59) 308----------------------------------------------------------------------------------------------------------At 1 April 2005 (restated) 2,796 27,301 264 367 (101) 7,923 38,550----------------------------------------------------------------------------------------------------------Total recognisedincome/(expense) for theyear - - - (501) 322 8,154 7,975Share based payment charge - - - - - 450 450Issue of shares - 8 - - - - 8Issue of shares by EBTon exercise of options - - 1 - - (1) -Equity dividends - - - - - (3,246) (3,246)----------------------------------------------------------------------------------------------------------At 31 March 2006 2,796 27,309 265 (134) 221 13,280 43,737---------------------------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock Exchange