e2v technologies PLC E2V Half-year results for six months to 30 September

  e2v technologies PLC (E2V) - Half-year results for six months to 30
  September

RNS Number : 2730Q
e2v technologies PLC
05 November 2012




                               5 November 2012

                             e2v technologies plc

          Half-year results for the six months to 30 September 2012



e2v technologies plc, the specialist provider of technology solutions for high
performance systems announces its half-year results for the six months ended
30 September 2012:



                                              6 months ended    6 months ended

Highlights                                 30 September 2012 30 September 2011

                                                         £m                £m
Revenue        (excluding         disposal 
businesses)^(1)                                         90.7             108.6
Adjusted^(2) operating profit                           13.9              19.9
Adjusted^(2) profit before tax                          13.1              18.2
Profit before tax                                       14.4              13.1
Net borrowings                                          28.3              32.0
Adjusted^(3) earnings per share                         4.5p              6.0p
Earnings per share                                      5.3p              4.4p
Interim dividend per share                              1.3p              1.3p



· Disposal of non-core businesses, for total cash consideration of £14m



·  Revenue  (excluding  disposal  businesses)^(1)  at  £90.7m  (H1  2012: 
£108.6m)



· Operating cost savings of £5m achieved in H1



· Adjusted^(2) operating profit margin at 15% (H1 2012: 18%)



· Order book for the second half at £88m (30 September 2011: £90m)



· Strong second half anticipated



· Interim dividend maintained at 1.3p



· Successful migration of US operations to new facilities on time and  on 
budget



The Board announces an interim dividend of 1.3 pence per share. This will  be 
paid on 17 December 2012 to e2v shareholders on the register as at 30 November
2012.



Commenting on the results, Keith Attwood, Chief Executive said:



"The business has responded well to the challenges in our end user markets and
the delays experienced in order  bookings. The ongoing cost control,  drawing 
on the flexible cost base we previously put in place and implementing  further 
restructuring,  results  in  a  profit   margin  in  line  with   management's 
expectations. We fully appreciate the contribution our staff are making.



We  have  made  progress  on  strategic  contracts,  although  no  revenue  is 
anticipated from vermiculite this year. Order book for delivery in the second
half is  £88m,  which compares  with  last year  at  £90m, and  provides  good 
visibility of revenue for the second  half. This, combined with ongoing  cost 
control and the pipeline of opportunities, supports our view that the business
remains in  good  shape to  deliver  a  strong second  half  performance,  and 
continues to be well positioned for growth thereafter."



Further enquiries:

e2v technologies plc
Keith Attwood, Chief Executive

Charles Hindson, Group Finance Director  Tel: +44 (0)1245 493493
Website: www.e2v.com
Pelham Bell Pottinger
Archie Berens / Charles Goodwin          Tel: +44 (0)20 7861 3112



Notes

(1) Excludes the Group's  non-core activities disposed  in May 2012  and 
October 2012.

(2)  Adjusted  operating  profit  is  before  amortisation  of  acquired 
intangible assets and operating specific items. Adjusted profit before tax is
before amortisation of acquired intangible assets and all specific items.

(3)  Adjusted  earnings  is  profit  before  amortisation  of   acquired 
intangible assets and all specific items less tax where applicable.



Interim management report

Review of the half-year



SUMMARY AND OUTLOOK



e2v has  responded  well to  the  challenges  posed by  the  general  external 
environment, lower demand from  certain end user markets  and delays in  order 
bookings although technical issues  have led to delayed  revenue on space  and 
defence programmes. We have drawn on the flexibility established in the  cost 
base, with ongoing cost control and further restructuring underway,  resulting 
in the  profit  margin  of  the  business  being  in  line  with  management's 
expectations. With  improved  order coverage  for  the second  half  and  key 
actions for opportunity pipeline conversion to orders, we remain cautious  but 
anticipate a strong trading  performance for the  remainder of this  financial 
year.



Revenue excluding  the  disposal businesses  was  £90.7m (H1  2012:  £108.6m), 
reflecting deferred  orders  for  US  and UK  defence,  lower  demand  in  our 
commercial and industrial businesses, and delayed revenue in space.



Adjusted^(1) operating profit of £13.9m (H1 2012: £19.9m) represents a  margin 
of 15% (H1  2012: 18%). The  actions management have  taken have reduced  the 
cost base by £5m in the period, demonstrating the resilience of the Group.



Our net borrowings at 30 September 2012 were £28.3m (H1 2012: £32.0m).



The disposal of our remaining non-core businesses on the 16 May 2012 for  £14m 
completed our portfolio realignment programme. Operating costs savings of £5m
were achieved through ongoing cost control and we have a further restructuring
programme underway primarily in  the UK at our  Chelmsford facility. We  have 
completed the transfer of our US operations into our new US facility, on  time 
and budget, supporting our  growth in this key  market. Our change  programme 
for space  projects  is  progressing  with  ongoing  recruitment  and  process 
improvement,  recovering  programme  delays.  We  have  also  established  an 
inventory reduction programme in the first quarter, with the benefit  targeted 
for the second half of the year.



The order  book for  delivery in  the coming  12 months  was £114m  (H1  2012: 
£120m), a decrease of £6m. Excluding  the anticipated fulfilment of the  last 
time buy orders,  the disposal of  the non-core businesses  and delays in  the 
cycle of radiotherapy orders, there has been modest growth in the rest of  the 
order book. Our six month order book for our continuing business is £88m  (H1 
2012: £90m).



We have made  progress on  a number of  key strategic  initiatives during  the 
period. We have  received the  initial order under  a multi-year  development 
agreement with  Rio  Tinto, covering  the  design and  supply  of  large-scale 
ProWave^TM microwave generators for use in projects to improve the  efficiency 
of copper recovery.  In space, we  were pleased to  have booked a  multi-year 
order with the China Academy of Space Technology (CAST). We were also pleased
to have recently announced the signing  of a memorandum of understanding  with 
Micron Technology, to  build upon our  strategic partnerships with  Freescale, 
Everspin and Maxim.  In October we  were awarded a  further £3.8m of  funding 
from the Regional Growth Fund in the UK to help support our strategic plan for
growth within the space imaging business.



Outlook



Our order book for delivery in the second half of £88m, along with anticipated
opportunity pipeline conversion, provides  visibility of stronger second  half 
revenue  compared  with  the  first  half.  Whilst  we  remain  cautious,  we 
anticipate a strong second half performance and therefore our outlook for  the 
full year remains unchanged.  The Group continues to  be well positioned  for 
growth thereafter.





BUSINESS OVERVIEW



RF power solutions



The RF  power solutions  division has  three key  applications:  radiotherapy, 
electronic countermeasures and industrial processing systems.



Sales for RF power solutions  were lower by 5%  at £37.9m (H1 2012:  £39.9m). 
This reflects lower demand in  our commercial and industrial business,  partly 
offset by  growth  in  electronic  countermeasures,  with  radiotherapy  being 
steady.



In radiotherapy we  deliver high  performance, high  reliability products  and 
provide the continuity for long term spares requirements that our radiotherapy
customers require. OEM demand in radiotherapy  has been strong in the  second 
quarter and we anticipate that we will continue to supply two of our strategic
customers under  existing terms,  whilst the  multi-year contracts  are  being 
finalised, and  we  will  provide  updates  on  progress  this  quarter.  The 
reduction in order book relating to these multi-year orders is £9m.



We provide components and sub-systems for electronic countermeasure protection
of high value air, land  and naval platforms. Electronic countermeasures  has 
delivered good  growth  from the  existing  programmes, including  the  ALE-55 
programme for the F18 Super Hornet.  After project delays, progress is  being 
made on  our  development contract  for  an  F15 upgrade  programme  which  we 
anticipate will move into  production in the second  half. This represents  a 
significant opportunity for the Group and  is a component in a large  US/Saudi 
export contract.



Our novel  application  of microwave  and  high  power RF  to  the  industrial 
processing of bulk  materials has  the potential  to deliver  transformational 
economics  in  process  efficiency,  energy  consumption  and  material  yield 
improvements in  established sectors.  In industrial  processing systems,  we 
have signed a development  agreement with Rio Tinto,  covering the design  and 
supply of large-scale ProWave^TM microwave and radio frequency generators  for 
use in projects to improve the efficiency of mineral recovery. The  agreement 
follows on from the signing of a memorandum of understanding earlier this year
and forms a framework  under which e2v will  scale up microwave generation  to 
that required by Rio Tinto.  Successful completion of the development  phase, 
anticipated at around two years, could  then lead to the supply of  mine-ready 
microwave equipment.



The vermiculite system's  extended field  trials have identified  a number  of 
technical challenges and we  have a programme of  work with the University  of 
Nottingham to determine viability.  No revenue from  this application is  now 
expected in the current financial year.



The remaining product  lines in  the division largely  provide technology  for 
commercial and industrial applications and activity has now steadied in  these 
sectors, whilst being substantially lower than the comparable period.  Whilst 
remaining cautious, we anticipate  improvement in orders  for delivery in  the 
second  half.  The  cost  flexibility  built  into  the  business  has   been 
instrumental in materially improving operating margins. Reflecting changes in
the markets for  our component  businesses generally, we  have commenced  some 
further restructuring of our Chelmsford based operation.





High performance imaging solutions



The High performance imaging solutions  division has three main  applications: 
machine vision, space imaging and scientific imaging.



Sales for High performance imaging solutions  were lower by 14% at £27.7m  (H1 
2012: £32.3m). Excluding one-off last time buys, sales were effectively flat.



In  machine  vision,  our  camera  platforms  provide  sensitive,  high  speed 
performance for high  end inspection processes  where quality and  reliability 
are key  customer  requirements for  applications  such as  semiconductor  and 
electronics  manufacturing   inspection,   food   and   beverage   processing, 
ophthalmology and document  imaging. Machine vision  demand experienced  some 
continued softening  in  the  first quarter  for  industrial  process  control 
applications, although shows signs  of steadying in  the second quarter.  Our 
new CMOS  based  line scan  camera  is  well positioned  for  identified  next 
generation flat panel inspection systems for installation in coming months and
for smaller consumer electronics production applications.



We provide high performance sensors enabling high end scientific instruments.
Scientific imaging is down on the comparable period reflecting lower end  user 
demand for existing product lines although  our new 8 micron high  performance 
sensor for life science applications has performed well, securing  preliminary 
orders from our major customers. We anticipate a return to the regular  order 
call-offs in the second half.



We have a long established  heritage of providing reliable, high  performance, 
high quality space qualified imaging sensors and arrays for space science  and 
astronomy applications  and  high speed,  high  resolution sensors  for  earth 
observation satellites.  Space  imaging  is down  on  the  comparable  period 
despite the strong  order book  with technical  issues resolved  in the  first 
quarter leading to  the anticipated  recovery of programme  milestones in  the 
second half. We were pleased to have  booked a multi-year order for CAST  for 
the provision of imaging sensors.  Though later than planned, this  programme 
will contribute revenue in the second  half. We initiated last year  specific 
programmes in  the UK  and  France to  recruit  additional staff  and  improve 
processes in our  space business. This  has enabled us  to recover  programme 
delays although not  as quickly as  we intended with  these initiatives.  The 
nature of this business is that  it will remain technically challenging as  we 
provide leading edge technologies for scientific discovery.



We support a range of other applications for our imaging technology  including 
CMOS dental  sensors,  CMOS area  array  sensors  for use  in  automatic  data 
collection systems including 2D barcode readers and thermal imaging  cameras. 
The remaining product  lines in the  division have shown  good growth  overall 
reflecting strong demand,  primarily for  our dental  sensors as  well as  our 
industrial  CMOS  sensors.  Overall  margins  in  the  division  reflect  the 
reduction in  one-off revenue  as  well as  the  delayed milestones  on  space 
programmes.





Hi-rel semiconductor solutions



The Hi-rel  semiconductor  solutions  division  addresses  two  main  sectors: 
Semiconductor  Lifecycle  Management   (SLiM™)  and   aerospace  and   defence 
semiconductors.



Sales for Hi-rel  semiconductor solutions  decreased 31% to  £25.1m (H1  2012: 
£36.4m). This  reflects  the  anticipated  reduction  in  68k  microprocessor 
revenue as well as the continued decline in the smart sensors business.



SLiM™  is  our  new  approach  to  obsolescence  management  and   counterfeit 
mitigation for our aerospace and defence customers. This provides a proactive
approach for managing  critical components in  aerospace and defence  systems, 
where the original components can become  obsolete during the lifetime of  the 
system and offers the potential for lower cost and reduced risk of counterfeit
goods entering the supply chain over the lifetime of the assets. In SLiM™, as
anticipated, revenue  is lower  than the  comparable period  last year,  which 
included the completion  of the first  phase of our  68k microprocessor  SLiM™ 
programme.  The  estimated  future  revenue  from  our  portfolio  of   SLiM™ 
programmes has remained stable  at around £20m over  the coming ten years  and 
this is not yet reflected in the order book. We continue to support strategic
programme initiatives with leading defence contractors covering their at  risk 
components.



We provide high  reliability semiconductors  and packaging  and test  services 
that meet the demanding specifications of our aerospace and defence customers.
Aerospace and defence semiconductors has benefited from two new product  line 
introductions, which  have offset  some  softening in  demand for  our  legacy 
products in  the  US. In  Europe,  customer demand  is  generating  increased 
activity for assembly and test services  in the second half. Current  trading 
includes the anticipated decline in the smart sensor business with our planned
exit from the sector. Order intake has remained steady, with the  anticipated 
replenishment of  the  order  profile  in the  second  half,  partly  from  an 
uncertain US A&D market.



We are  pleased  to  announce  that  in October  we  signed  a  memorandum  of 
understanding with Micron Technology to be an aftermarket provider of  certain 
Micron memory products for aerospace, industrial and defence customers.  This 
is in addition to our existing strategic partnerships with Freescale, Everspin
and Maxim.



The staffing  flexibility that  we had  established in  our Grenoble  business 
allowed us to  largely accommodate the  lower levels of  activity, along  with 
careful cost control  in the US  as we moved  into the new  facility in  July, 
resulting in margins in line with our expectations despite the lower level  of 
output.





Geographic expansion



The successful migration  of our US  operations to our  new facility has  been 
completed on  time  and budget.  We  have continued  to  recruit  experienced 
professionals in the US  to drive the  growth of this  business. In Asia,  we 
continue to build the team across  the region and we expect local  manufacture 
in China to commence in the second half.





Central functions and other businesses



The portfolio  of  businesses  that  were managed  in  the  corporate  centre, 
covering x-ray detectors, gas sensors and air quality sensors was sold on  the 
16 May  2012  for  initial  net  proceeds  of  £11.4m.  There  were  deferred 
arrangements made for the industrial gas sensors business of e2v  technologies 
(UK) Ltd which completed on 31  October 2012 generating net proceeds of  £0.5m 
and at  30 September  2012 the  net assets  of this  business continue  to  be 
recorded as assets held for sale.



The  divisions  are  supported  by  group  marketing  and  technology,   group 
operations and support services including commercial, human resources, IT  and 
finance, whose  costs are  largely  included within  divisional  performance. 
Central costs not allocated relate to  the management of e2v technologies  plc 
and part of  our sales  expansion principally in  Asia, these  were £1.7m  (H1 
2012: £1.9m).





FINANCIAL REVIEW



The results for  the first half  of the  financial year ending  31 March  2013 
reflect the challenging market conditions, no contribution from our industrial
processing systems business within RF power  solutions with a slower start  on 
Rio Tinto and no  contribution from the vermiculite  programme, and delays  on 
space and US defence programmes partially offset by the ongoing cost reduction
activities.



Revenue excluding the disposal businesses was £90.7m (H1 2012: £108.6m).  The 
comparable period included  one-off revenue  of £3.9m.  The revenue  achieved 
from the rest of the  business is therefore lower  by 13% from the  comparable 
period. New business, being new products or new customers supplied so far  in 
this financial  year, made  up  approximately 10%  of  sales (H1  2012:  15%), 
marginally below the 12% that we  estimate is required to maintain renewal  of 
our product portfolio. The proportion of sales generated from sub-systems and
solutions in the period was approximately  28% (H1 2012: 32%), reflecting  the 
delayed milestones in space programmes.



In the main application segments, sales were up in electronic  countermeasures 
by 21% and revenue was maintained in radiotherapy. In machine vision  revenue 
was down by 23%,  scientific imaging was down  9% reflecting softer demand  in 
the first quarter, with space down 24% due to delayed milestones and aerospace
and defence semiconductors  revenue was  down 28%  reflecting the  anticipated 
reduction in 68k microprocessors. In the remainder of the Group's  activities 
sales were down 14% reflecting the tough trading conditions. On a rolling  12 
month basis the percentage of sales  outside Western Europe have increased  to 
54% (H1 2012: 49%).



Gross profit  before specific  items  decreased by  17%  to £36.8m  (H1  2012: 
£44.5m) reflecting  the  lower  revenue  although  cost  reduction  activities 
maintained the gross  margin at 41%.  There has been  ongoing cost  reduction 
activity and continued action to  address low margin product lines,  including 
rationalisation of  the product  portfolio, selective  price increases,  along 
with yield and other production improvements.



Net research and development expenditure  decreased to £5.7m (H1 2012:  £7.6m) 
representing  6%  of  revenue  with  investment  focused  on  the  key  growth 
programmes, and is after the benefit of increased grant funding both in the UK
and France  of £1.1m  in the  period.  The use  of subcontract  resource  has 
continued, where  necessary,  to deliver  these  key programmes  and  also  to 
provide agility and flexibility.



Selling and  distribution costs  increased marginally  by £0.2m  to £7.9m  (H1 
2012: £7.7m).  This reflects  the expansion  in the  US and  Asian  platforms 
offset by some cost savings made in Europe.



Administrative  expenses,  excluding  amortisation  of  acquired  intangibles, 
business improvement programme costs,  profit on sale  of businesses and  fair 
value movements on foreign  exchange contracts, were  maintained at £9.3m  (H1 
2012: £9.2m).



Amortisation of acquired intangible assets decreased to £1.3m (H1 2012: £2.2m)
as a result of a number  of the acquired intangibles becoming fully  amortised 
in the period.  Fair value gains  on foreign exchange  contracts amounted  to 
£0.2m (H1 2012: losses  £0.8m). The trading results  of the Group's  non-core 
businesses of £0.4m, which  were disposed in May  2012 and October 2012,  have 
been treated as specific items for the period, with the prior period  restated 
accordingly (see note 4). The profit recognised on the disposal is the net of
exchange differences recycled  from reserves of  £2.4m and a  loss on sale  of 
£0.1m.



During the  period,  a  restructuring and  site  consolidation  programme  has 
commenced at the  Chelmsford site,  with further  restructuring ongoing.  The 
total cost of the  programme is estimated  at c.£5m of  which, £0.5m has  been 
recognised in the first half.



The adjusted^(1) operating  profit margin at  15% (H1 2012:  18%) was in  line 
with management's expectations.



Finance costs before specific items decreased by 54% to £0.8m (H1 2012: £1.6m)
reflecting the lower levels  of borrowings and the  reduced margin payable  on 
the bank  facility entered  into  in July  2011. The  resulting  adjusted^(1) 
profit before tax decreased by 28% to £13.1m (H1 2012: £18.2m).



Profit before tax increased by 10% to £14.4m (H1 2012: £13.1m) reflecting  the 
gain  in  the  period  principally  due  to  the  recycling  of  the  exchange 
differences on  the sale  of the  non-core  businesses as  well as  the  lower 
amortisation and restructuring costs.



The underlying  tax rate  for the  first half  was 28%  (H1 2012:  30%) due  a 
combination of both  the lower corporation  tax rate  in the UK  and a  higher 
proportion of taxable profits in the UK.



Adjusted^(2) earnings per share decreased to 4.5p (H1 2012: 6.0p) and reported
earnings per share amounted to 5.3p (H1 2012: 4.4p).



Operating cash  flow in  the first  half  was £5.4m  (H1 2012:  £17.0m).  The 
reduction reflects the lower operating profit and increased working capital of
£13.3m.  Of  which,  £5.2m  relates  to  increased  inventory,  the  majority 
reflecting delays on projects, £4.1m relating to payment of non-trade payables
and restructuring programmes absorbing £2.8m. We have established a programme
for inventory reduction, which is anticipated to benefit the second half. Tax
payments were £2.1m (H1 2012: £6.3m), reflecting reduced payments on account.
Net proceeds from the disposal of the non-core businesses amounted to  £11.4m. 
After capital expenditure,  other financing costs,  final dividends of  £5.9m 
and movements due to exchange rates, the overall decrease in net borrowings in
the period amounted to £1.7m. In the  second half of this financial year,  we 
anticipate that around £2.5m of the restructuring costs will be incurred.



At 30 September 2012  net borrowings amounted to  £28.3m. The total  drawings 
under the bank facility arrangement were  £37.8m of which £24.4m was drawn  in 
Sterling with the balance being drawn in US dollars. The unutilised  facility 
(at 30 September 2012 exchange rates)  is £41.9m, £30.5m of which is  Sterling 
denominated, £4.4m  is  Euro  dominated  with  the  balance  being  US  dollar 
denominated.



The order book has shown modest growth when compared with last year  excluding 
the anticipated fulfilment  of last  time buy  orders (reduction  of £4m)  and 
disposal of the  non-core businesses  (reduction of  £6m), and  delays in  the 
cycle of radiotherapy orders (reduction  of £9m). These continue under  short 
term arrangements with two of our radiotherapy customers.



The Group's total order book as at  30 September 2012 was £138m (30  September 
2011: £146m), representing a decrease of  £8m. Similarly, the order book  for 
delivery over the  coming 12 months  was £114m (30  September 2011: £120m),  a 
decrease of  £6m.  Our  sequential  order  book  excluding  the  disposed  of 
businesses is stable  at £137m (31  March 2012: £136m)  and our sequential  12 
month order book on the same basis also remained stable.



Principal risks and uncertainties for the second half



In compliance with the UK Corporate  Governance Code, the Group has  processes 
in place for identifying, evaluating and managing the significant risks  which 
could have an impact upon the Group's performance.



The principal risks and uncertainties affecting the business activities of the
Group remain  those detailed  on pages  23 and  24 of  the Annual  Report  and 
Financial Statements for  the year ended  31 March  2012, a copy  of which  is 
available on the Group website at e2v.com. The Group has reviewed these risks
and concluded that they adequately  represent the current principal risks  and 
uncertainties of the  company and  will continue  to remain  relevant for  the 
second half of  the financial  year. In  summary, the  significant risks  and 
uncertainties faced  by  the Group  comprise:  changing product  demand,  Euro 
destabilisation, competition including advancement in technology, IT security,
failure of suppliers,  supply chain disruption,  intellectual property,  legal 
and regulatory, people, acquisitions and treasury.



The Group  continues to  monitor  its exposure  to  risk associated  with  the 
continued uncertainty  associated  with  the Eurozone.  Trading  exposure  is 
limited,  with  sales  into  Greece,   Ireland,  Italy,  Portugal  and   Spain 
representing 2.5% (£2.3m) of total revenue in the half year. The Group is not
exposed to  any  major  operational  or supply  chain  dependencies  in  these 
countries. Nor does  it have  any significant  liquidity or  funding risk  in 
relation to these countries.





C Geoghegan K Attwood

Chairman        Chief 
Executive Officer



Notes



(1)  Adjusted  operating  profit  is  before  amortisation  of  acquired 
intangible assets and operating specific items. Adjusted profit before tax is
before amortisation of acquired intangible assets and all specific items.

(2)  Adjusted  earnings  is  profit  before  amortisation  of   acquired 
intangible assets and all specific items less tax where applicable.





Independent review report to e2v technologies plc



Introduction



We have been engaged by the Company  to review the condensed set of  financial 
statements in the  half-yearly financial report  for the six  months ended  30 
September 2012 which comprises the Consolidated Income Statement, Consolidated
Statement  of  Comprehensive  Income,  Consolidated  Statement  of   Financial 
Position, Consolidated  Statement of  Cash  Flows, Consolidated  Statement  of 
Changes in Equity  and the  related notes  1 to 14.  We have  read the  other 
information contained  in  the  half-yearly financial  report  and  considered 
whether it  contains any  apparent misstatements  or material  inconsistencies 
with the information in the condensed set of financial statements.



This report  is  made  solely  to the  Company  in  accordance  with  guidance 
contained in  International  Standard  on  Review  Engagements  2410  (UK  and 
Ireland) 'Review of Interim Financial Information Performed by the Independent
Auditor of the Entity' issued by the Auditing Practices Board. To the fullest
extent permitted by law, we do  not accept or assume responsibility to  anyone 
other than the Company, for our work, for this report, or for the  conclusions 
we have formed.



Directors' responsibilities



The half-yearly  financial  report is  the  responsibility of,  and  has  been 
approved by, the Directors. The  Directors are responsible for preparing  the 
half-yearly  financial   report  in   accordance  with   the  Disclosure   and 
Transparency Rules of the United Kingdom's Financial Services Authority.



As disclosed  in note  1, the  annual financial  statements of  the Group  are 
prepared in  accordance with  IFRSs as  adopted by  the European  Union.  The 
condensed set of financial statements  included in this half-yearly  financial 
report has been prepared in accordance with International Accounting  Standard 
34, 'Interim Financial Reporting', as adopted by the European Union.



Our responsibility



Our responsibility is to express to the Company a conclusion on the  condensed 
set of financial statements in the  half-yearly financial report based on  our 
review.



Scope of review



We conducted our review  in accordance with  International Standard on  Review 
Engagements (UK and  Ireland) 2410, 'Review  of Interim Financial  Information 
Performed by the  Independent Auditor of  the Entity' issued  by the  Auditing 
Practices Board  for use  in  the United  Kingdom.  A review  of  half-yearly 
financial information  consists  of  making enquiries,  primarily  of  persons 
responsible for financial and accounting matters, and applying analytical  and 
other review procedures.  A review  is substantially  less in  scope than  an 
audit conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.



Conclusion



Based on our  review, nothing  has come  to our  attention that  causes us  to 
believe that  the condensed  set of  financial statements  in the  half-yearly 
financial report for the six months  ended 30 September 2012 is not  prepared, 
in all material respects, in accordance with International Accounting Standard
34, 'Interim Financial  Reporting' as adopted  by the European  Union and  the 
Disclosure and Transparency Rules of  the United Kingdom's Financial  Services 
Authority.



Ernst & Young LLP

Cambridge

2 November 2012



1. The maintenance and integrity of  the e2v website is the responsibility  of 
the  Directors;  the  work  carried  out  by  the  auditor  does  not  involve 
consideration of  these  matters,  and accordingly,  the  auditor  accepts  no 
responsibility for  any  changes  that  may have  occurred  to  the  financial 
statements since they were initially presented on the website.

2.  Legislation  in   the  United  Kingdom   governing  the  preparation   and 
dissemination of financial  statements may  differ from  legislation in  other 
jurisdictions.







Consolidated income statement (unaudited)

Six months ended 30 September 2012



                                                                                             Year
                      6 months ended 30 September 2012   6 months ended 30 September 2011  ended 31
                                                                                             March
                                                                                             2012
                                                                         Specific
                                                              Before      items &
                           Before                           specific     acquired
                         specific     Specific               items &   intangible
                          items &      items &              acquired        asset
                         acquired     acquired            intangible amortisation
                                    intangible                 asset
                       intangible        asset         amortisation     (Note 3)
                            asset amortisation
                     amortisation     (Note 3)    Total     Restated     Restated    Total     Total
               Notes         £000         £000     £000         £000         £000     £000      £000
Revenue          2         90,677        3,280   93,957      108,633        6,588  115,221  234,615
Cost of sales            (53,924)      (2,697) (56,621)     (64,177)      (6,898) (71,075) (144,634)
Gross profit               36,753          583   37,336       44,456        (310)   44,146    89,981
Research and
development
costs                     (5,670)        (220)  (5,890)      (7,626)        (571)  (8,197)  (15,674)
Selling and
distribution              (7,959)        (106)  (8,065)      (7,733)        (528)  (8,261)  (17,597)
costs
Administrative            (9,263)          987  (8,276)      (9,235)      (3,023) (12,258)  (21,504)
costs
Operating                  13,861        1,244   15,105       19,862      (4,432)   15,430    35,206
profit
Finance costs    5          (752)            -    (752)      (1,627)        (779)  (2,406)   (3,252)
Finance          5             12            -       12            7           59       66        89
revenue
 Profit before             13,121        1,244   14,365       18,242      (5,152)   13,090    32,043
      taxation
Income tax       6        (3,643)          554  (3,089)      (5,473)        1,631  (3,842)   (8,503)
expense
Profit for the              9,478        1,798   11,276       12,769      (3,521)    9,248    23,540
period
Attributable
to:
Equity holders              9,478        1,798   11,276       12,769      (3,521)    9,248    23,540
of the Company
Earnings per
share
Basic            7          4.47p                 5.32p        6.04p                 4.37p    11.12p
Diluted          7          4.36p                 5.19p        5.97p                 4.32p    10.86p



Consolidated statement of comprehensive income (unaudited)

Six months ended 30 September 2012



                                      6 months ended 6 months ended Year ended
                                        30 September   30 September   31 March

                                Notes          2012           2011      2012
                                                £000           £000       £000
Exchange differences on
retranslation of foreign
operations                                   (3,205)          (656)    (3,682)
Exchange differences recycled
on disposal of non-core
businesses                        4          (2,428)              -          -
Exchange differences on net
investment hedges                              (323)            720         80
Current tax on exchange
differences                                       79          (188)       (22)
Actuarial losses on
post-employment benefits                       (318)          (111)      (333)
Deferred tax on actuarial
losses on post-employment
benefits                                         110             38        107
Other comprehensive  expense for  the        (6,085)          (197)    (3,850)
period
Profit for the period                         11,276          9,248     23,540
Total comprehensive  income  for  the          5,191          9,051     19,690
period
Attributable to:
Equity holders of the Company                  5,191          9,051     19,690



Consolidated statement of financial position (unaudited)

As at 30 September 2012



                                           30 September 30 September
                                                                     31 March
                                                  2012         2011      2012
                                     Notes         £000         £000      £000
ASSETS
Non-current assets
Property, plant and equipment          9         37,936       32,140    36,616
Intangible assets                                78,161       92,727    80,375
Deferred income tax asset                         7,946        9,840     8,122
                                                124,043      134,707   125,113
Current assets
Inventories                                      47,895       47,773    43,584
Trade and other receivables                      41,647       44,914    45,051
Other financial assets                              423           21       193
Income tax receivable                             1,122        1,738     2,185
Cash at bank and in hand              11          9,540        7,930     8,629
Assets held for sale                                613            -    15,050
Total current assets                            101,240      102,376   114,692
Total assets                                    225,283      237,083   239,805
LIABILITIES
Current liabilities
Trade and other payables                       (39,308)     (50,320)  (49,286)
Other financial liabilities                           -        (263)       (3)
Income tax payable                              (1,522)      (1,808)   (1,490)
Provisions                                      (6,879)     (12,979)   (8,560)
Liabilities directly associated with
assets classified as held for sale                    -            -   (1,918)
Total current liabilities                      (47,709)     (65,370)  (61,257)
Net current assets                               53,531       37,006    53,435
Non-current liabilities
Borrowings                            11       (37,332)     (39,149)  (38,303)
Provisions                                        (784)        (469)     (853)
Employment    and    post-employment  12        (4,004)      (3,156)   (3,468)
benefits
Deferred income tax liabilities                 (4,014)      (5,881)   (4,488)
Total non-current liabilities                  (46,134)     (48,655)  (47,112)
NET ASSETS                                      131,440      123,058   131,436
CAPITAL AND RESERVES
Called up share capital                          10,750       10,743    10,747
Share premium                                    41,828       41,791    41,809
Merger reserve                                   44,557       44,557    44,557
Own shares reserve                              (2,118)      (2,182)   (2,182)
Capital redemption reserve                          274          274       274
Foreign currency translation reserve            (4,575)        4,802     1,302
Retained earnings                                40,724       23,073    34,929
TOTAL SHAREHOLDERS' FUNDS              
ATTRIBUTABLE TO EQUITY HOLDERS OF
THE PARENT COMPANY                             131,440      123,058   131,436





Consolidated statement of cash flows (unaudited)

Six months ended 30 September 2012



                                              6 months     6 months Year ended
                                                 ended        ended
                                          30 September 30 September   31 March

                                                 2012         2011      2012
                                    Notes         £000         £000       £000
Cash    flows    from     operating 
activities
Profit before tax                               14,365       13,090     32,043
Net finance costs                                  740        2,340      3,163
Operating profit                                15,105       15,430     35,206
Adjustments to reconcile to net cash inflows from
operating activities
Depreciation of property, plant and              3,935        4,373      7,793
equipment                             9
Reversal  of  previous   impairment                  -        (403)      (433)
loss
Profit on sale  of property,  plant               (12)        (146)      (774)
and equipment
Gain  on   disposal   of   non-core            (2,333)            -          -
businesses                            4
Amortisation of intangible assets                1,840        2,860      5,604
Impairment of assets held for sale                   -            -      1,650
Fair   value   (gains)/losses    on              (239)          757        355
foreign exchange contracts
Share based payment charges                        442          322        559
Increase in inventories                        (5,152)        (568)    (1,860)
Decrease   in   trade   and   other              3,868        5,279      1,727
receivables
Decrease   in   trade   and   other           (10,515)      (6,770)    (4,925)
payables
Decrease in provisions                         (1,532)      (4,104)    (7,511)
Cash generated from operations                   5,407       17,030     37,391
Income taxes paid                              (2,090)      (6,288)   (10,798)
Net cash from operating activities               3,317       10,742     26,593
Cash    flows    from     investing 
activities
Proceeds  from  sale  of  property,                 12          217      1,007
plant and equipment
Interest received                                   12            7          7
Proceeds from disposal of  non-core             11,380            -          -
businesses                            4
Purchases of  property,  plant  and            (5,695)      (4,218)   (14,419)
equipment                             9
Purchases of software                            (632)        (764)    (1,532)
Expenditure on product development               (398)        (403)      (767)
Net cash  from/(used in)  investing              4,679      (5,161)   (15,704)
activities
Cash    flows    from     financing 
activities
Interest paid                                    (543)        (804)    (1,501)
Proceeds from issue of shares  (net                 22            9         31
of issue costs)
Dividends paid                        8        (5,932)      (7,621)   (10,373)
Payment  of  cancellation  fee   on                  -        (109)      (109)
interest rate swap
Net repayment of borrowings          11          (737)      (1,144)    (1,951)
Transaction costs of new bank loans                  -        (821)      (821)
raised
Net   cash   used   in    financing            (7,190)     (10,490)   (14,724)
activities
Net increase/(decrease) in cash and                806      (4,909)    (3,835)
cash equivalents
Net foreign exchange difference                  (216)         (47)      (101)
Cash and cash equivalents at                     8,629       12,886     12,886
beginning of the period
Cash and cash equivalents at
beginning of the period classified
as assets held for sale                            321            -          -
Total cash and cash equivalents at
beginning of the period              11          8,950       12,886     12,886
Cash and cash equivalents at end of              9,540        7,930      8,629
the period
Cash and cash equivalents at end of
the period classified as assets
held for sale                                        -            -        321
Total Cash and cash equivalents at               9,540        7,930      8,950
end of the period                    11





Consolidated statement of changes in equity (unaudited)

Six months ended 30 September 2012



                                                                                          Foreign                

                                                Called                           Capital    currency                

                                              up share    Share   Merger     Own redemption translation  Retained   Total

                                              capital premium reserve shares   reserve    reserve Earnings Equity
                                                  £000     £000     £000    £000       £000        £000      £000    £000
1 April 2011                                    10,742   41,783   44,557 (2,182)        274       4,926    21,147 121,247
Other comprehensive income                           -        -        -       -          -       (124)      (73)   (197)
Profit for the period                                -        -        -       -          -           -     9,248   9,248
Total comprehensive income                           -        -        -       -          -       (124)     9,175   9,051
Issue of shares                                      1        8        -       -          -           -         -       9
Dividends paid                                       -        -        -       -          -           -   (7,621) (7,621)
Share based payment                                  -        -        -       -          -           -       322     322
Deferred    tax     on    share     based                                                                    
payment
                                                     -        -        -       -          -           -        50      50
30 September 2011                               10,743   41,791   44,557 (2,182)        274       4,802    23,073 123,058
Other comprehensive income                           -        -        -       -          -     (3,500)     (153) (3,653)
Profit for the period                                -        -        -       -          -           -    14,292  14,292
Total comprehensive income                          -        -        -       -          -     (3,500)    14,139  10,639
Issue of shares                                      4       18        -       -          -           -         -      22
Dividends paid                                       -        -        -       -          -           -   (2,752) (2,752)
Share based payment                                  -        -        -       -          -           -       237     237
Deferred tax on share based payment                -        -        -       -          -           -       232     232
31 March 2012                                   10,747   41,809   44,557 (2,182)        274       1,302    34,929 131,436
Other comprehensive income                           -        -        -       -          -     (5,877)     (208) (6,085)
Profit for the period                                -        -        -       -          -           -    11,276  11,276
Total comprehensive income                           -        -        -       -          -     (5,877)    11,068   5,191
Issue of shares                                      3       19        -       -          -           -         -      22
Loss on issue of treasury shares                     -        -        -      64          -           -      (64)       -
Dividends paid                                       -        -        -       -          -           -   (5,932) (5,932)
Share based payment                                  -        -        -       -          -           -       442     442
Deferred tax on share based payment                  -        -        -       -          -           -       281     281
30 September 2012                               10,750   41,828   44,557 (2,118)        274     (4,575)    40,724 131,440





Notes to the half-yearly financial statements

Six months ended 30 September 2012



1. Basis of preparation and significant accounting policies



Basis of preparation



These  condensed  half-yearly  financial  statements  have  been  prepared  in 
accordance with the  accounting policies set  out in the  Group's 2012  Annual 
Report, except as detailed below with reference to the definition of  specific 
items as utilised for reporting adjusted operating profit measures.



The Group's non-core  activities comprised  the businesses  of e2v  scientific 
instruments Ltd, MiCS Microchemical  Systems SA and  e2v microsensors SA,  and 
the industrial  gas sensors  business  of e2v  technologies (UK)  Ltd.  These 
businesses did not  constitute a  separately reportable segment  and were  not 
considered a major line of business for the Group. Consequently for  internal 
reporting purposes, these businesses  were combined with the  Centre-corporate 
activities and do not  meet the definition of  a discontinued operation  under 
IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations'.  These 
non-core activities were sold by the Group in May and October 2012. Following
these  disposals,  to  ensure  the   accurate  reporting  of  the   underlying 
performance of the Group, management has determined that it is appropriate  to 
include the revenue and  profits associated with  the disposed businesses  for 
the current  and  previous financial  periods  as specific  operating  items. 
Whilst total reported revenue,  operating profit and  profit after tax  remain 
unchanged, adjusted  revenue, adjusted  operating profit  and adjusted  profit 
after tax are affected and the  comparative information has been restated  for 
these disposals. For the 6 months  ended 30 September 2011 adjusted  revenue, 
adjusted operating  profit and  adjusted profit  after tax  have decreased  by 
£6,588,000, £132,000 and £74,000, respectively and for the year ended 31 March
2012 adjusted revenue, adjusted operating profit and adjusted profit after tax
have decreased by £14,800,000, £842,000 and £735,000, respectively. Segmental
information included in note 2, has been restated to take account of this.



These financial statements have also been  prepared in accordance with IAS  34 
'Interim Financial Reporting' and the Disclosure and Transparency Rules of the
Financial Services Authority. The condensed half-yearly financial  statements 
have been  prepared  on the  going  concern  basis as  the  Directors,  having 
considered all  relevant  information  including  the  level  of  its  current 
facility and covenant  requirements, have  a reasonable  expectation that  the 
Group has  adequate resources  to continue  in operational  existence for  the 
foreseeable future.



These condensed half-yearly financial statements  are unaudited but have  been 
formally reviewed by the Company's auditor and their report to the Company  is 
set out above. The  financial information shown for  the year ended 31  March 
2012 in these condensed half-yearly  financial statements does not  constitute 
statutory financial statements as defined in Section 435 of the Companies  Act 
2006 and has been extracted from the Group's 2012 Annual Report which has been
filed with the Registrar of Companies. The auditor's report on the  financial 
statements contained within the Group's 2012 Annual Report was unqualified and
did not contain a statement under  either Section 498(2) or Section 498(3)  of 
the Companies Act 2006.



These condensed half-yearly financial statements were approved by the Board of
Directors on 2 November 2012.



Significant accounting policies



During  the  period  the  Group  has  adopted  the  following  new  standards, 
amendments to standards and interpretations issued under IFRS:



·  IFRS  1,  'Severe  Hyperinflation  and  Removal  of  Fixed  Dates  for 
First-time Adopters': to  replace references  to a  fixed date  of '1  January 
2004' with the date of transition to IFRSs, and to provide guidance on how  an 
entity should resume presenting financial statements in accordance with  IFRSs 
after a period when  the entity was  unable to comply  with IFRSs because  its 
functional currency was subject to severe hyperinflation.



· IFRS  7,  'Disclosures -  Transfers  of Financial  Assets':  Amendments 
introducing enhanced disclosure requirements to ensure that users are able  to 
improve their understanding of transfer transactions of financial assets  (for 
example, securitisations), including  the possible effects  of any risks  that 
may remain with the entity.



· IAS 12,  'Deferred Tax:  Recovery of  Underlying Assets'  to provide  a 
presumption that recovery of  the carrying amount of  an asset measured  using 
the fair value model in IAS 40 will, normally, be through sale.



The adoption of these standards has had  no financial effect on the Group  for 
the current  period. The  Group has  not early  adopted any  other  standard, 
interpretation or amendment that has been issued but is not yet effective.





2. Segment information



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



The operating and reportable segments are:



RF power  solutions  which  provides high  performance  electron  devices  and 
sub-systems  in  three  main   application  areas:  radiotherapy;   electronic 
countermeasures; and industrial processing systems.



High performance  imaging solutions  which provides  advanced Charged  Coupled 
Devices (CCD)  and  Complimentary  Metal Oxide  Semiconductor  (CMOS)  imaging 
sensors and cameras  in three  main application areas:  machine vision;  space 
imaging; and scientific imaging.



Hi-rel semiconductor solutions which provides high reliability  semiconductors 
and services in two main application areas: semiconductor lifecycle management
under the Group's SLiM^TM brand; and aerospace and defence semiconductors.



All other,  reported below,  includes the  results of  the Group's  activities 
which have been disposed of during the current financial period. The  results 
of these operations, as  detailed in note 3,  are treated as specific  items. 
Specific revenue  in the  periods  covered by  these financial  statements  is 
comprised entirely of revenue from the disposed non-core businesses.



Centre-corporate includes those unallocated costs directly associated with the
management of the Group's public quotation and other related costs arising for
the corporate management of the Group along with treasury related activities.





                                                                          
                                                  
                               High                                       
                         performance         Hi-rel
                RF power     imaging semi-conductor   All  Centre -      Total
               solutions   solutions      solutions other corporate operations
6 months ended
30   September 
2012                £000        £000           £000  £000      £000       £000
Adjusted
revenue           37,885      27,668         25,124     -         -     90,677
Specific
revenue                -           -              - 3,280         -      3,280
Revenue   from 
external
customers         37,885      27,668         25,124 3,280         -     93,957
Segment result
Adjusted
segment profit     6,851       2,405          5,615     -         -     14,871
Corporate
costs                  -           -              -     -   (1,666)    (1,666)
Exchange
differences            -           -              -     -       656        656
Adjusted
operating
profit/(loss)      6,851       2,405          5,615     -   (1,010)     13,861
Specific
operating
items and
acquired
intangible
asset
amortisation       (499)          31        (1,273) 2,746       239      1,244
Operating
profit/(loss)      6,352       2,436          4,342 2,746     (771)     15,105
Net    finance 
costs                                                                    (740)
Profit  before 
tax                                                                     14,365
Tax charge                                                             (3,089)
Profit for the
period                                                                  11,276
Total assets      23,268      30,346         87,046   490    84,133    225,283





            
                                                        
                                                                          
                                                       
6 months                      High                                         
ended 30                performance         Hi-rel    All
September      RF power     imaging semi-conductor         Centre -      Total
2011          solutions   solutions      solutions other corporate operations
Restated           £000        £000           £000   £000      £000       £000
Adjusted
revenue          39,892      32,315         36,426      -         -    108,633
Specific
revenue               -           -              -  6,588         -      6,588
Revenue  from 
external
customers        39,892      32,315         36,426  6,588         -    115,221
Segment
result
Adjusted
segment
profit            4,564       4,722         11,483      -         -     20,769
Corporate
costs                 -           -              -      -   (1,868)    (1,868)
Exchange
differences           -           -              -      -       961        961
Adjusted
operating
profit/(loss)     4,564       4,722         11,483      -     (907)     19,862
Specific
operating
items and
acquired
intangible                                                                  
asset
amortisation          6     (1,629)        (1,847)  (256)     (706)    (4,432)
Operating
profit/(loss)     4,570       3,093          9,636  (256)   (1,613)     15,430
Net   finance 
costs                                                                  (2,340)
Profit before
tax                                                                     13,090
Tax charge                                                             (3,842)
Profit    for 
the period                                                               9,248
Total assets     24,031      27,638         86,896 14,083    84,435    237,083





                                                         
                                                                           
                                                        
                             High                                          
                        performance         Hi-rel     All
Year ended 31  RF power     imaging semi-conductor          Centre -      Total
March 2012    solutions   solutions      solutions  other corporate operations
Restated           £000        £000           £000    £000      £000       £000
Adjusted
revenue          86,112      66,160         67,543       -         -    219,815
Specific
revenue               -           -              -  14,800         -     14,800
Revenue  from 
external
customers        86,112      66,160         67,543  14,800         -    234,615
Segment
result
Adjusted
segment
profit           12,533      10,297         21,059       -         -     43,889
Corporate
costs                 -           -              -       -   (3,854)    (3,854)
Exchange
differences           -           -              -       -       990        990
Adjusted
operating
profit/(loss)    12,533      10,297         21,059       -   (2,864)     41,025
Specific
operating
items and
acquired
intangible                                                                    
asset
amortisation       (55)       (750)        (3,184) (1,444)     (386)    (5,819)
Operating
profit/(loss)    12,478       9,547         17,875 (1,444)   (3,250)     35,206
Net   finance 
costs                                                                   (3,163)
Profit before
tax                                                                      32,043
Tax charge                                                              (8,503)
Profit    for 
the year                                                                 23,540
Total assets     22,729      29,636         86,886  14,922    85,632    239,805





Geographical information



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



                          6 months ended 6 months ended Year ended
                                           30 September   31 March

                       30 September 2012           2011      2012
                                    £000           £000       £000
Revenue by destination
United Kingdom                    15,171         16,520     36,949
North America                     37,770         40,699     82,672
Europe                            26,728         40,197     76,855
Asia Pacific                      12,779         15,862     34,063
Rest of the World                  1,509          1,943      4,076
                                  93,957        115,221    234,615



                                                       30 September 31 March

                                     30 September 2012         2011    2012
                                                  £000         £000     £000
Non-current assets (excluding taxes)
United Kingdom                                  36,608       36,416   35,799
North America                                   41,575       34,979   37,319
Europe                                          37,676       53,452   43,862
Asia Pacific                                       238           20       11
                                               116,097      124,867  116,991





3. Specific operating items and acquired intangible assets amortisation



                                      6 months ended 6 months ended Year ended
                                   30 September 2012   30 September   31 March

                                                               2011      2012

                                                           restated   restated
                                                £000           £000       £000
Amortisation      of      acquired             1,281          2,158      3,795
intangible assets
Business   improvement   programme               460            192    (1,008)
expenses, net
Pre-disposal    trading    results             (413)          (132)      (842)
associated with disposed  non-core 
businesses
Disposal  of  non-core  businesses           (2,333)              -      1,650
(see note 4)
Fair value (gains)/losses  foreign             (239)            757        355
exchange contracts
Last    time    build    inventory                 -          1,665      2,510
provision
Reversal  of  previous  impairment                 -              -      (433)
loss
Profit on sale of Lincoln site                     -          (208)      (208)
                                               1,244          4,432      5,819



In response to the  changing market conditions, principally  for the RF  power 
solutions component businesses,  the Group  has commenced  a restructuring  in 
Chelmsford during the period. The business improvement programme expenses  of 
£460,000, which  were  incurred  during  the  period,  principally  relate  to 
termination and site consolidation costs.



The business  improvement programme  expenses/(credits)  and reversal  of  the 
previous impairment loss recorded  in the prior financial  year relate to  the 
programmes at Grenoble  and Lincoln that  had been initially  provided in  the 
year ended 31 March 2010.  Whilst these programmes were principally  complete 
at 31  March 2012,  a provision  of  £2,108,000 remained  in relation  to  the 
programme at the Grenoble facility. French termination payments are made  for 
a period of up to 12  months after a person has  the left the business and  as 
such payments are expected to continue until December 2012.



During the period ended 30 September 2012 payments of £869,000 (6 months ended
30 September 2011: £4,218,000  and 6 months ended  31 March 2012:  £2,951,000) 
have been made in respect of the Grenoble and Lincoln programmes. Payments of
£246,000 have been  made in  respect of  the Chelmsford  programme during  the 
period.



As detailed in note 1, the trading results of the Group's non-core businesses,
which were  disposed  in May  2012  and October  2012,  have been  treated  as 
specific items  for  the periods  being  reported. Note  4  provides  details 
relating to the disposal of the Group's non-core businesses.



The Group, in part, hedges its exposure to foreign currency risks through  the 
use of  forward exchange  contracts. The  changes in  the fair  value of  the 
instruments  are  recorded  as  specific  items  in  the  income   statement. 
Fluctuations in the  exchange rates in  the period have  resulted in net  fair 
value gain of £239,000 (6 months ended 30 September 2011: loss £757,000;  year 
ended 31 March 2012: loss £355,000).





4. Disposal of non-core businesses



As at 31  March 2012,  the Group's non-core  businesses were  classified as  a 
disposal group held for  sale and on  16 May 2012, the  Group disposed of  e2v 
scientific instruments Ltd, MiCS Microchemical Systems SA and e2v microsensors
SA. The net assets of these businesses  on the date of disposal are  detailed 
below.



                                        £000
Net assets
Property, plant and equipment          1,349
Intangible assets                      6,528
Deferred tax assets                      115
Inventories                            3,092
Trade and other receivables            3,467
Cash                                     875
Trade and other payables             (2,045)
Income tax payable                     (109)
Provisions                              (45)
Deferred tax liabilities               (277)
Total net assets disposed             12,950
Loss on disposal                        (95)
Total consideration                   12,855
Satisfied by:
Cash and cash equivalents             12,255
Deferred consideration                   600
Total consideration                   12,855
Net cash inflow arising on disposal:
Cash, net of costs of disposal       12,255
Cash transferred with the businesses  (875)
Net cash proceeds on disposal         11,380



Included in income statement:         6 months ended 6 months ended Year ended
                                                       30 September   31 March
                                        30 September
                                                2012           2011      2012
                                                £000           £000       £000
Loss on disposal                                (95)              -          -
Exchange differences recycled from
foreign currency translation reserve
on disposal of non-core businesses             2,428              -          -
Impairment of assets held for sale                 -              -    (1,650)
Net gain/(charge) (note 3)                     2,333              -    (1,650)



The effect of this disposal  on the Group's results  in the current and  prior 
periods is disclosed  in note  3. On recognising  the disposal  of the  Swiss 
business, a gain of £2,428,000 has  been recognised relating to the  recycling 
of the accumulated exchange differences  in respect of that operation.  These 
had  previously  been  recognised   through  other  comprehensive  income   on 
translation of foreign operations at each  period end. An impairment loss  of 
£1,650,000 arising from the remeasurement  of the disposal group's net  assets 
to fair value less costs to sell had previously been recognised as a  specific 
item for the year  ended 31 March 2012.  Therefore the net profit  recognised 
with respect to the disposal over both periods is £683,000.



The industrial gas sensors business of  e2v technologies (UK) Ltd was sold  on 
31 October 2012 for estimated net proceeds  of £0.5m and at 30 September  2012 
the net assets of  this business continue  to be recorded  as assets held  for 
sale.





5. Finance costs and finance revenue



                                      6 months ended 6 months ended Year ended
                                                       30 September   31 March

                                   30 September 2012           2011      2012
                                                £000           £000       £000
Finance costs
Bank loan interest                               529            891      1,493
Other interest                                     5              -         19
Interest   on    employment    and                64             74        145
post-employment benefits
Amortisation of debt issue costs                 154            662        816
Finance  costs   before   specific               752          1,627      2,473
costs
Specific costs
Write-off of debt issue costs                      -            779        779
Total finance costs                              752          2,406      3,252
Finance income
Bank interest receivable                          12              7          7
Finance  income  before   specific                12              7          7
income
Specific income
Fair value adjustments to interest                 -             59         82
rate swaps
Total finance revenue                             12             66         89





6. Income tax



The tax  charge  for the  period  has been  calculated  on the  basis  of  the 
Directors' best estimate of the underlying  annual effective tax rate for  the 
year of 27% (30 September 2011: 29%), consistent with the previous period.



The UK government, with effect from 1 April 2012, reduced the main rate of  UK 
Corporation tax  from 25%  to 24%.  In  addition the  Finance Bill  2012  was 
substantially enacted on 3  July 2012, which will  reduce the corporation  tax 
rate to 23% with effect from 1 April 2013. The UK deferred tax balances as at
30 September  2012  have  therefore  been  calculated  based  on  the  reduced 
corporation tax rate of 23%. 



A further reduction in the main rate of UK corporation tax has been  announced 
which will reduce the rate to 22% from 1 April 2014. This change had not been
substantively enacted at the balance sheet date and consequently the effect of
this is not included in these half-yearly financial statements.





7. Earnings per share



Basic earnings per share is calculated  by dividing net profit for the  period 
attributable to  ordinary  shareholders  by the  weighted  average  number  of 
ordinary shares outstanding during the period. Diluted earnings per share  is 
calculated by dividing the net profit for the period attributable to  ordinary 
shareholders by the  weighted average  number of  ordinary shares  outstanding 
during the period adjusted for the effects of dilutive options.



Adjusted earnings per share is calculated on  the basis of net profit for  the 
period before specific  items and  acquired intangible  amortisation. In  the 
Directors'  judgment  adjusted  earnings  per  share  is  considered  to  more 
appropriately reflect the  underlying performance  of the  business period  on 
period.



The following reflects the net profit and share data used in the earnings  per 
share computations:



                                      6 months ended 6 months ended Year ended
                                                       30 September   31 March

                                   30 September 2012           2011      2012
                                                           Restated   Restated
                                                £000           £000       £000
Profit for the period attributable            11,276          9,248     23,540
to ordinary shareholders
Amortisation      of      acquired             1,281          2,158      3,795
intangible assets
Business   improvement   programme               460            192    (1,008)
expenses, net
Operating  items  associated  with             (413)          (132)      (842)
disposed non-core activities
Disposal of non-core activities              (2,333)              -      1,650
Fair  value  (gains)/  losses   on             (239)            698        273
financial instruments
Last    time    build    inventory                 -          1,665      2,510
provision
Reversal  of  previous  impairment                 -              -      (433)
loss
Profit on the sale of Lincoln site                 -          (208)      (208)
Write-off of debt issue costs                      -            779        779
Tax effect of the above                        (554)        (1,631)    (1,755)
Adjusted  profit  attributable  to             9,478         12,769     28,301
ordinary shareholders
                                             No. 000        No. 000    No. 000
Weighted   average    number    of 
ordinary shares
For basic earnings per share                 211,833        211,689    211,710
Effect of dilution:
 Share options                               5,339          2,449      4,975
For diluted earnings per share               217,172        214,138    216,685
                                               Pence          Pence      Pence
Earnings per share
Basic                                           5.32           4.37      11.12
Adjusted basic                                  4.47           6.04      13.37
Diluted                                         5.19           4.32      10.86
Adjusted diluted                                4.36           5.97      13.06





8. Dividends paid and proposed



                                      6 months ended 6 months ended Year ended
                                                       30 September   31 March

                                   30 September 2012           2011      2012
                                                £000           £000       £000
Equity   dividends   on   ordinary 
shares paid during period
2011 Interim  dividend: 1.20p  per                 -          2,540      2,540
share
2011  Final  dividend:  2.40p  per                 -          5,081      5,081
share
2012 Interim  dividend: 1.30p  per                 -              -      2,752
share
2012  Final  dividend:  2.80p  per             5,932              -          -
share
                                               5,932          7,621     10,373



On 2 November 2012 the Board declared  an interim dividend of 1.3p per  share, 
with a total dividend payment of  £2,791,000. The interim dividend is to  be 
paid on 17 December 2012 to  shareholders registered at close of business  on 
30 November 2012  and is based  on the  number of shares  in issue,  excluding 
those held by the  Employee Benefit Trust  and the Company,  at the date  that 
these financial statements have been  approved and authorised for issue.  The 
actual payment  may differ  due to  increases or  decreases in  the number  of 
shares in issue between the date  of approval of the financial statements  and 
the record date of the interim dividend.





9. Property, plant and equipment



                                      6 months ended 6 months ended Year ended
                                                       30 September   31 March

                                   30 September 2012           2011      2012
                                                £000           £000       £000
Opening net book value                        36,616         31,977     31,977
Additions                                      5,695          4,218     14,419
Depreciation                                 (3,935)        (4,373)    (7,793)
Reversal  of  previous  impairment                 -            403        433
loss
Disposals                                          -           (62)      (316)
Transfer to assets held for sale                   -              -    (1,551)
Reclassifications                                  -              -       (92)
Exchange adjustment                            (440)           (23)      (461)
Closing net book value                        37,936         32,140     36,616





10. Contingent assets, liabilities and capital commitments



The Group has  signed an  option to  sell a vacant  building and  land at  its 
facility in  Grenoble,  which at  30  September 2012  and  31 March  2012  are 
disclosed as assets  held for  sale. The option,  which expires  on 10  March 
2013, includes a minimum sale price, net of anticipated costs, of £4  million; 
however this  amount can  increase  depending upon  the level  of  development 
achieved. Should  the  option  not  be  exercised,  and  subject  to  certain 
conditions  having  been  met,  the  Group  will  receive  £0.8  million   for 
non-exercise of  the  option.  To  facilitate this  disposal  the  Board  has 
authorised, at 30 September 2012,  capital expenditure of £0.4 million,  which 
is in addition to the capital commitments below.



In the  ordinary course  of  business, the  Group  may issue  performance  and 
advance payment  guarantees  to  third  parties.  As  at  30  September  2012 
£2,759,000 (30 September  2011: £2,519,000;  31 March  2012: £2,927,000)  were 
outstanding. The Directors  are of  the opinion that  the risk  to the  Group 
associated with these guarantees is not material and consequently no provision
is recorded.



At 30 September  2012, the  Group had  capital commitments  of £1,877,000  (30 
September 2011: £1,825,000; 31 March 2012: £2,047,000) principally relating to
the acquisition of new plant and machinery.





11. Net borrowings



                               6 months ended        6 months ended Year ended
                                                       30 September   31 March
                                 30 September
                                         2012                  2011      2012
                                         £000                  £000       £000
Total    cash     and     cash          8,950                12,886     12,886
equivalents  at  beginning  of 
the period
Loans  at  beginning  of   the       (38,919)              (40,972)   (40,972)
period
Net borrowings at beginning of       (29,969)              (28,086)   (28,086)
the period
Increase/(decrease) in cash               806               (4,909)    (3,835)
Repayment of borrowings                   737    The story has been
                                                truncated,
[TRUNCATED]
 
Press spacebar to pause and continue. Press esc to stop.