1 September 2010
IQE plc
IQE plc (AIM: IQE, the "Group"), the leading global supplier of advanced wafer products and wafer services to the semiconductor industry, announces its Interim Results for the half year ended 30 June 2010.
FINANCIAL HIGHLIGHTS
· Revenues up 54% to £33.0m (H1 2009: £21.4m)
· Gross profit up 93% to £7.3m (H1 2009: £3.8m)
· EBITDA up 184% to £5.4m (H1 2009: £1.9m)
· Operating profit £2.7m (H1 2009: loss £0.8m)
· Pre tax profit £2.2m (H1 2009: loss £1.4m)
· £1.9m cash inflow from operations (H1 2009: £0.1m)
· EPS 0.50 pence (H1 2009: 0.31 pence loss per share)
· EPS adjusted for share based payments 0.60 pence (H1 2009: 0.23 pence loss per share)
· Net debt reduced to £15.6m (H1 2009: £19.0m)
BUSINESS HIGHLIGHTS
· Strong performance in all main markets: wireless up 52%, optoelectronics up 55% and electronics up 102%
· Wireless growth driven by increasing adoption of smartphones; IQE is designed into the majority of top-tier smartphones by virtue of its broad customer base and its market share of c.30%
· Emerging optoelectronic markets accelerating; CPV solar up 100% and VCSELs for finger navigation and optical USB up 70%
· Electronics driven by advanced BiCMOS and initial sales of IP rich advanced substrates (GeOI and SOS)
· Highly geared business model translates 54% revenue growth into 184% EBITDA growth
· Appointment of Adrian Meldrum to the Board, with specific responsibility for development of the optoelectronics business
· Continued progress in extending portfolio of intellectual property including high-speed VCSELs for next-generation optical communications, 6" CPV solar technology, 4" gallium antimonide substrates and free-standing gallium nitride substrates
· Additional patents granted for Nanocolumn technology
Dr Drew Nelson, IQE Chief Executive, said:
"IQE has delivered record results for the first half of 2010 and our strong operational gearing has turned 54% growth in revenues into a 184% increase in EBITDA.
"Our focus remains on exploiting our powerful intellectual property to deliver innovative and high-quality products to rapidly growing markets. The second half of 2010 has started well with strong demand across our full range of advanced semiconductor products leading us to have every confidence in both the short term and long term prospects of the business."
Contacts:
| IQE plc | (+44 29 2083 9400) |
| Drew Nelson | |
| Phil Rasmussen | |
| Chris Meadows | |
| College Hill | (+44 20 7457 2020) |
| Adrian Duffield / Carl Franklin | |
| Execution Noble & Company Limited | (+44 207 456 9191) |
| John Llewellyn-Lloyd / Richard Crawley |
NOTE TO EDITORS
IQE is the leading global supplier of advanced semiconductor wafers, with products that cover a diverse range of applications, supported by an innovative, outsourced foundry services portfolio that allows the Group to provide a 'one stop shop' for the wafer needs of the world's leading semiconductor manufacturers.
IQE uses advanced crystal growth technology (epitaxy) to manufacture and supply bespoke semiconductor wafers ('epi-wafers'). The world's major chip manufacturing companies use IQE's wafers to make the leading-edge components which form the heart of virtually all of today's high-tech devices. IQE is unique in being able to supply wafers using all of the leading crystal growth technology platforms and has developed and maintained significant intellectual property in relation to its products and services.
IQE's products are found in many leading-edge consumer, communication, computing and industrial applications, including a complete range of wafer products for the wireless industry. Our technology is an integral part of mobile handsets, particularly smartphones, wireless infrastructure, Wi-Fi, GPS, and satellite communications. The unique optoelectronic properties of IQE's materials are also found in applications including optical communications, optical connectors, optical storage, laser printers/copiers, thermal imaging, leading-edge medical products, finger navigation devices and ultra high brightness LEDs. IQE's expertise also extends to a variety of advanced silicon based systems and high-efficiency concentrator photovoltaic (CPV) solar cells.
The epitaxy production process is complex and highly specialised. As such, chip manufacturers are increasingly seeking to outsource wafer production to specialist foundries such as IQE in order to reduce overall wafer costs and accelerate time to market. The Group is also able to lever its global purchasing volumes to reduce the cost of raw materials. In this way IQE's outsourced services provide compelling benefits in terms of flexibility and predictability of cost, thereby significantly reducing operating risk.
IQE also provides bespoke R&D services to deliver customised materials for specific applications and offers specialist technical staff to manufacture to specification either at its own facilities or on the customer's own sites.
IQE operates six manufacturing facilities located in Cardiff (two) and Milton Keynes in the UK; in Bethlehem, Pennsylvania and Somerset, New Jersey in the USA; and Singapore. The Group also has a dedicated R&D facility in Bath, UK and operates 11 sales offices located in major economic centres worldwide.
INTERIM RESULTS 2010
1. OVERVIEW
IQE is the world's leading supplier of advanced wafers to the semiconductor industry with a strategy that focuses on developing and maintaining IP-rich technologies for high-growth, high-volume markets. The Group has developed a unique set of competitive advantages to provide its customers with world-leading epitaxial wafer foundry services. By delivering these advantages both consistently and globally, and through its strong operational performance, IQE has become the undisputed leader in its field.
IQE manufactures bespoke compound semiconductor wafers for major chip manufacturing companies, which use these wafers to make the chips that form the key components of virtually all high-technology systems. IQE is unique in being able to offer the industry's broadest product portfolio using the widest range of production platforms available today.
Products from the Group are found in many existing and emerging consumer, communication, computing and industrial devices, including mobile handsets, tablet and personal computers, Wi-Fi, WiMAX, GPS, and satellite receivers and transmitters. IQE's products also provide the unique optoelectronic properties used in an increasing number of applications including high-speed communications, optical storage and finger-navigation components.
Emerging markets for IQE's products include laser projection, optical connectors, finger navigation, ultra-high-brightness light-emitting diodes (UHB LEDs) for solid-state lighting (SSL) and high-efficiency concentrator photovoltaic (CPV) solar cells.
2. RESULTS
Revenues grew by 54% to £33.0m (H1 2009: £21.4m), primarily driven by strong demand for smartphone products during the first half of the year supported by accelerating growth in optoelectronic and advanced silicon components.
Gross profits increased by 93% to £7.3m (H1 2009: £3.8m) with gross margins improving from 17.8% to 22.2%.
Selling, general and administrative expenses were unchanged at £4.6m (H1 2009: £4.6m) and therefore reduced as a percentage of sales from 22% to 14%.
EBITDA increased by 184% to £5.4m (H1 2009: £1.9), demonstrating IQE's highly operationally levered business model.
Operating profit increased by £3.5m to £2.7m (H1 2009: £0.8m operating loss), which after an interest charge of £0.5m (H1 2009: £0.5m) delivered a pre-tax profit of £2.2m (H1 2009: £1.4m loss)
The Group had no tax charge during the period, reflecting the benefit of the substantial tax losses at its disposal. These tax losses will enable IQE to shelter in excess of £100 million of future taxable profits. Therefore, retained profit for the period was £2.2m (H1 2009: £1.4m retained loss).
Earnings per share were 0.50p (H1 2009: loss of 0.31p), with adjusted EPS of 0.60p (H1 2009: loss of 0.23p). On a fully diluted basis, adjusted EPS were 0.54p (H1 2009: loss of 0.23p).
Cash inflow from operations increased by £1.8m to £1.9m (H1 2009: £0.1m), even after the absorption of £3.1m (H1 2009 : £1.7m) into working capital as the business continued to grow
Net debt stood at £15.6m (H1 2009: £19.0m), representing a year-on-year reduction of £3.4m.
3. STRATEGY
IQE's strategy remains focused on delivering market leadership in high growth markets, protected by technology leadership and intellectual property.
IQE has been successful in establishing a clear leadership position in the high-growth wireless communication market, which currently accounts for 75% of sales. Through innovation and technology leadership, IQE is replicating this success in a number of emerging high-growth markets including VCSEL technology (for applications such as finger navigation and optical USB), CPV solar technology, high-efficiency solid-state light sources and advanced lasers (for applications such as pico projectors and high density optical storage).
IQE's success in the market reflects it focus on its customers' needs. IQE has been successful in differentiating its service by developing a powerful set of USPs, which include:
· a complete range of IP rich products covering all major applications;
· global multi-site production capabilities in the primary manufacturing platforms to allow efficient capacity planning and for disaster scenario contingency;
· maintenance of a broad contact base and global presence with access to all the key global markets;
· delivery of benefits from economies of scale including purchasing power and research and development efficiencies;
· sharing of best practices and innovation across the group to deliver improved operating and cost efficiencies; and
· provision of surge capacity to meet the expected growth in demand in the mobile device sector and other high-volume activities.
This strategy has continued to deliver robust results despite the global economic downturn and will continue to deliver on current and next-generation products. In addition, IQE is able to leverage its substantial manufacturing capacity to deliver tangible benefits to customers, shareholders and other stakeholders.
4. PRODUCTS
IQE has a well-established track record in developing, protecting and commercialising its intellectual property and its product roadmap continues to be driven by trends in four key technology areas, all of which have high-growth, high-volume prospects:
· Wireless: The acceleration of the adoption of advanced, high-speed mobile communications, including 3G, WiFi, GPS and other wireless technologies. As mobile technologies continue to advance at a rapid pace with new features constantly emerging, the role of advanced compound-semiconductor materials such as GaAs has become critical in enabling high-speed data processing, while maintaining low levels of power consumption. IQE's products are critical in the drive to 3G and beyond, along with the need for backward network compatibility. They enable the speed and power to accommodate features such as high-resolution imaging, video, high-speed wireless data access, VoIP and satellite navigation. Today's high-speed devices contain many more GaAs components than previous generations.
· Opto electronics: Consumer demand for faster and more flexible means of communication is driving a number of high-growth, high-volume applications that depend on compound-semiconductor technology. This includes optical cables (such as optical USB and Intel's Light Peak), finger navigation for mobile devices, and laser projection systems. Optical cables are widely expected to displace the copper cables used to connect computers, TVs and peripherals. IQE is the world leader in VCSEL technology (Vertical Cavity Surface Emitting Laser), which lies at the heart of optical cables and finger navigation. Laser projection is also viewed as one of the most exciting applications of optoelectronic technology, with first-generation projectors already being incorporated into mobile handsets and cameras. VCSEL technology is already beginning to replace mechanical trackerball designs for finger navigation in mobiles phones. It is widely expected that penetration of this technology will grow rapidly.
· Cleantech: Demand for IQE's products will be driven the move towards clean, efficient and sustainable energy sources (solar cells), and highly efficient light sources (LEDs) in order to reduce the impact of global warming, reliance on fossil fuels and provide a much cleaner environment. Compound semiconductors are playing a critical role and IQE is involved in leading-edge development of materials for these applications, including solar-cell technologies that are achieving record levels of energy conversion.
· Electronics: The continuing need for higher-speed, more powerful microprocessors and higher-speed, ultra-high-density memories is driving the demand for new materials solutions based on silicon substrates including the incorporation of compound semiconductors directly onto silicon substrates. In response, IQE has developed a new range of engineered substrates such as Germanium on Insulator (GeOI) for next-generation integrated circuits and devices. IQE has established powerful positions in both technologies, working with some of the biggest names in the industry.
The wireless market currently provides the Group with high-volume sales and the expectation of continued high growth. However, the other markets are undergoing rapid development and offer further near-term, high-growth potential and product diversity.
5. MARKET DEVELOPMENT
IQE's markets fall into the broad categories of wireless, optoelectronics, and electronics.
Wireless
Wireless products include a wide range of components used for radio frequency (RF) communications in mobile handsets, smartphones, personal computers, tablet PCs and a host of other mobile devices.
Mobile technologies are currently used by more than half the world's population, with industry analysts predicting handset volumes to increase to around 1.3bn in 2010 and 1.6bn by 2013. Growth of smartphones which employ significantly higher gallium arsenide (GaAs) content than standard handsets, is expected to account for 19% of all handset sales in 2010, increasing to over 50% by 2014.
Growth in compound semiconductor demand is further driven by new applications for WiFi such as machine-to-machine, point-to-point and tablet PCs as well as network operators introducing low-end 3G products to migrate their customers to 3G networks, effectively increasing the compound semiconductor chip content in low-end handsets.
The compound semiconductor content in smartphones is continuing to grow and ranges from $2 to $4 in low-end handsets up to $9 in sophisticated high-end devices.
IQE is in production with all leading wireless chip companies and was recently awarded "TriQuint's supplier of the year for 2010" based on production support and development of new products. TriQuint is known to supply the majority of wireless chips for a number of smartphones including iPhone, Samsung Galaxy, HTC 4G EVO and the Blackberry Tour.
Other customers have significant content in RIM, Samsung and other leading handset manufacturers with IQE providing BiHEMT wafers for better power performance and longer battery life.
Wafer inventories remain at low levels throughout the supply chain with no evidence of inventory build-up.
Optoelectronic
Optoelectronic components cover a broad range of applications including data communications, consumer applications, solid state lighting and CPV solar cells.
Optical fibre communications have been used for many years for long-haul voice and data communications. Today's PCs and peripheral devices are increasingly data hungry to the extent that communications between such devices require the same capacity that just 10 years ago would have been sufficient to carry over one million voice calls across the Atlantic. Over the next four years, optical cables are predicted to replace copper cables for interconnecting a wide range of devices. Demand for semiconductor lasers (VCSELs) is anticipated to grow from around 1m units in 2009 to over 650m units in 2014.
In addition to optical communications, VCSELs are beginning to be deployed as finger-navigation devices by a number of leading handset manufacturers such as RIM, LG, Samsung, Sony Ericsson and HTC.
Data storage devices (from CDs to Blu-ray discs) utilise lasers and optical detectors made using semiconductor wafer products. The storage capacity of a digital recording disc is determined by the wavelength (colour) of light emitted by the read/record laser with audio/data CDs operating at the red end of the spectrum and Blu-ray at the blue end. Modern devices such as Blu-ray HD video and games consoles employ multiple laser components to allow backward compatibility. Shipments of Blu-ray optical storage devices are expected to grow from 40m units in 2009 to over 200m units in 2012.
Red green and blue lasers are also used to generate images in an emerging range of pico projectors. It is anticipated that pico projectors will become commonplace within handset and tablet PCs within the next five years in the same way that cameras have become during the last five years.
The drive for sustainable generation of electricity is expected to yield a mix of alternative power options over the coming years within which solar energy is likely to emerge as a key source of renewable energy. IQE's technology provides the material for the most efficient and cost effective solar cells for power generation in the form of CPV solar cells. Industry analysts estimate that less than 0.5% of current electricity is generated by solar power but predict that this will increase to 64% in 2100. IQE is uniquely positioned as high-efficiency solar power emerges over the coming years.
Closely linked with sustainable power generation is the move towards high efficiency lighting which also uses IQE's wafer technology. Over 20% of the world's energy consumption is taken up by lighting. A key driver for the adoption of alternative lighting technology will be the almost universal banning of incandescent lighting technology from 2012. LED Solid State Lighting is emerging as the major technology to displace existing lighting, which dates back over a century. The market for ultra-high brightness LEDs is expected to grow from less than $2Bn in 2009 to over $4Bn by 2012.
Electronics
The ever-increasing demand for higher speed and improved performance from today's electronic devices is ushering in a new era of semiconductor materials that combine the versatility of silicon, which has been the default semiconductor material for the last half century, with the power and performance of compound semiconductors that have emerged as true 21st century materials.
6. TRADING OUTLOOK
Growth in demand for IQE's products during the first half of 2010 was largely driven by the increasing demand for wireless components used in smartphone and tablet PC technologies, which contain a significantly higher content of gallium arsenide (GaAs) products than previous generations of handheld devices.
Smartphones represent a fundamental structural shift in mobile communications and will still only account for 19% of the total handset marketplace in 2010. The Group sees the annual growth rate of 30-40% continuing for several years to come. In addition, the proliferation of wireless applications such as with smart meters and point to point communications will add further demand for IQE's wireless products.
Demand for wireless products is strongly supported by accelerating growth in demand for optoelectronic devices across a range of exciting new technologies and applications, including finger navigation, short range data communications, lasers for projection, high efficiency LEDs and CPV materials for advanced solar energy generation.
Significant growth is also occurring in IQE's silicon based product division with the adoption of new engineered substrates launched in 2009 such as Germanium on Insulator (GeOI) and Silicon on Sapphire (SOS) for next-generation integrated circuits and high speed devices.
The second half has begun well, with sales now anticipated to be ahead of expectations as a result of a strong performance across all of the Group's product ranges. The continued successful implementation of the Group's strategy combined with strong operational performance give the Board every confidence in both the short term and long term prospects of the business.
Dr Drew Nelson
CEO
| 6 months to | 6 months to | 12 months to | |||||
| CONSOLIDATED INCOME STATEMENT | 30 Jun 2010 | 30 Jun 2009 | 31 Dec 2009 | ||||
| (All figures £'000s) | Note | Unaudited | Unaudited | Audited | |||
| Revenue | 33,017 | 21,421 | 52,652 | ||||
| Cost of sales | (25,684) | (17,614) | (41,073) | ||||
| Gross profit | 7,333 | 3,807 | 11,579 | ||||
| Selling, general and administrative expenses | (4,643) | (4,640) | (8,535) | ||||
| Operating profit / (loss) | 2,690 | (833) | 3,044 | ||||
| Finance costs | (489) | (528) | (986) | ||||
| Profit / (loss) attributable to equity shareholders | 2,201 | (1,361) | 2,058 | ||||
| Adjusted earnings / (loss) per share | 3 | 0.60p | (0.23p) | 0.68p | |||
| Earnings / (loss) per share | 3 | 0.50p | (0.31p) | 0.47p | |||
| Adjusted diluted earnings / (loss) per share | 3 | 0.54p | (0.23p) | 0.64p | |||
| Diluted earnings / (loss) per share | 3 | 0.44p | (0.31p) | 0.44p | |||
| Earnings before interest, tax, depreciation and amortisation (EBITDA) have been calculated as follows: | |||||||
| Profit / (loss) attributable to equity shareholders | 2,201 | (1,361) | 2,058 | ||||
| Share based payments | 488 | 359 | 898 | ||||
| Net interest payable | 489 | 528 | 986 | ||||
| Depreciation of tangible fixed assets | 1,891 | 2,045 | 3,372 | ||||
| Amortisation of intangible fixed assets | 348 | 338 | 737 | ||||
| EBITDA | 5,417 | 1,909 | 8,051 | ||||
| | |||||||
| CONSOLIDATED STATEMENT OF | 6 months to | 6 months to | 12 months to | ||||
| COMPREHENSIVE INCOME/(EXPENSE) | 30 Jun 2010 | 30 Jun 2009 | 31 Dec 2009 | ||||
| (All figures £'000s) | Unaudited | Unaudited | Audited | ||||
| Profit / (loss) attributable to equity shareholders | 2,201 | (1,361) | 2,058 | ||||
| Cash flow hedges | (203) | 213 | - | ||||
| Revaluation gain of initial investment on acquisition | - | - | 28 | ||||
| Currency translation differences on foreign currency net investments | 1,725 | (4,483) | (3,859) | ||||
| Total comprehensive income/(expenses) for the period | 3,723 | (5,631) | (1,773) | ||||
| As At | As At | As At | ||||
| CONSOLIDATED BALANCE SHEET | 30 Jun 2010 | 30 Jun 2009 | 31 Dec 2009 | |||
| (All figures £'000s) | Unaudited | Unaudited | Audited | |||
| Non-current assets : | ||||||
| Intangible assets | 21,200 | 14,348 | 19,182 | |||
| Property, plant and equipment | 20,852 | 21,469 | 21,365 | |||
| Total non-current assets | 42,052 | 35,817 | 40,547 | |||
| Current assets : | ||||||
| Inventories | 10,879 | 10,291 | 10,789 | |||
| Trade and other receivables | 16,514 | 10,835 | 13,261 | |||
| Cash and cash equivalents | 1,394 | - | 4,233 | |||
| Total current assets | 28,787 | 21,126 | 28,283 | |||
| Total assets | 70,839 | 56,943 | 68,830 | |||
| Current liabilities : | ||||||
| Borrowings | (13,612) | (10,937) | (6,573) | |||
| Trade and other payables | (16,748) | (12,903) | (16,770) | |||
| Total current liabilities | (30,360) | (23,840) | (23,343) | |||
| Non-current liabilities : | ||||||
| Borrowings | (3,343) | (8,059) | (12,591) | |||
| Deferred consideration | (3,014) | - | (3,014) | |||
| Deferred income | (26) | (64) | (45) | |||
| Total non-current liabilities | (6,383) | (8,123) | (15,650) | |||
| Total liabilities | (36,743) | (31,963) | (38,993) | |||
| Net assets | 34,096 | 24,980 | 29,837 | |||
| Shareholders' equity : | ||||||
| Ordinary shares | 4,457 | 4,361 | 4,435 | |||
| Share premium | 1,458 | 336 | 1,150 | |||
| Profit and loss account | 22,714 | 14,338 | 20,513 | |||
| Other reserves | 5,467 | 5,945 | 3,739 | |||
| Total shareholders' equity | 34,096 | 24,980 | 29,837 | |||
| 6 months to | 6 months to | 12 months to | |||
| CONSOLIDATED CASH FLOW STATEMENT | 30 Jun 2010 | 30 Jun 2009 | 31 Dec 2009 | ||
| (All figures £'000s) | Unaudited | Unaudited | Audited | ||
| Cash flows from operating activities : | |||||
| Cash inflow from operations | 5 | 1,891 | 95 | 7,712 | |
| Net interest paid | (553) | (559) | (1,099) | ||
| Net cash inflow/(outflow) from operating activities | 1,338 | (464) | 6,613 | ||
| Cash flows from investing activities : | |||||
| Acquisition of NanoGaN Limited | - | - | (205) | ||
| Development expenditure | (1,739) | (916) | (2,325) | ||
| Investment in other intangible fixed assets | (171) | - | (248) | ||
| Purchase of property, plant and equipment | (1,161) | (916) | (1,660) | ||
| Proceeds from sale of tangible fixed assets | 1,551 | - | - | ||
| Net cash used in investing activities | (1,520) | (1,832) | (4,438) | ||
| Cash flows from financing activities : | |||||
| Issues of ordinary share capital | 37 | 240 | 596 | ||
| Loans and leases (repaid)/received | (2,738) | (244) | 2,778 | ||
| Net cash (used in)/generated from financing activities | (2,701) | (4) | 3,374 | ||
| Net (decrease)/increase in cash and cash equivalents | (2,883) | (2,300) | 5,549 | ||
| Cash and cash equivalents at the beginning of the period | 4,233 | (928) | (928) | ||
| Exchange gains/(losses) on cash and bank overdrafts | 44 | - | (388) | ||
| Cash and cash equivalents at the end of the period | 6 | 1,394 | (3,228) | 4,233 | |
1 BASIS OF PREPARATION
These interim results have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards ("IFRS") and interpretations in issue at 30 June 2010.
The interim results were approved by the Board of Directors and the Audit Committee on 31 August 2010. The interim results do not constitute statutory accounts within the meaning of the Companies Act 2006 and have not been audited. Comparative figures in the interim results for the year ended 31 December 2009 have been taken from the published audited statutory financial statements. All other periods presented are unaudited.
| 6 months to | 6 months to | 12 months to | |||||||||
| 2 SEGMENTAL INFORMATION | 30 Jun 2010 | 30 Jun 2009 | 31 Dec 2009 | ||||||||
| (All figures £'000s) | Unaudited | Unaudited | Audited | ||||||||
| Revenue by business segment : | |||||||||||
| Wireless | 24,795 | 16,289 | 41,598 | ||||||||
| Optoelectronics | 7,134 | 4,593 | 9,843 | ||||||||
| Electronics | 1,088 | 539 | 1,211 | ||||||||
| Total revenue | 33,017 | 21,421 | 52,652 | ||||||||
| EBITDA by business segment: | |||||||||||
| Wireless | 4,710 | 2,047 | 8,359 | ||||||||
| Optoelectronics | 704 | (92) | (46) | ||||||||
| Electronics | 3 | (46) | (262) | ||||||||
| Total EBITDA | 5,417 | 1,909 | 8,051 | ||||||||
| Operating profit/(loss) by business segment: | |||||||||||
| Wireless | 2,558 | (201) | 4,659 | ||||||||
| Optoelectronics | 281 | (437) | (942) | ||||||||
| Electronics | (149) | (195) | (673) | ||||||||
| Total operating profit/(loss) | 2,690 | (833) | 3,044 | ||||||||
| 3 EARNINGS PER SHARE | 6 months to | 6 months to | 12 months to | ||
| 30 Jun 2010 | 30 Jun 2009 | 31 Dec 2009 | |||
| Unaudited | Unaudited | Audited | |||
| Results in £'000s: | |||||
| Profit/(loss) attributable to ordinary shareholders | 2,201 | (1,361) | 2,058 | ||
| Share based payments | 488 | 359 | 898 | ||
| Adjusted profit/(loss) attributable to ordinary shareholders | 2,689 | (1,002) | 2,956 | ||
| Number of shares: | |||||
| Weighted average number of ordinary shares | 444,585,171 | 434,131,613 | 436,881,052 | ||
| Dilutive share options | 55,432,916 | - | 26,321,661 | ||
| Adjusted weighted average number of ordinary shares | 500,018,087 | 434,131,613 | 463,202,713 | ||
| Adjusted earnings/(loss) per share | 0.60p | (0.23p) | 0.68p | ||
| Basic earnings/(loss) per share | 0.50p | (0.31p) | 0.47p | ||
| Adjusted diluted earnings/(loss) per share | 0.54p | (0.23p) | 0.64p | ||
| Diluted earnings/(loss) per share | 0.44p | (0.31p) | 0.44p | ||
Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares during the period. Adjusted earnings per share is calculated by adding back the charge for share based payments since the directors believe that this provides a fairer reflection of the group's earnings.
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all potential ordinary shares. Share options are only considered to be dilutive if they are 'in the money' i.e. that they can result in the purchase of ordinary shares for less than the average mid market share price in the period (6 months to 30 June 2010: 17.69p; 12 months to 31 December 2009: 10.84p).
The group incurred losses in the 6 months to 30 June 2009 and, as such, options and warrants that may be converted were considered anti dilutive, since they would reduce the loss per share.
| 4 STATEMENT OF CHANGES IN | 6 months to | 6 months to | 12 months to | |||
| SHAREHOLDERS' EQUITY | 30 Jun 2010 | 30 Jun 2009 | 31 Dec 2009 | |||
| (All figures £'000s) | Unaudited | Unaudited | Audited | |||
| Profit / (loss) attributable to equity shareholders | 2,201 | (1,361) | 2,058 | |||
| Cash flow hedges | (203) | 213 | - | |||
| Revaluation of initial investment on acquisition | - | - | 28 | |||
| Net exchange differences offset in reserves | 1,725 | (4,483) | (3,859) | |||
| Total comprehensive income/(expense) | 3,723 | (5,631) | (1,773) | |||
| Employee share option scheme | 536 | 393 | 625 | |||
| Shares issued for business combination | - | - | 767 | |||
| Total transactions with owners | 536 | 393 | 1,392 | |||
| Shareholders' equity at start of period | 29,837 | 30,218 | 30,218 | |||
| Shareholders' equity at end of period | 34,096 | 24,980 | 29,837 | |||
| 6 months to | 6 months to | 12 months to | ||||
| 5 CASH GENERATED FROM OPERATIONS | 30 Jun 2010 | 30 Jun 2009 | 31 Dec 2009 | |||
| (All figures £'000s) | Unaudited | Unaudited | Audited | |||
| Operating profit/(loss) | 2,690 | (833) | 3,044 | |||
| Depreciation of tangible assets | 1,891 | 2,045 | 3,372 | |||
| Amortisation of intangible assets | 348 | 338 | 737 | |||
| Gain on sale of tangible assets | (447) | (103) | (100) | |||
| Government grants released | (19) | (19) | (39) | |||
| Non cash share based payment costs | 488 | 359 | 898 | |||
| Cash from operations before changes in working capital | 4,951 | 1,787 | 7,912 | |||
| Decrease/(increase) in inventories | 422 | (132) | (340) | |||
| (Increase)/decrease in trade and other receivables | (2,378) | (581) | (2,457) | |||
| (Decrease)/increase in trade and other payables | (1,104) | (979) | 2,597 | |||
| Cash inflow generated from operations | 1,891 | 95 | 7,712 | |||
| As At | As At | As At | |||
| 6 ANALYSIS OF NET DEBT | 30 Jun 2010 | 30 Jun 2009 | 31 Dec 2009 | ||
| (All figures £'000s) | Unaudited | Unaudited | Audited | ||
| Cash and cash equivalents/(overdraft) | 1,394 | (3,228) | 4,233 | ||
| Loans due after one year | (3,329) | (8,016) | (12,568) | ||
| Loans due within one year | (13,552) | (7,653) | (6,519) | ||
| Finance leases due after one year | (14) | (43) | (23) | ||
| Finance leases due within one year | (60) | (56) | (54) | ||
| Total borrowings | (16,955) | (15,768) | (19,164) | ||
| Net debt | (15,561) | (18,996) | (14,931) | ||
HUG#1441797
