“Continued growth”
Radstone Technology, the world’s leading independent supplier of high-performance, embedded computer products for defence and aerospace applications today announces preliminary results for the year ended 31 March 2005.
Key Points
· Turnover up 14% to £49.9m (2004: £43.7m).
· Group Profit before tax, goodwill and exceptional items increased 15% to £8.5m (2004: £7.4m).
· Normalised Earnings per share * up 5% to 21.54p (2004: 20.50p). Basic Earnings per share up from 5.00p to 26.12p.
· Final dividend of 2.7p per share increasing the total dividend by 20% to 3.6p (2004: 3.0p).
· Order book ended the year at a record level at £86.5m (2004 : £79.3m)
· $26.5m multi-year production order from Raytheon
· Octec Ltd (acquired in July 2004) has been earnings enhancing.
· EMS business showed a substantial improvement in results during the year, following our reorganisation of the business, with a contribution of 18.7% of sales (2004 : 9.8%)
* Calculated after adjusting profit after tax for the effect of goodwill amortisation and exceptional items.
Jeff Perrin, Chief Executive commenting on the results said:
“The US defence market remains strong and its increasing investment in technology to achieve a complete network centric battlefield, with armed forces that are equipped for rapid deployment, will mean that Radstone is well placed to benefit from our customers’ requirements for high performance embedded computing.
The Group has invested substantially in new facilities, it has developed and brought to market new products and it has increased its market reach through targeted acquisitions. We have continued to deliver improved financial performance; have a record order book and a healthy balance sheet and so begin this financial year in a strong position.”
The full text of this release can be found at:
www.radstone.com/press/dsp_release.aspx?id=124
For further information:
Radstone Technology
Jeff Perrin, Chief Executive
Kevin Boyd, Group Finance Director
01327-359444
Web: www.radstone.co.uk
Buchanan Communications
Tim Thompson or Nicola Cronk
020 7466 5000
Email: [email protected]
Chairman’s Statement
I am pleased to report a strong set of results from the Radstone Group. Group profit before tax, goodwill and exceptional items recorded its ninth successive year of improvement, increasing by 15% to £8.5m from £7.4m last year (see calculation in note 4).
Sales in the Embedded Computing business were adversely affected by the weak US dollar (explained in detail in the Financial Review). As a result the 14% increase in sales to £50m was mainly due to the additional deliveries from Octec acquired in July 2004 and a full year’s contribution from ICS acquired in September 2003.
Basic earnings per share under FRS14 were 26.12p (2004: 5.00p). Normalised earnings per share (see calculation in note 1) increased by 5% to 21.54p (2004: 20.50p).
New orders received during the year to 31 March 2005 totalled £54.4m and the order book ended the year at a record level at £86.5m (2004: £79.3m).
Dividend
In light of the underlying performance of the Group and the directors’ intention of creating shareholder value through a progressive dividend policy, your board is recommending a final dividend of 2.7p per ordinary share, giving a dividend of 3.6p for the year, which represents an increase of 20% . This will be paid on 28 September to shareholders on the register on 9 September 2005.
New Product Development
This was a strong period for new product introductions, ensuring that Radstone remains at the forefront of its industry. Over the past year we have continued to invest significant resources in product development, which reached a record level of £6.1m (2004: £4.5m) equivalent to 12.2% (2004: 10.3%) of turnover.
Corporate Activity
In July 2004 we completed the acquisition of Octec Ltd based in Bracknell, UK, for a total consideration of £10.8m. The consideration payable on completion was £10.7m and a further £0.1m was paid in May 2005 on achievement of profit targets for the 12 months to January 2005. To finance the acquisition, approximately £6.5m was raised by way of a placing of shares and the balance from existing banking facilities. It was especially pleasing to note, that the enhancement by Octec of our earnings per share, met our short-term expectation at the time of the acquisition.
I welcome the employees of Octec to the Radstone Group.
In our interim report we gave details of the changes that had been negotiated with the vendors of ICS with respect to their earn-out agreement. This detailed that during September 2004, following the successful completion of the integration of ICS, agreement was reached with Dr. Dipak Roy, the founder and former shareholder of ICS, that he resign his position as President of ICS. As part of the agreement, Radstone paid to the vendors C$7.5m (approximately £3.3m) in lieu of a payment of C$5.0m (approximately £2.2m) in January 2005 and a potential payment of up to C$5.0m in January 2006. ICS continues to perform in line with expectations at the time of the acquisition.
During January 2005 we purchased through DaqScribe Technology Inc. (our subsidiary specialising in mechanical test and measurement), the trade and assets of SavvyCorp for $167k. SavvyCorp offers a complete high performance, low cost data acquisition system solution and high bandwidth signal conditioning modules to measure pressure, temperature and other sensor inputs.
In March 2005 we sold SensorCom Inc., a small system integrator, to its management team for $1.6m. SensorCom joined the Radstone Group as part of the acquisition of ICS Ltd, of which it was a subsidiary, in September 2003. ICS had previously acquired SensorCom for $285k in September 2002. It had become apparent that strategically our core engineering development and manufacturing businesses and SensorCom’s integration business were not a good fit and therefore your board made the decision to divest itself of the business.
Facilities
Construction of a new purpose built 75,000 sq. ft. freehold facility within Towcester was completed on schedule and to budget in early May 2004. Our own internal fit-out took a further three weeks and we relocated in early June with minimal disruption to production. This modern state-of-the-art facility, with its increased capacity is a major competitive advantage for the Group.
With the large majority of our business emanating from customers in the United States, we took the decision to open, in November 2004, an engineering design centre near Boston, Massachusetts. This will be home to a team of design and development engineers in addition to front line customer service and support staff. This will complement the existing Radstone sales and support offices located throughout the USA. Our vision for the future sees us continuing to develop our presence still further in North America.
Outlook
The US defence market remains strong and its increasing investment in technology to achieve a complete network centric battlefield, with armed forces that are equipped for rapid deployment, will mean that Radstone is well placed to benefit from our customers’ requirements for high performance embedded computing.
The Group has invested substantially in new facilities, it has developed and brought to market new products and it has increased its market reach through targeted acquisitions. Radstone has continued to deliver improved financial performance; it has a record order book and a healthy balance sheet and so begins this financial year in a strong position.