Final Results
Radstone Technology PLC
11 June 2003
Preliminary Results for the year ended 31 March 2003
RADSTONE DELIVERS PERFORMANCE AHEAD OF
EXPECTATIONS
Radstone Technology PLC ("Radstone", LSE:RST), the leading supplier of
high-performance, rugged computer products to the defence and aerospace
industries, today announces its preliminary results for the year ended 31 March
2003.
Highlights
• Profit before tax up 34% to £6.125 million (2002: £4.575 million)
• Sales up 18% to £48.494 million (2002: £41.204 million)
• Basic earnings per share up 36% to 17.98p (2002: 13.19p)
• Dividend increased to 2.0p (2002: 1.0p)
• Strong cash flow eliminates debt
• Improved performance from Electronic Manufacturing Services
• Strong forward order book at £62.711 million
Rhys Williams, Chairman, commented:
"Our Embedded Computing business, which accounts for the majority of our
profits, continues to provide technical leadership in the rugged embedded
computing market. This market is at the centre of the drive for smart weaponry
and improved communications within the military, known as "Battlespace
Digitisation" or "Network-centric Warfare". The increasing proportion of defence
budgets now being spent in pursuit of the completely networked battlefield will
provide the main driver for Radstone's growth prospects.
"Radstone may continue to be affected by short-term programme fluctuations, but
our long-term prospects have never been stronger."
- ends -
Date: 11 June 2003
For further information please contact:
Radstone Technology PLC City Profile Group
Charles Paterson, Group Managing Director Simon Courtenay
Jeff Perrin, Finance Director 020-7448-3244
01327-359444
Web: www.radstone.com
Chairman's Statement
for the year ended 31 March 2003
I am pleased to report that the trading performance of the Radstone Group during
the year exceeded expectations, with good performances from both businesses.
Group profit before tax increased by 34% to £6,125,000 from £4,575,000 last
year.
Sales continued to grow in the second half of the year, ending the period at
£48,494,000, an 18% increase over last year's £41,204,000. The Electronic
Manufacturing Services (EMS) business had a particularly strong second half,
principally as a result of one large, low-margin contract.
With an effective tax rate of 30% (2002:32%), the post tax profit was £4,259,000
(2002: £3,124,000), an improvement of 36%. We enjoyed excellent cash flow, with
£12,676,000 generated from operations in the year, further enhancing our strong
financial position.
Basic earnings per share under FRS14 were 17.98p (2002: 13.19p). Normalised
earnings per share (see calculation in note 1) increased by 34% to 18.77p (2002:
13.97p).
New orders received during the year to 31 March 2003 totalled £44,576,000, a 13%
increase over last year.
The weakness of the US dollar was reflected in the order book, which ended the
year at £62,711,000, (2002: £73,465,000), following the effect of a £6,837,000
currency devaluation adjustment.
Dividend
Due to the performance of the Group and the Directors' views on the excellent
prospects for the business, your Board is recommending payment of a dividend of
2.0p per ordinary share (2002: 1.0p). This will be paid on 29 September to
shareholders on the register on 5 September 2003. It is the intention of the
Board to pay an interim dividend for the 2004 financial year.
New Product Development
The Group continues to regard its investment in product development as a
strategic priority in an increasingly competitive world market place. The team
has worked hard to ensure that the Group retains its market leading position and
is at the forefront of innovations that aid its continued growth.
Investment in new product development increased by 13% to £3,942,000, with a
dozen successful new product introductions during the year.
Our R&D investment has seen a compound annual growth rate during the last five
years of over 11% and has proved to be a key factor in building our strong order
book, converting it into profits and winning market share from our competitors.
Facilities
On 5 November 2002 we announced that the Company had exchanged contracts for the
sale of its freehold property at Water Lane, Towcester for a cash consideration
of £4,100,000, which will be payable on completion of the move to the new
facility which is likely to be in the summer of 2004. The consideration compares
with a net book valuation of £1,331,000 at 31 March 2003.
The Radstone Group's headquarters and the Embedded Computing business will move
to a new purpose built 75,000 sq. ft. freehold facility within Towcester.
Construction is expected to start this summer and will take approximately 12
months to complete. The 6 acre site has scope for a further 39,000 sq. ft.
expansion in the future. The cost of the land and construction will be
approximately £10,500,000.
The EMS business will move into a 31,000 sq. ft. leasehold facility in nearby
Milton Keynes, during this summer.
Your board is confident that the new laboratory and office facilities will
enable the Group to work more efficiently and provide a platform for future
growth.
Outlook
In a difficult market, our EMS business produced an exceptional performance, the
result of reducing its cost base and successfully targeting and winning a unique
short-term contract.
We are unlikely to have the benefit of this type of work on a consistent basis
and therefore it is unlikely that growth in the EMS business will be achieved
during the 2004 financial year.
Our Embedded Computing business, which accounts for the majority of our profits,
continues to provide technical leadership in the rugged embedded computing
market. This market is at the centre of the drive for smart weaponry and
improved communications within the military, known as "Battlespace Digitisation"
or "Network-centric Warfare". The increasing proportion of defence budgets now
being spent in pursuit of the completely networked battlefield will provide the
main driver for Radstone's growth prospects.
Radstone may continue to be affected by short-term programme fluctuations, but
our long-term prospects have never been stronger.
Operations Review
Embedded Computing
2003 2002
£'000 £'000
Total sales (all external) 31,969 28,793
Gross profit 17,265 14,396
Contribution 8,481 6,913
A successful year for the Embedded Computing business saw substantial growth in
sales, margins and gross profit, although the continuing weakness in the US
dollar, the unit's main trading currency, restricted its sales growth in
sterling terms to 11% (2002: 11%).
Despite a more settled US procurement regime following the publication of the
September 2001 Quadrennial Defense Review, the phasing of shipments followed a
pattern familiar from the previous year, with a strong delivery performance in
the second half of the year. Some 60% of shipments occurred in Q3 and Q4,
compared with 68% in 2002 and 55% in previous years.
In the USA, preparations for military deployment in the Middle East overlaid the
usual second half year distortions associated with the Department of Defense
budget cycle, resulting in the forward re-scheduling of various
programme-specific items. No less than 40% of US shipments were made during the
final quarter.
Elsewhere, the phasing of several substantial orders was affected by
non-operational factors, with the general effect in each case of accentuating
the Q3/Q4 weighting of shipments.
Most significant among these were major sales to the Far East, with an invoice
value of $2.5million. These were finally shipped late in Q4, following the
resolution of a variety of administrative and shipping formalities extending
over a six month period. Similar issues on a reduced scale affected shipments to
Turkey.
Production programmes involving rugged board and system products dominated the
sales total. The majority relate to long-running projects, including Lockheed
Martin (LAMPS), BAE Systems (chiefly Eurofighter, Foxhunter Radar, RMPA and
ASTOR), Northrop Grumman (Firefinder), Raytheon Systems (various programmes,
including ATFLIR) and Harris Corporation (MLRS). No single programme represented
more than 10% of the sales of the Embedded Computing business.
Gross profit increased to £17,265,000 compared with £14,396,000 last year
(+20%), reflecting the favourable effects of an increasing proportion of rugged
products in the annual total, together with a rather weak market for many
components, which resulted in lower direct costs. Gross profit margin increased
to 54% from 50% in 2002 and 47% in 2001.
Contribution improved to 26.5% of sales (2002: 24.0%), due to the combined
effects of margin improvements and the operational gearing effect of increased
sales volumes.
The total of Embedded Computing business transactions denominated in US dollars,
(including US dollar transactions with non-US customers), reached $35,094,000 in
2003, equivalent to 69% of the unit's annual sales at the 31 March 2003 spot
exchange rate.
The sterling value of the US dollar experienced its steepest decline for fifteen
years over the period. The spot rate comparison shows the dollar weakening from
$1.42 at 31 March 2002 to $1.58 at 31 March 2003 (-11%), whilst average rates
for the same two years moved from $1.43 to $1.55, (-8%).
Despite these unfavourable currency factors, Processors achieved a 9% sales
growth in sterling terms with shipments of £13,463,000 (2002: £12,312,000) and
remained the largest single Embedded Computing product group.
Graphics/DSP revenue increased by 58% to £4,561,000 (2002: £2,885,000),
exceeding last year's 54% rise. While the LAMPS programme represented the
largest single product destination, substantial DSP product shipments were made
to Firefinder and ATFLIR as well as a major new Chinese customer.
Following strong growth in 2002, Systems shipments showed a short-term decline.
2003 deliveries of £4,719,000 were 15% less than in 2002 (2002: £5,519,000). The
main customers within this total were BAE Systems, Boeing and L-3 Communications
as well as UK Government Agencies.
Our capability in the Systems area is an important competitive advantage for the
Group.
Development work aimed at reducing the cost and lead times of our Systems
products made good progress during the year, creating the potential to extend
their use into previously inaccessible application areas with substantial
production volumes.
Electronic Manufacturing Services (EMS)
2003 2002
£'000 £'000
Total sales 17,315 13,374
Sales to Embedded Computing (790) (963)
External sales 16,525 12,411
Gross profit 1,555 1,307
Contribution 1,245 873
Following a difficult year in 2002 and a slow start to 2003, the EMS business
recovered strongly, despite the continuing weakness of the UK manufacturing
economy. External sales of £16,525,000 were 33% above 2002 (2002: £12,411,000),
exceeding the previous highest single year figure of £15,336,000 set in 2001.
The business entered the financial year with low expectations of a general UK
industrial recovery and recognised the need to overhaul its cost structure.
During Q1 a reorganisation was implemented to create a significantly more
responsive operation, with a reduced cost base.
At the same time, while maintaining contact with the traditional UK industrial
customer base, the business focused on new markets, where our strengths in areas
such as process capability, quality and financial stability were likely to be
decisive.
Initial successes were achieved among the major UK defence system integrators,
where these qualities, coupled with a proven familiarity with the documentation
and security procedures of the defence industry, resulted in an order stream
which accounted for approximately 10% of the year's shipments.
At the mid-year point, shipments lagged the equivalent 2002 level by 7%,
reflecting the weak industrial environment, coupled with the relatively long
lead times for certain components. However, order intake had recovered strongly
and activity levels at both manufacturing sites increased rapidly during Q3 and
Q4 in response to further orders.
The largest of these orders related to a new automotive test equipment project
to provide service station diagnostic equipment for a major international
vehicle manufacturer. Prototype and pre-production orders during Q3 led rapidly
to a series of production orders aimed at producing several thousand fully
assembled testers in time for the launch of a new passenger vehicle during
spring 2003. Using both manufacturing locations, production built up rapidly
during the latter part of Q3, enabling the business to achieve shipment levels
in excess of 1,000 units per month during Q4. The invoice value of Q4 shipments
was £5,499,000, with a peak in February of £2,156,000. Total billings
attributable to this programme in the year were £7,597,000 (2002: zero),
representing 46% of total 2003 external sales for the EMS business. The project
was virtually complete by 31 March 2003, save for a small residue of units
awaiting the resolution of component shortages.
Although there are no orders of comparable size for the 2004 financial year, the
project has provided a valuable demonstration of the responsiveness, technology
range and flexibility of the EMS business, which is likely to prove helpful in
other tenders in the future.
The gross profit of £1,555,000 represented an increase of £248,000 over last
year (2002: £1,307,000), but a slight reduction in percentage terms, (9.0% in
2003 versus 9.8% in 2002), due to the relatively low margin associated with the
automotive test equipment project.
Despite the reduced margin, the increased sales volume resulted in an increase
in contribution from £873,000 in 2002 to £1,245,000 in 2003 (+43%).
Group Geographical Analysis of Operations
Sales
Total Group sales increased by 18% to £48,494,000 (2002: £41,204,000), despite
European economic stagnation and foreign currency effects.
Exports increased by 13% to £26,020,000 (2002: £23,068,000), though as a
proportion of total sales this represented a slight decline, (2003: 54% versus
2002: 56%).
UK sales grew from £18,136,000 in 2002 to £22,474,000 (+24%), driven mainly by
the high level of Q3/Q4 shipments in the EMS business.
EMS business operations remained exclusively UK focussed so that the export
revenue stream resulted entirely from the activities of the Embedded Computing
business.
Embedded Computing UK sales were flat, at £5,949,000, (2002: £5,969,000). As in
previous years, BAE Systems operating divisions were important product
destinations, with ongoing deliveries to the Eurofighter DASS and the Foxhunter
radar upgrade programmes.
Shipments to mainland Europe declined, due mainly to the phasing of long-term
system orders from naval systems integrators in Italy and France. The first
production deliveries to Aselsan Electronic Industry Inc., Turkey, for the
Turkish Army's PMSS programme made up only part of the shortfall and the region
recorded sales of £3,146,000, down 22% from last year's £4,043,000.
In the main US market, sales of £18,651,000 set a new record, increasing by 13%
over 2002 to form 38% of Radstone Group sales (2002: 40%). (In US dollar terms,
the increase from $24,651,000 to $30,302,000 was 23%).
While the main US sales drivers, (LAMPS, Firefinder, MLRS, ATFLIR) are familiar
from earlier years, £592,000 of the total represents the first prototype and
pre-production deliveries of processor and ancillary hardware items to General
Dynamics Land Systems, for the Abrams tank CEEP upgrade. The balance of CEEP
deliveries will be made during the first half of the 2004 financial year.
Shipments to the rest of the world showed strong growth, advancing from
£2,498,000 to £4,223,000 in 2003, an increase of 69%.
As outlined above, the Far East was an important product destination. The
Group's success in its main US market has been a useful differentiator in
approaching these emerging markets.
Orders
The order book at 31 March 2003 totalled £62,711,000, down 15% in sterling terms
from the £73,465,000 achieved in 2002.
The greater part of the Radstone Group order book results from orders originally
denominated in US dollars, booked at a variety of spot rates over extended
periods of time.
The comparison with 2002 highlights the effects of US dollar volatility over
this particular two-year period: the 2002 total benefited from an overall
revaluation adjustment of £1,344,000 due to exchange movements, while the 2003
total has been reduced by £6,837,000 for the same reason.
Similar considerations apply to the new orders received within the year.
Gross new orders booked at constant management exchange rates totalled
£44,576,000 in 2003, representing a 13% increase over 2002 (2002: £39,324,000).
New orders, reduced by the £6,837,000 required to correct the order book to 31
March 2003 spot currency rates were £34,739,000 compared with £40,668,000 in
2002. The apparent decline of 15% was entirely attributable to this currency
adjustment.
New UK orders for the Radstone Group totalled £18,418,000, giving a 35% increase
compared with £13,608,000 in 2002. All of the improvement is attributable to the
unusual profile of EMS orders in the year, which resulted in a 91% increase from
£8,085,000 to £15,474,000, of which £7,597,000 was the automotive test equipment
project.
In contrast, Embedded Computing UK orders declined in the absence of any major
new systems orders, ending the year with a total of £2,944,000 (2002:
£5,523,000), a decline of 47%.
New orders from mainland Europe and Turkey grew by 34% to £4,913,000 (2002:
£3,672,000), mainly as a result of the first phase of the Aselsan PMSS
agreement, which represented a booking value of approximately £2.2 million.
With a Far Eastern order held in work in progress for much of the year, due to
documentation issues, there was little scope for major new orders from that
customer and Rest of World bookings recorded a decline of 60%, from £5,091,000
to £2,046,000.
In the USA, the combination of mature production programmes and new design wins
resulted in a 13% growth in orders received.
The largest US orders took the form of extensions to well-established Radstone
production programmes, of which most significant was the Lockheed Martin LAMPS
contract extension signed in August 2002 (£5,992,000).
Other important US orders included the first ATFLIR production order,
(£1,354,000) and the first ACOT torpedo production order, (£1,014,000), from
different operating divisions of the Raytheon Corporation.
Financial Review
Overview
Group sales of £48,494,000 were 18% above last year and as in the previous year
substantially weighted towards the second half. Second half deliveries, like
last year, were 62% of the total, compared to 56% in the previous two years.
Second half deliveries were affected by the automotive test equipment contract
in the EMS business.
The gross profit margin was 38.8% compared to 38.1% last year. Margins in the
Embedded Computing business improved substantially from 50.0% to 54.0%, due to
the increased mix of higher margin products. In the EMS business, margins fell
from 9.8% to 9.0% as a result of the high volume, low margin automotive test
equipment contract.
Gross profits increased by £3,117,000. Expenditure on development, sales,
marketing and administration increased by £1,732,000 with the result that
operating profit (before goodwill amortisation of £186,000) increased by
£1,385,000 to £6,643,000, a 26% improvement. This represented an operating
profit of 13.7% of sales, compared to 12.8% last year.
EBITDA (see note to the consolidated cash flow statement) at £8,386,000 was 23%
above last year. The first half generated £1,827,000 and the second half
£6,559,000, compared to £11,000 and £6,799,000 respectively.
Interest costs of £332,000 were £165,000 less than last year.
The tax charge of £1,866,000 represented 30% of the pre-tax profit compared to
32% in 2002.
The basic earnings per share (FRS14) were 17.98p (2002: 13.19p). The normalised
earnings per share (see calculation in note 1) were 18.77p, a 34% increase
compared to last year.
Cash flow
Cash flow from operating activities was £12,676,000 compared to £788,000 last
year.
After net interest, tax payments and purchase of own shares of £317,000,
£1,703,000 and £109,000 respectively and all forms of capital expenditure of
£1,869,000, free cash flow amounted to £8,678,000. From the free cash flow a
dividend of £238,000 was paid. Additional income of £15,000 was received from
the exercise of share options resulting in a cash inflow of £8,455,000.
The cash inflow, increased slightly by a £137,000 exchange rate movement on net
foreign borrowings, eliminated the net debt of £8,029,000 from last year and
produced a net cash balance of £563,000.
Investment
During the year, the Group invested a net £1,869,000 in capital equipment
compared with £1,697,000 in 2002.
Company funded development expenditure amounted to £3,942,000 (2002:
£3,474,000), representing 12.3% of sales for the Embedded Computing business
(2002: 12.1%). Consistent with the Group's established policy, all product
development was charged directly to the profit and loss account.
Liquidity
Net cash of £563,000 at the year end compares to gearing of 43% last year and
26% at the half year. Current and quick ratios were 2.4 and 1.6 respectively,
compared to 1.9 and 1.1 last year. Interest was covered 20.0 times compared to
10.6 times last year. The proposed dividend is covered 8.9 times compared to
13.1 times last year.
The Group seeks to reduce financial risk and to ensure sufficient liquidity is
available to meet foreseeable needs. Our policy is to maintain a balance between
continuity of funding and flexibility through the cost-effective use of
borrowings with a range of maturities.
Performance
Normalised earnings per share, (see calculation in note 1), which is indicative
of underlying performance, grew by 34% to 18.77p (2002: 13.97p).
Following the successful introduction of the SAP R/3 enterprise resource
planning system in the summer of 2001, the management of working capital has
improved considerably, resulting in average working capital of 30.2% of sales
compared to 34.8% last year.
The return on average capital employed was above last year's 22.1% at 27.6% and
return on opening equity of 23.0% was also above last year's 19.7%.
Treasury
With a substantial part of sales in United States dollars, hedging foreign
exchange fluctuations against this currency is recognised by the directors as a
key responsibility. Whilst the majority of this exposure is hedged by purchases
of components in US dollars and the local costs of our US operation, there still
remains a net exposure to be hedged. The prudent use of various financial
instruments minimises this vulnerability to the volatility of the rate of
exchange to the US dollar.
At 31 March 2003 there were £275,000 of unrealised net gains on 78 forward
foreign currency contracts and options (2002: £1,000 of net gains) covering US
dollars. None of these was recognised at the balance sheet date. All unrealised
net gains are expected to be dealt with in the profit and loss accounts for the
periods ending 31 March 2004 and 31 March 2005. During 2003, the net gain not
realised at 31 March 2002 was included in the profit and loss account.
Since unrealised gains or losses are calculated by marking to market forward
foreign currency contracts and options, that in themselves are used to calculate
foreign currency prices for our products, the off-set for these unrealised
amounts is the sales which will result from the physical delivery of these
products.
Translation exposure arising on the consolidation of the Group's US assets is
hedged by use of a US dollar loan in the UK parent company. The net effect of
this is taken directly to reserves as allowed under SSAP20, ensuring that only
trading transaction gains and losses on foreign exchange are represented in the
profit and loss account.
The interest rate exposure created by the requirement of the US dollar and
Sterling loans are managed by interest rate SWAPS.
Consolidated Profit & Loss Account
for the year ended 31 March 2003
Notes 2003 2002
£'000 £'000
Turnover 48,494 41,204
Cost of sales (29,674) (25,501)
_________ _________
Gross profit 18,820 15,703
Administration costs
Administration (3,083) (2,528)
Development (3,942) (3,474)
Goodwill (186) (186)
_________ _________
Total administration costs (7,211) (6,188)
Distribution costs - sales and marketing (5,152) (4,443)
_________ _________
Operating profit 6,457 5,072
Net interest payable (332) (497)
_________ _________
Profit on ordinary activities before taxation 6,125 4,575
Taxation (1,866) (1,451)
_________ _________
Profit for the financial year 4,259 3,124
Dividend (477) (238)
_________ _________
Retained profit for the year 3,782 2,886
_________ _________
Basic earnings per share 1 17.98p 13.19p
_________ _________
Normalised earnings per share 1 18.77p 13.97p
_________ _________
Diluted earnings per share 1 17.86p 13.12p
_________ _________
Dividend per share 2.00p 1.00p
_________ _________
Statement of total recognised gains and losses
£'000 £'000
Profit for the financial year 4,259 3,124
Exchange rate adjustment (217) (232)
_________ _________
Total gains recognised relating to the year 4,042 2,892
_________ _________
There is no material difference between the profit reported above and that
calculated on the historical cost basis. Turnover and expenses all relate to
continuing operations.
Balance Sheets
at 31 March 2003
Group Company
2003 2002 2003 2002
£'000 £'000 £'000 £'000
Fixed assets
Goodwill 3,100 3,286 - -
Intangible assets 57 50 57 50
Total intangible assets 3,157 3,336 57 50
______ ______ ______ _______
Tangible assets 5,997 5,967 1,529 1,546
Own shares 344 235 344 235
Investments - - 6,865 6,865
______ ______ ______ _______
9,498 9,538 8,795 8,696
______ ______ ______ _______
Current assets
Stocks 9,450 11,773 - -
Debtors falling due after more than one year - - 151 151
Debtors 13,248 15,273 6,243 5,007
Cash at bank and in hand 4,406 672 11,382 4,891
______ ______ ______ _______
27,104 27,718 17,776 10,049
______ ______ ______ _______
Creditors: amounts falling due within one year
Bank and other borrowings 939 4,828 - -
Other creditors 10,420 10,030 6,040 1,083
______ ______ ______ _______
11,359 14,858 6,040 1,083
______ ______ ______ _______
Net current assets 15,745 12,860 11,736 8,966
______ ______ ______ _______
Total assets less current liabilities 25,243 22,398 20,531 17,662
Creditors: amounts falling due after
more than one year
Bank and other borrowings 2,904 3,873 1,353 2,922
Provisions for liabilities and charges 234 - 366 329
______ ______ ______ _______
3,138 3,873 1,719 3,251
______ ______ ______ _______
Net assets 22,105 18,525 18,812 14,411
______ ______ ______ _______
Capital and reserves
Called up share capital 2,982 2,977 2,982 2,977
Share premium account 9,519 9,509 9,519 9,509
Revaluation reserve 218 218 218 218
Profit and loss account 9,386 5,821 6,093 1,707
______ ______ ______ _______
Equity shareholders' funds 22,105 18,525 18,812 14,411
______ ______ ______ _______
Consolidated Cash Flow Statement
for the year ended 31 March 2003
2003 2002
£'000 £'000
Operating activities
Net cash inflow from operating activities 12,676 788
________ ________
Returns on investments and servicing of finance
Interest received 18 17
Interest paid (219) (420)
Interest paid on finance leases (116) (137)
________ ________
(317) (540)
________ ________
Taxation
UK Corporation tax paid (1,703) (957)
Overseas tax paid - (295)
________ ________
(1,703) (1,252)
________ ________
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,810) (1,265)
Proceed from disposal of tangible fixed assets 4 -
Purchase of own shares (109) (88)
Purchase of intangible fixed assets (63) -
________ ________
(1,978) (1,353)
________ ________
Equity dividends paid (238) -
________ ________
Net cash inflow/(outflow) before financing 8,440 (2,357)
________ ________
Financing
Issue of ordinary share capital 15 9
________ ________
15 9
________ ________
Repayment of loans (500) (500)
Repayment of principal under finance leases (496) (503)
________ ________
(996) (1,003)
________ ________
(981) (994)
________ ________
Increase/(decrease) in cash 7,459 (3,351)
________ ________
Note to the Consolidated Cash Flow Statement
Reconciliation of operating profit to net cash
inflow from operating activities
2003 2002
£'000 £'000
Operating profit 6,457 5,072
Amortisation of goodwill 186 186
________ ________
Operating profit before goodwill 6,643 5,258
Amortisation of intangible fixed assets 56 36
Depreciation of tangible fixed assets 1,687 1,516
________ ________
EBITDA 8,386 6,810
Loss on disposal of tangible fixed assets 80 5
Decrease/(increase) in stocks 2,323 (1,763)
Decrease/(increase) in debtors 1,881 (3,755)
Increase/(decrease) in creditors 6 (509)
________ ________
Net cash inflow from operating activities 12,676 788
________ ________
Notes:
1. Earnings per share
2003 2002
pence pence
per share per share
Basic earnings per share 17.98 13.19
________ ________
Normalised earnings per share 18.77 13.97
________ ________
Diluted earnings per share 17.86 13.12
________ ________
The calculation of basic and diluted earnings per share is based on the profit
for the year after tax of £4,259,000 (2002: £3,124,000). Normalised earnings per
share is calculated after adjusting profit after tax for the effect of goodwill
amortisation and is more indicative of underlying performance. The
reconciliation of basic to normalised earnings per share is as follows:
2003 2002
pence pence
per share per share
Basic earnings per share 17.98 13.19
Goodwill written off 0.79 0.78
________ ________
Normalised earnings per share 18.77 13.97
________ ________
The weighted average number of shares in issue during the year used in the
calculation of earnings per share is as per the following table:
2003 2002
'000 '000
Weighted average for year - basic and 23,683 23,696
normalised earnings per share
Calculation of shares under option per FRS 14 160 123
________ ________
Weighted average for year - diluted earnings per share 23,843 23,819
________ ________
2. The comparative figures for the year to 31 March 2002 do not constitute full
accounts within the meaning of Section 240 of the Companies Act 1985. Full
accounts for that period, which received an unqualified audit report and did
not contain a statement under Section 237(2) or Section 237(3) of the
Companies Act 1985, have been delivered to the Registrar of Companies. The
financial information set out in the preliminary statement of results for
the year ended 31 March 2003 does not constitute statutory accounts within
Section 240 of the Companies Act 1985. The Group's statutory accounts for
the year ended 31 March 2003 have not yet been filed with the Registrar of
Companies. The Company's auditors have issued an unqualified report on those
financial statements. Their report contains no statement under Section 237
(2) or Section 237(3) of the Companies Act 1985.
3. This preliminary announcement is prepared on the basis of the accounting
policies as stated in the financial statements for the year ended 31 March
2002.
4. Copies of the 2003 Report and Accounts will be sent to shareholders in due
course. Further copies will be available from the registered office of
Radstone Technology PLC, Water Lane, Towcester, Northants NN12 6JN.
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