ANDOR TECHNOLOGY PLC
("Andor")
Preliminary Results for the year ended 30 September 2009
24 November 2009
Andor Technology plc (AND.L), the leading developer and manufacturer of
high performance digital cameras and solutions for academic, industrial
and government applications globally, today announces preliminary
results for the year ended 30 September 2009.
Financial Highlights
- Turnover up 34% to GBP33.1m (2008: GBP24.7m)
- *Operating profit up 63% to GBP3.4m (2008: GBP2.1m)
- *PBT up 67% to GBP3.5m (2008: GBP2.1m)
- *EPS up 79.4% to 11.57 pence (2008: 6.45 pence)
- Cash generation up 411% to GBP5.8m (2008: GBP1.1m)
- Strong cash position - net funds of GBP7.9m
*Pre exceptional items
Operational Highlights
- White paper launch of scientific CMOS image sensor technology
- 30% year-on-year growth in opening order book for 2010
- Continued growth in China and investment in sales channel
- Delivering against USD2.1m design contract
Commenting on the results Conor Walsh, Chief Executive, said:"Andor has
charted a path through the uncertainty of the past 12 months
and delivered a strong set of results. As we look forward to 2010 we
remain cautious about the economic outlook, the exposure we have as a
global business to currency volatility, and the ever-increasing
competition for business. But we are also optimistic, buoyed by the
strength of our brand and our business, the technology we offer and
will deliver over the coming year, and most of all the skill and
diligence of our staff."
Enquires:
Andor Technology plc Conor Walsh +44 (0) 28 9023 7126
Chief Executive
Arden Partners plc Fred Walsh +44 (0) 20 7398 1651
Director, Corporate Finance
Notes to Editors:
Andor Technology plc (www.andor.com) is at the forefront of developing
and manufacturing instruments for the global scientific imaging and
spectroscopy markets. The company's range of CCD and intensified CCD
camera systems are used throughout the world for academic, industrial
and government research across a wide range of fields such as
biotechnology, physics and chemistry. Using Andor products these
customers can break new ground by performing experiments that were
previously considered impossible. Independently conducted customer
research confirms that Andor's low light solutions are considered world
beating.
Established in 1989, Andor's corporate headquarters are in Belfast,
Northern Ireland. Operating in a global market, Andor's US headquarters
opened in Connecticut in 1997. Andor has regional sales offices in
Europe, the US, Japan and China.
The company is listed on the London Stock Exchange's AIM market and
commenced dealings in its ordinary shares in December 2004 (AND.L).
***
Overview
This year we have reached a number of new milestones at Andor. We
celebrate 20 years in business and, for the 12th year in succession we
have increased our turnover, growing sales by 34% to GBP33.1m. We
have recorded our largest ever full year growth in operating profit
(before exceptional items) up 63%, and over the past two years
operating profits (before exceptional items) have more than
doubled from GBP1.4m to GBP3.4m. Finally, we have recorded the largest
ever cash generation achieved in a 12 month period, delivering cash
conversion from operating profit of 176% and actual cash generation of
GBP5.8m in the 12 months to 30 September 2009.
These are challenging and volatile times in the global market and Andor
is a global business. We export more than 90% of our product and in the
year just finished we have benefited from the weakening of sterling
against the other major currencies. We forward contract a significant
proportion of our currency exposure, but as with all global businesses,
we remain exposed to the volatility of the exchange rates going forward
and specifically to a strengthening of sterling.
It is also worth recording that one third of the year was spent in an
offer period. It is testament to the management team and the employees
of Andor that they did not lose focus on the primary responsibility of
running the business and executing the strategic plan. These results
are achieved through their hard work, ability and dedication.
Geographic Review
For the 12th year in succession we have achieved record turnover of
GBP33.1m, up 34% on the previous year. We said during 2008 that we were
implementing a strategy to grow OEM sales in the US to counter the
effects of reduced research funding available to our scientific
customers. At the end of 2008 we said we were seeing the benefit of
this with significant growth in order intake. We are therefore pleased
to report at the end of 2009, that the biggest growth across all
regions has been achieved in the US, growing sales by 58%.
We continue to see China as a significant growth opportunity for Andor
and during the year we invested further in our direct and indirect
channels. Sales grew 54% in the 12 month period and we have plans for
further investment during 2010 to capitalise on this opportunity. In
Japan sales grew by 53% however this performance, more than others, has
benefited from the fluctuations in the exchange rate.
Europe has been one of our strongest growth markets over the past three
years, especially due to the explosive performance of our systems
division in this region. It is therefore no surprise that sales in
Europe have grown 12% this year representing a consolidation on a
number of years of strong growth.
Segment Review - Scientific Research
Scientific research customers are core to our business and directly
represent 60% of revenue. Our traditional product offering has been a
portfolio of cameras at the very highest end of the performance range.
We continue to invest in these products and sales to this segment
during the year grew by 44% to GBP19.7m.
While this remains core to our business going forward, we are
implementing a strategy of increasing our addressable market by
extending our product offering into the mid-range market. We launched
this strategy in December 2007 and since then we have released three
cameras - the Luca, the iVac and the Clara - all targeted at this
mid-range market.
In June 2009 we made our most significant announcement as part of this
expansion strategy. At the Laser Conference and Exhibition in Munich we
announced, together with our partners, a breakthrough in scientific
CMOS image sensor technology. This sensor technology is capable of
outperforming most scientific imaging devices on the market today and
has the potential to become the global detection platform of choice for
demanding scientific photonics applications. This is still in the
development phase and there remain risks associated with the
delivery, however, the level of interest in this technology among the
scientific community is extremely high and we are very optimistic about
the medium term revenue potential.
Segment Review - OEM
OEM growth has been another focus for the business since December 2007
and I am pleased to report a reversal of the sales decline of 2008.
During the year ended 30 September 2009 sales grew by 24% to GBP7.0m.
This has been largely driven by a focused plan in the US which, over
the last two years, has delivered two engineering and design contracts
worth USD1.3m and USD2.1m each and also an order for a key US account
for a custom designed product currently delivering USD3.0m per annum.
Over the coming years the delivery of the mid-range portfolio of
cameras for the scientific research segment will create further
opportunity in the OEM segment. Many of our existing customers have
demand for product that we have not been able to satisfy historically.
Our strategy in scientific research to expand our product portfolio
into the mid-range market will also greatly increase our addressable
market in OEM. The products, complemented by our investment in purpose
built facilities and engineering capabilities, leave us well positioned
to meet the needs of existing and new OEM accounts.
Segment Review - Systems Division
The systems division was created to provide a more complete solution to
the customer and complements our other segments which tend to be more
component based. Currently we offer the Andor Revolution® which is the
complete solution for live cell microscopy. Last year we recorded
growth of 109% and said our plan for 2009 was to consolidate on market
share achieved. I am pleased to report sales for the full year grew by
20% to GBP6.4m (2008: GBP5.3m).
In the summer of 2009 we announced a new product to add to the
portfolio and we expect this to be formally launched in the first half
of the new financial year, a little later than planned. This product
will target existing technology in the live cell field and will
leverage our existing investment in channel to market and application
knowledge. We are continuing to grow our geographic reach for this
segment and I am pleased to report that following very strong
performance in Europe last year, our biggest growth region this year
was the US where we almost doubled sales in local currency. We are
adding to our channel infrastructure in Asia Pacific and expect to see
further growth in these regions over the coming years.
Financial Review
Turnover grew by 34% to GBP33.1m (2008: GBP24.7m). Europe is our largest
geographic market with sales of GBP13.9m, up 12% on the previous year.
Sales to the US grew by 58% to GBP11.7m while Asia Pacific in total grew
by 53% to GBP7.5m. Europe now represents 42% of revenue, with the US at
35% and Asia Pacific totalling 23%.
Gross margin increased by 340 basis points to 51%. The market remains
extremely competitive, but with the benefit of superior technology and
helped by favourable currency movements our margins before production
costs have improved by 380 basis points. Changes to duty
classifications and a prudent view on stock provisioning have increased
production costs relative to turnover by 40 basis points.
We continue to invest for growth and during the period operating costs
(before exceptional items) grew from GBP9.6m to GBP13.4m. We increased
our headcount by 33 (18%) with nearly all of those additions coming in
operations and engineering. This investment considerably strengthens
our ability to design and manufacture new product as well as
continuously improve quality and meet market output demands. R&D
expenditure grew to GBP3.2m representing 9.7% of turnover.
Operating profit (before exceptional items) grew by 63% from GBP2.1m to
GBP3.4m and pre-exceptional operating margins grew by 180 basis points
from 8.6% to 10.4%. We incurred GBP124,000 exceptional costs in
the year relating to the offer period, which terminated in January 2009
(2008: GBP600,000). Net interest receivable was GBP72,000 (2008:
GBP5,000 payable). Profit before tax increased by 124% to GBP3.4m and
pre-exceptional profit before tax increased 67% from GBP2.1m to GBP3.5m.
The taxation charge for the period was GBP400,000 (2008: GBP379,000). Of
this amount, GBP500,000 related to corporation tax payable with the
balance being a deferred tax credit. This increase is due to
the improvement in profit on ordinary activities before tax. The
underlying effective tax rate is 14.2% before exceptional items,
benefiting from the R&D tax credits and also a prior year provision
reversal.
Basic earnings per share have increased from 4.22 pence per share in
2008 to 11.11 pence per share in 2009. Pre-exceptional basic earnings
per share have increased from 6.45 pence per share in 2008 to 11.57
pence per share in 2009.
On 30 September 2009 Andor had had cash at bank and in hand of GBP10.0m
and long term borrowings of GBP2.0m. In addition, we have available
facilities of GBP1.3m secured against debtor balances and overdraft
facilities of GBP0.3m.
Cash generation increased fourfold from GBP1.1m to GBP5.8m driven by
improved profitability and better working capital management. Working
capital to sales fell from 30% to 15%, a record low for the business.
It is likely that due to the timing of sales and the funding required
for growth, this will reverse slightly in 2010 but not to the level of
previous years. Capital expenditure fell back to GBP0.5m (2008:
GBP0.9m). This is a typical level when we are not making one-off
strategic investments for growth. The business now has net assets of
GBP16.4m. Research and development expenditure was 9.7% of sales in 2009
(2008:
10.5%). This amount includes an impairment provision of GBP0.4m against
capitalised development expenditure.
Board Developments
During the year we said goodbye to Jack Doherty who resigned having
given sterling service to Andor since 2005. We also announced that our
Chairman, Bryan Keating would be stepping down after the upcoming AGM
to be succeeded by Colin Walsh. Bryan has been with Andor for nearly 10
years and his contribution to the growth and development of the
business over that time has been immense. We wish both Jack and Bryan
good luck in their future activities and thank them for their service.
A search for an additional non-executive board member is also
underway.
Outlook
Our strategy is clear. We want to grow through investment and
innovation, achieving superior advantage in our technology and our cost
structures. We want to develop our core business as the springboard to
fund further growth by expanding our addressable market but staying
within our area of expertise. We want to leverage our facilities and
our resources to drive volume and increase capacity utilisation. And
finally, we want to use the dual assets of our listing and our cash
generation to deliver accelerated growth by seeking out acquisition
opportunities that complement our existing business.
This has truly been an extraordinary year. Unprecedented economic
conditions, massive uncertainty across all business sectors and extreme
volatility in the currency markets will mean 2009 will be remembered
for some time. Andor has charted a path through the uncertainty of the
past 12 months and delivered a strong set of results. As we look
forward to 2010 we remain cautious about the economic outlook, the
exposure we have as a global business to currency volatility, and the
ever increasing competition for business. But we are also optimistic,
buoyed by the strength of our brand and our business, by the technology
we offer and will deliver over the coming year, and, most of all,
by the skill and diligence of our staff.
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