15 June 2010
Andor Technology plc ("Andor")
Interim Results for the Six Months ended 31 March 2010
Andor Technology plc (AND.L), the leading developer and manufacturer of
high performance digital cameras for academic, industrial and
government applications globally today announces interim results for
the six months ended 31 March 2010.
Financial highlights
. Turnover up 24% to GBP20.0m (H1'09: GBP16.1m)
. Adjusted* operating profit up 85% to GBP3.2m (H1'09:GBP1.7m)
. Adjusted* PBT up 87% to GBP3.3m (H1'09: GBP1.7m)
. Adjusted* EPS up 73% to 9.32 pence (H1'09: 5.39 pence)
. GBP4.0m cash generated from operations
. Record GBP0.5m profit related pay distributed amongst all employees
*Adjusted results are before acquisition costs, amortisation of
acquired intangibles and IFRS2 share based payments
Operational highlights
. Growth in sales in China - up 71%
. Acquisition of Bitplane AG ("Bitplane")
. Launch of Revolution® DSD
. Launch of Ikon-M PV for solar panel market
. Completed transition to IFRS
. sCMOS camera on track for H2 launch
Commenting on the results Conor Walsh, Chief Executive, said:"I am
delighted to report that, for the six months to 31 March 2010,
the employees of Andor have again delivered an exceptional set of
results. The scale of improvement year on year, and the consistency of
performance over the past number of years have been extraordinary.
While Andor is not insulated from the macro-economic environment we
have strengths that help us in difficult times. We are balanced across
the geographic segments and the market sectors that we serve, we have a
clear strategy to deliver growth through investment and innovation and
we are obsessive about our execution."
For further information, please contact:
Enquiries:-
Andor Technology plc 028 9023 7126
Conor Walsh, Chief Executive Officer
Nominated Adviser & Broker
Arden Partners plc 020 7614 5928
Fred Walsh
Matthew Armitt
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).
Introduction by the Chairman
These interim financial statements are my first as Chairman and the
first results reported by Andor that have been prepared in accordance
with the International Financial Reporting Standard ("IFRS") as adopted
by the European Union. Previous financial statements were prepared in
accordance with UK Generally Accepted Accounting Principles ("UKGAAP").
Prior to the acquisition of Bitplane, Andor was not obliged to prepare
accounts in accordance with IFRS as we were not required to prepare
consolidated financial statements.
The trading performance of the business has continued to strengthen as
evidenced in the significant increase in both revenue and profit. Under
Conor's leadership "Team Andor" has delivered another strong
performance during the first half of the year and your Board is pleased
with the results that have been achieved and grateful to all the staff
that have contributed to this performance.
Financial Overview
For the six month period ended 31 March 2010, the conversion from
UKGAAP to IFRS as adopted by the EU increased the operating profit by
GBP89,000. For the same period in the prior year the effect was to
increase operating profit by GBP39,000. The effect of the transition to
IFRS is fully explained in note 13 to these interim financial
statements.
Throughout this document adjusted results are stated after adding back
acquisition costs, amortisation of acquired intangible assets and the
IFRS2 share based payments adjustment. A reconciliation of reported
results to adjusted results, for the six months ended 31 March 2010 and
for the six months ended 31 March 2009, is given in note 14 of these
interim financial statements.
The Board is delighted to welcome to Andor the staff of Bitplane, which
we acquired in late December 2009. In the current results Bitplane has
contributed revenue of GBP1.0m and profit before tax of GBP0.3m. Current
performance remains in line with our expectations.
Turnover grew 24% to GBP20.0m (H1'09: GBP16.1m) and adjusted operating
profit grew 85% to GBP3.2m (H1'09: GBP1.7m). This converted to cash at a
rate of 152% delivering GBP4.0m cash before financing and acquisition
activity. Taken in the context of the first half of last year, which
saw increases of 40% in revenue and 102% in adjusted operating profit,
today's results are truly outstanding.
EBITDA grew to GBP3.5m from GBP2.1m, an increase of 68% resulting in an
EBITDA margin of 17.5%. Adjusted PBT grew 87% to GBP3.3m from GBP1.7m
and adjusted earnings per share increased by 73% to 9.32 pence from 5.39
pence. We generated GBP4.0m of cash in the period and working capital to
sales is now at an all time low of 10.7%.
Segmental Performance
Rest of World
Revenue to Rest of World grew 6% from GBP8.2m to GBP8.7m. Our strongest
growth was achieved in China where sales grew 71% to GBP1.7m. We
continue to invest in this high growth region and in the period we
restructured our sales organisation to deliver a more targeted
approach. We have also increased our direct sales presence on the
ground as we believe this visible commitment to the region is important
both to Andor and our customers.
In the current period sales of Systems to Rest of World fell slightly
from the heights achieved in the same period last year. This situation
is not uncommon in the introduction of new technology and we are clear
on the actions we need to take to move the technology from early
adopters to more mainstream use. Because of this, revenue from Europe
fell by 3% in the period to GBP7.0m.
European research sales have remained strong. We are also seeing a
significant increase in OEM sales to Europe as a result of our
investment in both product and channel. The iKon-M PV, launched for the
solar cell inspection market, has generated significant interest
amongst new OEM customers.
Japan
Because of its significance as the world's second largest economy we
report Japan separately from the Rest of World. Revenue here grew by
33% from GBP2.2mto GBP2.9m. Since we opened our second Japanese office,
in Osaka, we have seen increased business with research customers in
both the physical and life sciences. At Andor we believe it is
important to show commitment to your market and your customers and
investing in this way demonstrates that commitment.
US
Revenue from the US grew by 30% to GBP7.4m from GBP5.7m. We have seen
growth in the Systems Division and the OEM business but especially
pleasing is the strong performance achieved by our research sales team
who have worked extremely hard in difficult market conditions to
deliver real growth.
In the US, and across all the regions, we have revisited the
organisational structure to ensure it is capable of delivering the
growth targets we set ourselves for the coming years. In most regions
we have made changes and added resource and are confident the current
structure is fit for the future.
Bitplane
On 23 December 2009 we acquired the entire issued share capital of
Bitplane. Based in Zurich, Switzerland, Bitplane is a world leader in
3D and 4D image analysis software for the medical and life sciences
sector. Bitplane is established globally with a strong brand and will
continue to be run as a standalone business, but very much as part of
the Andor family.
The consideration was composed GBP5.6m of cash and 283,851 ordinary
shares in Andor (valued at GBP0.5m) with the potential for further
consideration in the form of cash and shares totalling GBP0.5m under an
earn out provision in the event Bitplane achieves certain EBITDA
targets in the twelve months post acquisition. The acquisition was
funded by a placing in December 2009 of Andor ordinary share which
raised GBP3.0m with the remainder drawn from cash. At the balance sheet
date we had GBP11.0m of cash in hand and net cash (after deducting debt)
of GBP9.0m.
We have appointed an Integration Manager from within the Andor
Leadership Team with responsibility for all aspects of the integration
process and we have already identified a number of ways that Andor and
Bitplane can work together to generate additional returns. We
successfully completed the transition of the Bitplane management
reporting to the Andor standard including the additional requirements
under IFRS. Product training has been completed across both businesses
and we are beginning to see the benefits that the joint Andor/ Bitplane
product offerings bring to the market. In the three months since
acquisition Bitplane contributed revenue of GBP1.0million and operating
profit of GBP0.3 million.
Operational Review
Systems Division
The Systems Division compliments our camera component business by
offering a complete solution to customers. Our existing Revolution® XD
system offers ultimate sensitivity and performance for live cell
imaging and growth rates in sales have been exceptional over the past
three years.
There remain significant growth opportunities in this space and we have
continued to invest in expanding our channel to market, taking a
largely direct approach to these large and often complex sales. We have
added to our sales team in the US and in China and we believe these
regions hold significant potential for further growth in this division.
We are also expanding our product offering and in February of this year
we announced the release of our Revolution® DSD. This is a white light
spinning disc confocal systems that delivers comparable image quality
to traditional laser-point scanning confocal microscope but at
significantly lower cost. This product will move to production in the
second half of this year and we expect to see an impact in the order
book by year end.
In April 2010 we acquired Photonic Instruments ("Photonic") in the US
for consideration comprising $5m (GBP3.25m) in cash and the issue of
156,627 ordinary shares. The acquisitions of Bitplane and Photonic also
add significantly to the product offering in the systems division and
enhance our competitive differentiation. We were delighted that our
first joint demonstration incorporating product from the three
businesses was successful and generated a single order worth almost
$700,000.
Scientific Research
Research sales are the bedrock of the Andor business. Historically our
product offering has been at the high end of the performance spectrum
delivering ultimate sensitivity to our research customers in both the
physical and life science markets. Our first objective is to continue
to invest and grow this high end market where we have built our
reputation for innovation, quality and superior customer service.
Largely driven by this core market sales grew 16% in the period to
GBP10.7 million from GBP9.2 million in the same period last year.
In addition, our strategy is to use our experience, technical knowledge
and manufacturing capability to expand our product offering into the
much larger mid range market. We have delivered a number of products
addressed at this space however the most significant is our ground
breaking sCMOS camera. As we said in February, we expect this product
to move to production in the second half of this year and expect sales
to benefit from H1 2011. There has been a high level of interest in
this technology and we have been working on developing additional
indirect channels to support the expected demand for product.
OEM
Growing our OEM business is another key aspect of our strategy. This is
higher volume business to business sales for Andor and leverages the
investment we make in our research market by bringing similar
technology to these instrumentation companies. It also supports our
investment in engineering and manufacturing capability which is another
differentiator for Andor. OEM customers need to know Andor's
manufacturing capability can keep up with and support their growth over
time. Our facility, opened in 2005, is custom designed for Andor and
has capacity to support our growth plans going forward. We have
invested in automated quality control systems, train our staff in Six
Sigma and embrace the principles of Lean Manufacturing. All of this is
to achieve our ultimate goal of becoming world class.
We have seen growth across all of our regions but especially in the US
where our performance has been particularly strong. We received
follow-on funding of $0.5 million for our design contract that we
announced in April 2009 taking the total order to in excess of $2.6
million for delivery in 2010. The potential remains for this camera to
move to production for the customer and be a significant revenue
contributor from 2011 onwards.
We restructured our sales and engineering teams to better support our
OEM customers and this is delivering real benefit. In Europe we have
also seen real growth, particularly from our new Ikon-M PV product.
This is a dedicated CCD camera designed to deliver market leading speed
and sensitivity for in-line inspection of photovoltaic cells used in
solar panels. We have also gained traction in the Chinese OEM market,
although this is early stage business for Andor.
Outlook
We have again exceeded market expectations. The reason is because we
have outstanding individuals who are focused and dedicated to
delivering innovative, superior products and service to our customers
and whose personal goals are totally aligned with those of the
business. On behalf of the Board I thank them for their efforts.
While Andor is not insulated from the macro-economic environment wehave
strengths that help us in difficult times. We are balanced across
the geographic segments with sales in Rest of World, the US and Japan.
We are equally balanced across the markets that we serve having
successfully grown our OEM and systems business. We have a clear
strategy to deliver growth through investment and innovation. And
finally we are obsessive about our execution. For these reasons the
Board remains confident about the outlook for the full year and beyond.
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