Interim Results

Embargoed until 07.00 	8 November 2000


Radstone Technology PLC

('Radstone' or 'the Group')

Interim Results for the six months ended 30 September 2000


Radstone Technology PLC, one of the world's leading suppliers of open architecture computer subsystems to the industrial and defence sectors, announces Interim Results for the six months ended 30 September 2000.

Highlights

* Sales for the six months were up 46% at £18.2m, an increase of £5.8m over last year.  

On a like-for-like basis (excluding the business acquired in December 1999), sales increased by £2.4m, a 19% improvement.

* Pre-tax profit increased by 92% to £1.2m  (1999: £603,000)

* Basic earnings per share increased by 67% to 3.45p (1999: 2.07p)

* Operating cash inflow more than doubled to £2.65m (1999: £1.23m)

* The period end order book stood at a record £59.9m (1999: £25.7m).   New orders received in the period were £32.4m, double the same period last year

* Investment in product development was £1.4m, representing 7.9% of Group sales

Rhys Williams, Chairman, commented:

'During this period, the Group has secured a substantial volume of new business and my view of future opportunities is extremely positive.

'The markets in which we operate remain encouraging and I am confident we can maintain this pace of sales growth in the period ahead.  The prospects for the Group are for a sustained improvement in sales, profits and cash.'



- Ends -

For further information please contact:

Radstone Technology PLC	01327 359444
Dr Charles Paterson, Group Managing Director, or
Jeff Perrin, Finance Director

Square Mile Communications Ltd	020 7601 1000
Nick Oborne / Stephanie Smart	





Embargoed until 07.00 	8 November 2000

Radstone Technology PLC

('Radstone')

Interim Results for the six months ended 30 September 2000


Chairman's Statement

I am pleased to report a strong performance in the half year to 30 September 2000.  Sales increased by 46%, pre-tax profit by 92% and earnings per share by 67% against the corresponding period last year.

Results
Sales for the six months were £18,196,000, an increase of £5,758,000 over last year.  On a like-for-like basis (excluding the business acquired in December 1999), sales increased by £2,387,000, a 19% improvement.  This growth would have been even greater if it were not for the industry wide current component shortages.

Pre-tax profits, at £1,245,000 (excluding goodwill) improved by £642,000.

Basic earnings per share were 3.45p.  Normalised earnings per share (excluding goodwill written off and exceptional items) increased by 85% to 3.83p. With prior year tax losses having been fully consumed last year, corporation tax at £344,000, represented a full charge on profits; had a full tax charge been applied last year, the normalised earnings per share increase would have been 95%.

The gross profit of 34.4% compares with 39.3% last year.  The decline in gross profit margin was expected, reflecting the increased proportion of Contract Electronic Manufacturing (CEM) sales within the Group total, following the December 1999 acquisition.  On a like-for-like basis, excluding the acquired business, gross profit would have shown a small improvement, to 39.8%.

The order book for future delivery ended the period at a record £59,935,000, of which £14,800,000 is scheduled for delivery in the second half of this year.  The comparable figures for 1999 were £25,700,000 and £8,800,000 respectively.  

New orders received in the period were £32,378,000, double the same period last year.  The book to bill ratio for the period was exceptionally high at 1.78, reflecting the transition to production status of a number of important design wins in our main US market place.


Business Development

Embedded Computing
The transition to production status of a growing number of US design wins from earlier years was a notable feature of deliveries in the period; sales increased to £10,948,000, 17% up on the £9,328,000 achieved in the corresponding period last year.

The period saw major design win successes for the Group's rugged VMEbus product family, both in the US and the UK.  These wins, which emphasised display and digital signal processing applications, position the division well for the future.

We were particularly pleased to announce in September further orders from Northrop Grumman, totalling $18 million, for the upgrade of the US Army Firefinder Radar Programme.



CEM
Third party sales grew strongly in the half-year, from £3,110,000 to £7,248,000, an increase of 133%; excluding the acquisition, organic growth was 25%.

Good progress was made in the task of integrating the acquired business within the new unified management structure and in upgrading the plant and equipment to Radstone Group standards.  This has enabled the Hawarden unit to compete successfully for new third party assembly business and to qualify as an assembler of products for the Group's Embedded Computing business.

Financial
Operating cash inflow for the period was £2,652,000 (1999: £1,231,000), representing the results of strong operating profits and reduced working capital.

Payments for servicing finance and taxation were respectively £263,000 and £91,000 (1999: £89,000 and £64,000).  Expenditure on fixed assets, including leasing of £512,000 was £806,000 (1999: £747,000).  The purchase of the company's own shares as part of the directors and senior managers' incentive plan amounted to £147,000.

The resultant cash inflow produced a £1,354,000 decrease in net debt from 31 March 2000 to £5,247,000.  Gearing was 40% at 30 September 2000 compared to 35% at 30 September 1999 and 53% at the end of last year.

Investment in product development was £1,436,000, representing 7.9% of Group sales and 13.1% of Embedded Computing sales (1999: £1,300,000 representing 10.5% of Group sales and 13.9% of Embedded Computing sales).

The Euro
The Radstone Group has adapted its financial processes to undertake business in the Euro where necessary.  The associated costs were negligible.

Outlook
During this period, the Group has secured a substantial volume of new business and my view of future opportunities is extremely positive.

The markets in which we operate remain encouraging and I am confident we can maintain this pace of sales growth in the period ahead.  The prospects for the Group are for a sustained improvement in sales, profits and cash.


Rhys Williams
Chairman

- Ends -

For further information please contact:

Radstone Technology PLC	01327 359444
Dr Charles Paterson, Group Managing Director, or
Jeff Perrin, Finance Director

Square Mile Communications Ltd	020 7601 1000
Nick Oborne / Stephanie Smart	



Group Profit and Loss Account 
for the six months ended 30 September 2000


	6 months to
	6 months to
	12 months to

30 September 2000
	30 September 1999
	31 March 2000

	(neither audited 
	nor reviewed)
	(neither audited
	nor reviewed)

	(audited)

	£'000
	£'000
	£'000




Turnover
18,196
12,438
30,163




Cost of sales
(11,928)
(7,548)
(17,692)




Gross profit
6,268
4,890
12,471




Development costs
(1,436)
(1,300)
(2,981)
Sales and marketing costs
(2,302)
(1,926)
(4,175)
Administration costs
(1,027)
(955)
(2,282)
Administration costs - goodwill
(90)
-
(62)




Operating profit on ordinary activities before interest

1,413

709

2,971




Net interest payable
(258)
(106)
(310)




Profit on ordinary activities before taxation

1,155

603

2,661




Taxation
(344)
(157)
(262)




Retained profit for the period
811
446
2,399








Basic and headline earnings per share
	3.45p
	2.07p
	10.82p
Normalised earnings per share
	3.83p
	2.07p
	11.10p
Diluted earnings per share
	3.41p
	2.04p
	10.64p








All results relate to continuing operations



Group Balance Sheet
At 30 September 2000


	At
	At
	At

	30 September 2000
	30 September 1999
	31 March 2000

	(neither audited 
	nor reviewed)
	(neither audited
	nor reviewed)

	(audited)

£'000
£'000
£'000




Fixed assets



Goodwill
3,569
-
3,650
Intangible assets
25
19
30
Tangible assets
5,635
3,797
5,487
Investments in own shares
131
-
-





9,360
3,816
9,167




Current assets



Stocks
9,104
6,870
7,976
Debtors
7,462
5,517
8,413
Cash at bank and in hand
948
1,444
778





17,514
13,831
17,167




Creditors: amounts falling due within one year



Bank and other borrowings
(1,361)
(1,353)
(2,550)
Other creditors
(7,410)
(5,404)
(6,574)





(8,771)
(6,757)
(9,124)
Net current assets
8,743
7,074
8,043




Total assets less current liabilities
18,103
10,890
17,210
Creditors: amounts falling due after more than one year



Bank and other borrowings
(4,834)
(2,869)
(4,829)




Provisions for liabilities and charges
(35)
(8)
(35)




Net assets
13,234
8,013
12,346








Capital and reserves



Called up share capital
2,950
2,659
2,925
Share premium account
9,446
7,241
9,362
Revaluation reserve
218
218
218
Profit and loss account
620
(2,105)
(159)




Equity shareholders' funds
13,234
8,013
12,346



Group Cash Flow Statement
For the six months ended 30 September 2000


	6 months to
	6 months to
	12 months to

	30 September 2000
	30 September 1999
	31 March 2000

	(neither audited 
	nor reviewed)
	(neither audited
	nor reviewed)

	(audited)

	£'000 
£'000
£'000




Net cash inflow from operating activities
2,652
1,231
2,407




Servicing of finance



Interest received
4
44
43
Interest paid
(205)
(96)
(160)
Interest paid on finance leases
(62)
(37)
(89)





(263)
(89)
(206)




Taxation



UK Corporation tax paid
(74)
-
(322)
UK Corporation tax recovered
25
-
-
Overseas tax paid
(50)
(64)
(4)
Overseas tax recovered
8
-
-





(91)
(64)
(326)




Capital expenditure and financial investments



Acquisition of subsidiary
-
-
(5,178)
Purchase of tangible fixed assets
(294)
(427)
(969)
Purchase of intangible fixed assets
-
-
(27)
Purchase of own shares
(147)
-
-





(441)
(427)
(6,174)








Equity dividends paid
-
-
-
Net cash inflow/(outflow) before financing
1,857
651
(4,299)




Financing



Placing
-
-
2,387
Proceeds from share options
109
-
-
New Loans
-
1,000
2,500
Repayment of loans
(383)
(233)
(497)
Payment of principle under finance leases
(640)
(101)
(254)





(914)
666
4,136
Increase/(decrease) in cash in the period
943
1,317
(163)




Reconciliation of operating profit to net cash inflow from continuing operating activities



Operating profit
1,413
709
2,971
Amortisation of goodwill
90
-
62
Amortisation of intangible fixed assets
5
10
26
Depreciation of tangible fixed assets
657
418
980
Profit on disposal of tangible fixed assets
1
-
41
Amortisation of investment in own shares
16
-
-
Increase in stocks
(1,128)
(857)
(1,245)
Decrease in debtors
922
1,744
137
Increase/(decrease) in creditors
676
(793)
(592)
Increase in provisions
-
-
27
Net cash inflow from continuing operating activities

2,652

1,231

2,407



Notes:

1.	The calculation of earnings per share has been expressed in four separate ways.

(a)	Basic earnings per share is the profit after tax of £811,000, (interim 1999/00: £446,000, full year 1999/00: £2,399,000) divided by the weighted average number of ordinary shares in issue of 23,513,966,  (interim 1999/00: 21,551,344, full year 1999/00: 22,162,159).

(b)	Headline earnings per share has been recommended by the Institute of Investment Management and Research (the IIMR).


	6 months to
	6 months to
	12 months to

	30 September 2000
	30 September 1999
	31 March 2000




Basic and headline earning per share
	3.45p
	2.07p
	10.82p

(c) Normalised earnings per share uses the same number of shares as for basic earnings per share but uses an adjusted profit figure as the numerator of the ratio, to eliminate the effect of the amortisation of goodwill and any exceptional item.  This is more indicative of underlying performance and may be reconciled to basic earnings per share as follows:


	6 months to
	6 months to
	12 months to

	30 September 2000
	30 September 1999
	31 March 2000




IIMR earnings per share
	3.45p
	2.07p
	10.82p
Normalised adjustment:



Elimination of goodwill
	0.38p
	-
	0.28p




Normalised earnings per share
	3.83p
	2.07p
	11.10p

(d) Diluted earnings per share are disclosed under the requirements of FRS14 and are calculated from the following ratio.

	6 months to
	6 months to
	12 months to

	30 September 2000
	30 September 1999
	31 March 2000




Profit on ordinary activities after taxation
	£811,000
	£446,000
	£2,399,00




Average number of shares including outstanding options

	23,789,720

	21,885,388

	22,547,306

The difference in the average number of shares in issue used as the denominator of the calculation for the basic and diluted earnings per share is due to the premium element of share options still outstanding at the end of each financial period, based on the average mid market share price during the period.  The adjustment to the number of shares is:


	6 months to
	6 months to
	12 months to

	30 September 2000
	30 September 1999
	31 March 2000




Premium element of share options based on average mid-market share price during period

	
	275,754

	
	334,044

	
	385,147

2.   The above accounts do not constitute full accounts within the meaning of S.240 of the Companies Act 1985.  All figures for the year to 31 March 2000 are abridged.  Full accounts, on which the report of the auditors was unqualified and did not contain a statement under S.237 (2) or S.237 (3) of the Companies Act 1985, have been delivered to the Registrar of Companies.  The results for the six  months to 30 September are neither audited nor reviewed.

3. The profit and loss account, balance sheet and cash flow statements have been prepared on a basis consistent with the statutory financial statements for the year to 31 March 2000.

4. Copies of this report will be sent to shareholders and will also be available at the Company's registered office.


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