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RNS

Q4 and Full Year Results 2012

Released 07:00 06-Feb-2013

RNS Number : 2063X
Wolfson Microelectronics PLC
06 February 2013
 



6 February 2013

Wolfson Microelectronics plc

Fourth Quarter and Full Year Results to 30 December 2012

Strong revenue momentum with fourth quarter sales up 52% year-on-year

Wolfson Microelectronics plc ("Wolfson" or "the Company"), a world leader in Audio Solutions for consumer electronic products, announces fourth quarter and audited full year results for 2012.

Fourth quarter 2012 summary:

·    Revenue up 52% to $56.1m (Q4 2011: $36.9m)

·    Gross margin of 43.9% (Q4 2011: 49.9%, before exceptional charges)

·    Underlying* operating profit of $1.5m (Q4 2011: $2.9m loss)

·    Operating profit of $0.5m** (Q4 2011: $7.2m loss)

 

Full year financial summary:

·    Revenue up 15% to $179.7m (2011: $156.9m)

·    Gross margin of 46.9% (2011: 48.5%, before exceptional charges)

·    Underlying* operating loss of $2.9m (2011: $7.5m loss)

·    Operating loss of $9.3m** (2011: $24.2m loss)

·    Underlying* diluted loss per share of 1.0 cents (2011: 4.9 cents loss)

·    Diluted loss per share of 5.2 cents (2011: 15.4 cents loss)

·    Cash and short-term deposits at 30 December 2012 of $48.0m (1 Jan 2012: $53.4m), no debt

 

Full year 2012 operational summary:

·    Built strong revenue momentum as 2012 progressed with year-on-year sales growing 52% in Q4 and 15% for the full year supporting a return to profitability in the second half of 2012

 

·    Sales to mobile phones and tablet computer applications grew 60% year-on-year 

 

·    Strong performance from Audio Hubs and Micro-Electro-Mechanical Systems (MEMS) microphone product lines with Audio Hubs growing 27% overall, Mobile Audio Hubs growing by around 60% and MEMS microphones growing to 6% of Q4 2012 revenues

 

·    Launched 21 new products, including the world's first quad core HD Audio System-on-a-Chip (SoC) and the world's first high performance integrated MEMS microphone

·    Record estimated revenue value for new design-ins set in 2012 with Q4 2012 the best ever quarter for design-in value. The majority of the value of design-ins is for Audio Hubs with around 10% for MEMS microphones

 

 

 

 

 

 

Outlook:

 

In Q1 2013, given normal seasonality, the Company anticipates:

 

•   Continuing revenue momentum with year-on-year revenue growth in the range of 40% - 60% ($42m to $48m) dependent on timing of customers' new product ramps

•   Gross margin to be around 41% driven by near-term product mix

 

Looking further ahead:

 

•   Gross margins are expected to improve strongly towards traditional levels as 2013 progresses primarily due to mix shifting to more value-added products and MEMS production reaching economic scale

•   Strong end-markets in smartphones and tablet computers, the shift to higher added value products and design-in value at record levels in 2012, means the Company is well positioned for further strong growth in revenues and profitability during  2013

 

 

Commenting on the results, Mike Hickey, CEO of Wolfson Microelectronics, said:

 

"By penetrating the most dynamic and fast-growing segments of the consumer electronics market, we have established strong revenue momentum, growing more than 50% year-on-year in the fourth quarter and, as anticipated, returned to profit in the second half of the year.

"We are increasing our market presence in smartphones and tablet computers, and are now shipping to most of the world's brand-leading mobile phone and tablet computer manufacturers. This, combined with our class-leading portfolio of audio products delivering another record year for new design-ins, positions the Company well for further strong growth in 2013."

 

*Underlying full year results exclude: charges for the amortisation of acquired intangible assets (2012: $1.7m; 2011: $5.5m) and share-based compensation charges, including associated payroll taxes (2012: $3.3m; 2011: $3.6m). Also, in 2012, an exceptional charge of $1.4m is excluded (2011: net exceptional charges of $7.6m are excluded). The term "underlying" is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures.

** After exceptional charge for 2012 of $1.4m (2011: after net exceptional charges $7.6m) of which $1.4m was in Q4 2012 (Q4 2011: $2.4m charge).

 

Enquiries:

 

Wolfson Microelectronics


Mike Hickey, CEO

Mark Cubitt, CFO

020 7618 9100 On the day

0131 272 7000 Thereafter



Luther Pendragon


Harry Chathli, Claire Norbury

020 7618 9100

 

Mike Hickey, CEO, and Mark Cubitt, CFO, will be hosting a presentation to investors and analysts at 0900 GMT at JP Morgan, Holborn Bars, 138-142 Holborn, London EC1N 2NQ. An audio webcast of the Wolfson Microelectronics plc Full Year Results presentation can be heard LIVE from 0900 GMT via: www.wolfsonmicro.com/investor

 

Additionally, there is a dial-in facility: UK freephone 0800 634 5205; US freephone +1 866 629 2704; International +44 (0)208 817 9301. A replay of the conference call is available from 1130 GMT on +44 (0)207 769 6425 or US +1 630 652 3111, Access Pin 9819393#



Operational Review

 

2012 was a challenging year for the semiconductor and consumer electronics industries, with a contraction of around 3% in the overall semiconductor market and zero growth in the consumer electronics market. In pleasing contrast, 2012 has been a year of positive evolution and growth for Wolfson, with revenue up 15% at $179.7m for the full year (2011: $156.9m) and up 52% to $56.1m in the fourth quarter (Q4 2011: $36.9m). Full year revenue into the mobile phone and tablet computer application markets grew approximately 60% and these applications now represent around 65% of total revenue. Other consumer device applications were impacted by weak consumer spending and were down 23% overall, with good growth in digital still cameras and portable media players more than offset by weaker markets in home audio and gaming.

 

Revenue from Audio Hubs grew 27% year-on-year to 75% of full year 2012 revenues. Within this segment, Mobile Audio Hub products grew around 60% and accounted for over half of 2012 full year revenues. Revenues from the MEMS microphone product line has also grown significantly during 2012 from a very small base, accounting for 6% of revenue in Q4 2012 and 3% of full year 2012 revenue.

 

Gross margin for the full year was 46.9% (2011: 48.5%, before exceptional charges), and 43.9% for the fourth quarter of 2012 (Q4 2011: 49.9%, before exceptional charges). This decline is a result of product mix, a delay in qualification of a lower cost manufacturing source for a high volume product and non-recurring costs associated with the steep production ramp in the MEMS microphone product line. These factors are expected to reverse as 2013 progresses, with gross margin recovering strongly in the second half towards traditional levels as product mix swings to more value-added products, a lower cost manufacturing source for a high volume product is qualified and MEMS microphone production achieves economic scale.

 

Wolfson further enhanced its product portfolio with the launch of 21 new products in 2012 and the strength of the Company's product and technology portfolio delivered another record design-in year. The overall number of design-ins for 2012 was down year-on-year to 237 (2011: 382) due to a general consolidation in customers' product portfolios as they reacted to the adverse end-market conditions by reducing the number of new models being introduced. However, the estimated value of these design-ins, measured in terms of projected eight quarter revenue, grew significantly year-on-year to exceed the record level of 2011, with Q4 2012 being the Company's best ever quarter for design-in value.

 

This design-in value growth has been driven by the projected higher volume from fewer new customer products being introduced and the Company, through adding higher value features to its Audio Hubs, is increasing average selling prices. Also, as a result of Wolfson's new advanced HD Audio solutions, the Company is gaining more "value share of board" in each end product. Wolfson's 'end-to-end' HD Audio solutions comprise Audio Hubs, multiple MEMS microphones, software and other products from its portfolio so, when selected, the Company increases the number of its parts being designed into each new end customer product.

 

The majority of the estimated revenue value for design-ins won in 2012 was for Audio Hub products (85%) and for MEMS microphone (10%) products. This positions the Company well for further growth in revenues in both of these product lines in 2013, and for MEMS microphone revenues to become an increasing percentage of its overall business. The majority of the design-ins are into products in the fastest growing consumer electronic product applications such as mobile phones, smartphones and tablet computers, and Wolfson has built strong growth momentum in these applications, both from a revenue and design-in perspective. Encouragingly, Wolfson is also achieving design-ins in its traditional markets, such as home audio, digital still cameras and portable media players.

Most of the 2012 design-ins are with leading brand global consumer electronics manufacturers, and the majority are expected to start to ramp to volume production and revenue during 2013, with precise timing dependent on end customer product launch dates.

 

Product Adoption by Existing and New Customers in 2012

Adoption of Wolfson's audio products by existing and new customers continued to grow during the year, increasing its market penetration. Excellent progress was made particularly in mobile phones, smartphones and tablet computers, where adoption of Wolfson's low power Audio Hubs has further enhanced the Company's leadership position in these products.

 

Design-ins with the previously announced five new top tier mobile phone manufacturers progressed well during the year, with four achieving volume manufacturing and one expected in early 2013.

 

Market penetration with existing customers continues to progress, with notable new Wolfson product adoptions for mobile phones and tablet computers at customers including Samsung, LG, Microsoft, BlackBerry, Motorola, Fujitsu and Sony.

 

Encouragingly, additional progress was made with new Wolfson product adoptions with both new customers and existing customers in new applications. These included:

 

o A large consumer electronics company's range of tablet computers

o Two major Chinese computer and telecommunications enterprises selecting Wolfson audio solutions for their ranges of mobile phones

o A Japanese multinational corporation selecting Wolfson's Audio Hubs for a selection of its new mobile phone platforms

o A brand-leading consumer electronics company for its smart connector accessory

 

While almost half (47%) of 2012 design-ins were for mobile phones and tablet computers, Wolfson continued to win design-ins in other application markets. Some notable design-ins during the year included:

 

o A large consumer electronics manufacturer selecting Wolfson's Audio DSP and Audio Hub for its latest media player

o Sony selecting Wolfson's Audio Hub for its PS Vita portable gaming console

o A number of brand-leading digital still camera manufacturers selecting Wolfson low power Audio Hubs for their latest models

o Wolfson Dynamic Hearing software selected for multiple headset and hearing aid products

o Nokia selecting Wolfson Dynamic Hearing software for its Reaction Bluetooth® headset

o A world-leading technology company selecting Wolfson's Audio Hub and MEMS microphones for its latest top-of-the-range set-top-box model

o Samsung selecting Wolfson's audio solution for its new remote controllers for its smart television range

o iriver selecting Wolfson's DAC and audio transceiver for its Astell&Kern AK100 digital music player

 



Executing on Strategy

The Company's goal is to lead in HD Audio for consumer electronics products by:

·    Leveraging its best-in-class intellectual property (IP) position and brand heritage in highest performance audio

·    Growing its leadership in Audio Hubs and making them the de facto platform for HD Audio in consumer electronics products

·    Building on its technology leadership in noise cancellation and sound enhancement software to 'own' sound processing

·    Exploiting  its technology and performance advantages in MEMS microphones to deliver the best voice and audio capture

·    Enabling best-in-class low power, high performance HD Audio solutions with its drivers, converters, Audio Hubs and MEMS microphones

When it was introduced in 2009, the intention behind the strategy was to exploit three emerging technology transitions in smart electronic devices:

·    The dis-integration of the audio function from central processors in consumer electronics products to standalone devices like Wolfson's Audio Hubs

·    The emergence of noise cancelling and sound processing as key features in smart mobile devices

·    The replacement of traditional electret condenser microphones (ECM) with MEMS microphones and the emergence of multi-microphone applications to support complex sound processing and noise cancelling features

These technology transitions are now fully acknowledged in the industry, with the Company's HD Audio technology featuring in an increasing array of products from most of the world's brand-leading mobile phone and tablet computer manufacturers.

 

The Company's Audio Hubs continue to be selected by OEMs for many industry-leading consumer electronics applications, and accounted for 75% of revenues and 85% of design-ins in 2012. This success has been fuelled by the significant growth in smartphones and tablet computers, as they are among the first product applications to dis-integrate the audio function from the application processors to standalone devices. However, the Company expects this audio dis-integration trend to extend to other mobile phone product tiers and consumer electronics applications over the next few years as smart devices proliferate, and this is driving a fast growing market for standalone audio devices like Wolfson Audio Hubs. The market for dis-integrated audio is expected to grow to more than $2bn in the next three years at a compound annual growth rate (CAGR) of around 60% (Source: Gartner, iSuppli and Wolfson).

 

The MEMS microphone market is expected to grow to more than $1.5bn in the next three years with a CAGR of around 60% (Source: Gartner, iSuppli and Wolfson). This growth is due to restrictions in the size and shape of portable products such as mobile phones and tablet computers driving the technology transition from ECM to more compact MEMS microphones and the increase of applications where multiple microphones are used for noise cancellation or advanced audio processing.

 

Wolfson's MEMS microphone product line has grown significantly during 2012. From a very small base at the start of the year, MEMS microphones accounted for 6% of revenue in Q4 2012. The Company is now shipping in volume to three major mobile device manufacturers and multiple other customers in a wide range of customer products. Design-ins and a strong MEMS microphone portfolio are expected to support increasing traction with customers during 2013 and beyond, and the Company expects MEMS microphones to become an increasing percentage of overall revenues.

 

The Company has also invested in its supply chain, executing the supply chain re-engineering initiative announced in 2011 to plan, including the introduction of two new process nodes and a new MEMS production process. A significant operational milestone was achieved in 2012 with the shipment of the two billionth Wolfson part. Quality was further enhanced with a Six Sigma quality programme being implemented across the Company and Wolfson's software capabilities were strengthened with the successful integration of Dynamic Hearing.

 

Product Development

Over the last year, Wolfson has launched 21 new products. The highlights of the Company's product development progress in 2012 are outlined below.

 

Audio Hubs

The Company introduced several new industry-leading products in the Audio Hub family, including the WM5102 and the WM5110, both of which are designed primarily for the smartphone and tablet computer market. The WM5102 is a high performance Audio Hub with voice Digital Signal Processor (DSP), featuring integrated transmit path (Tx) and receive path (Rx) noise reduction, and echo cancellation, which helps mobile phone manufacturers deliver clearer, more natural sounding audio, even in noisy environments.

 

The WM5110 is the world's first quad core HD Audio System-on-a-Chip (SoC), and is capable of delivering exceptional hi-fi audio quality with an extremely fast processor, at very low power consumption. It has the added benefit of on-board hardware and software, which reduces background noise by up to 90%, delivering high quality voice conversations, audio recording and playback, resulting in what Wolfson believes to be the most powerful and efficient HD Audio Processor on the market.

 

MEMS Microphones

The Company introduced the world's first high performance, fully integrated (complete microphone on a single piece of silicon) MEMS microphone.

 

In addition, Wolfson launched the WM7121 and the WM7132, adding to its MEMS microphone portfolio. These are the first high performance top and bottom port silicon MEMS microphones from Wolfson to feature matching frequency responses, matching phase responses and matching sensitivity. This makes them much easier for designers to integrate into products with multiple microphones. These devices are designed to deliver HD Audio quality and highly authentic audio recordings to a wide range of consumer electronics applications including mobile phones, Bluetooth® headsets, navigation devices, gaming consoles and both digital still and digital video cameras.

 

The MEMS microphone portfolio was further enhanced during the year by a number of top and bottom port devices in various packaging configurations. The Company's strong MEMS microphone portfolio is expected to gain increasing traction with new and existing customers during 2013 and beyond.



Financial Review

The financial results of the Company for the 52 week period ended 30 December 2012 are summarised in the table below. 

 




52 week period ended 30 December 2012

52 week period ended 1 January 2012




            $m

% revs

            $m

% revs








Revenue


179.7


156.9









Gross profit (IFRS)


84.2

46.9 %

70.2

44.7%

Exceptional charge


-

-

5.9

3.8%

Gross profit (Underlying)


84.2

46.9%

76.1

48.5%







Overheads







Research & Development

(51.1)

29%

(47.3)

30%


Distribution & Selling

(23.3)

13%

(23.4)

15%


Administration


(12.7)

7%

(12.9)

8%








Underlying* operating  loss

(2.9)

-2%

(7.5)

-5%









Share-based compensation

(3.3)

2%

(3.6)

2%


Amortisation charges

(1.7)

1%

(5.5)

4%


Exceptional items:






- recognised in cost of sales

-

-

(5.9)

4%


- recognised in overheads

-

-

(3.5)

2%


- pension (past service cost)/      curtailment gain

(1.4)

1%

1.8

-1%








Operating loss


(9.3)

-5%

(24.2)

-15%








Net financing (expense) / income


(0.1)


0.1









Loss before tax


(9.4)

-5%

(24.1)

-15%








Income tax credit


3.3


6.2









Loss after tax


(6.1)

-3%

(17.9)

-11%








Diluted loss per share (cents)


(5.2)


(15.4)


Underlying diluted loss per share (cents)


(1.0)


(4.9)


Average £/$ exchange rate


             1.55


               1.60 


 

*Underlying results exclude: charges for the amortisation of acquired intangible assets (2012: $1.7m; 2011: $5.5m) and share-based compensation charges, including associated payroll taxes (2012: $3.3m; 2011: $3.6m).  Also, in 2012, an exceptional charge of $1.4m is excluded (2011: exceptional items totalling $7.6m are excluded). The term "underlying" is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies.  Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures.  Reconciliations of underlying measures to IFRS measures for operating expenses and operating loss in respect of each period are provided in the tables below.

 

Operating expenses: reconciliation from Underlying to IFRS

 


Underlying

Share-based compensation

(including associated payroll taxes)

Amortisation  of acquired intangible assets

Exceptional items

IFRS

           

$m

$m

$m

$m

$m

52 weeks ended 30 December 2012






Distribution and selling costs

(23.3)

(0.6)

-

-

(23.9)

Research & Development expenses

(51.1)

(2.1)

(1.7)

-

(54.9)

Administrative expenses

(12.7)

(0.6)

-

-

(13.3)

Past service cost on defined benefit plan

-

-

-

 (1.4)

(1.4)


_______

______

_______

_______

_______


(87.1)

(3.3)

(1.7)

(1.4)

(93.5)


             

             

             

             

             







52 weeks ended 1 January 2012






Distribution and selling costs

(23.4)

(1.0)

-

(1.9)

(26.3)

Research & development expenses

(47.3)

(2.0)

(5.5)

(1.5)

(56.3)

Administrative expenses

(12.9)

(0.6)

-

(0.1)

(13.6)

Curtailment gain on defined benefit plan

-

-

-

1.8

1.8


_______

_______

_______

_______

_______


(83.6)

(3.6)

(5.5)

(1.7)

(94.4)


             

             

             

             

             













 

 

Operating loss: reconciliation from Underlying to IFRS 

 



52 weeks ended

52 weeks ended



30 December 2012

1 January 2012

           


$m

$m





Underlying operating loss 


(2.9)

(7.5)

Share-based compensation and related payroll taxes

Amortisation of acquired intangible assets


(3.3)

(1.7)

(3.6)

(5.5)

Exceptional items


(1.4)

(7.6)



_______

_______

Operating loss (IFRS)


(9.3)

(24.2)



_______

_______







Segmental Performance

Audio Hubs Products

The Company focuses on high performance Audio Hubs, including High Definition (HD) Audio System-on-Chip (SoC), noise reduction and sound enhancement software. Revenues at $134.1m in 2012 accounted for 75% of Company revenue (2011: 67%) and increased by 27% in the year from $105.4m in 2011. Within this segment, Audio Hubs sold into mobile applications increased by almost 60% whilst Audio Hubs in non-mobile applications fell by 12%, reflecting the strong growth in smartphones and tablet computers, but weaker demand in most other application markets.

 

Gross margin for this reportable segment fell to 46.6% in 2012 from 49.8% in 2011, reflecting the product mix in 2012.

 

Discrete and Power Products

This segment comprises simpler audio products (ADCs, DACs), power management integrated circuits, imaging parts and MEMS microphones. Revenues at $45.5m in 2012 accounted for 25% of Company revenue (2011: 32%) and declined by 11% in the year from $50.9m in 2011. Within this segment, MEMS microphones grew tenfold, albeit from a very small base, to revenue of $5.2m. In Q4 2012, MEMS microphones accounted for 6% of total Company revenues compared to less than 1% in Q1 2012. The other components of this segment suffered from lack of differentiation and the weakness in the general consumer electronics market and, excluding MEMS microphones, fell in the year by 20%.

 

Gross margin for this reportable segment increased to 47.5% in 2012 from 45.6% in 2011, helping to partly offset the fall in revenues.

 

Other Products

Other Products comprises the sale of complete headset products and royalties thereon. This segment is fundamentally different from the other segments as it relates to sales of finished consumer products rather than the sale of integrated circuit components. Revenues in both 2012 and 2011 represented less than 1% of Company revenues.

 

Revenue

Company revenue increased by 15% to $179.7m (2011: $156.9m), with a decline of 11% in the first half of 2012, followed by strong growth of 41% in the second half of the year, compared to the same periods in 2011. As explained in the Segmental Performance section, this is the net result of strong growth in Audio Hubs and MEMS microphones, offset to some extent by weakness in Discrete and Power products. The largest customer in 2012 represented 32% of revenue (2011: 16%).

 

Gross Profit

Company gross profit in 2012 was $84.2m, up 11% from the previous year (2011: $76.1m, before exceptional charges). Gross margin fell to 46.9% from 48.5% (before exceptional charges) in 2011, primarily impacted by product mix, delays in qualification of a lower cost manufacturing source for a high volume product, plus costs associated with the steep production ramp of the MEMS microphone product line. These effects are expected to reverse as 2013 progresses, with gross margin recovering strongly in the second half towards traditional levels as mix swings towards more value-added products, the lower cost manufacturing source is qualified and MEMS microphone production reaches economic scale.



Operating Expenses

Total underlying overheads, excluding amortisation of acquired intangibles, share-based compensation charges (and associated payroll taxes) and exceptional charge amounted to $87.1m in 2012, compared to $83.6m (before exceptional charges) in 2011, an increase of $3.5m. Of this increase, $2.1m relates to the full year costs of Dynamic Hearing acquired on 30 September 2011. The projected underlying overheads in 2013 are based on a broadly flat headcount and are expected to be between $90m and $94m, with the variability primarily in the research and development spend. The increase relates to: 2013 Sterling-denominated overheads being hedged at an exchange rate of $1.6: £1 compared to $1.55: £1 in 2012, accounting for $1.7m of the increase, and assumed inflation of 3% prevailing in 2013. The individual overhead categories are explained further in the following paragraphs.

 

The Company's continuous investment in research and development and best-in-class engineering tools is imperative to Wolfson's growth strategy and long-term competitiveness. Expenditure on research and development, excluding charges such as amortisation and share-based compensation charges, increased by 8% to $51.1m or 29% of revenue (2011: $47.3m or 30% of revenue). The increase in this category of costs of $3.8m in 2012 primarily reflects the greater complexity of the products now being designed by the Company, resulting in higher mask costs on lower technology node tape-outs, software and subcontract DSP costs relating to these newer products and the full year impact of research and development costs incurred by Dynamic Hearing. For 2013, research and development costs are expected to be between $51m and $55m, spread evenly through the year.

 

Distribution and selling expenses, excluding share-based compensation charges, were broadly flat at $23.3m or 13% of revenue (2011: $23.4m or 15% of revenue). This results from higher freight and packaging costs, associated with the increased revenues, offset by supply chain efficiencies. For 2013, the expected cost is around $25m, with a slight weighting to the second half of the year on freight and packaging costs associated with increased forecast volume.

 

Administrative expenses, excluding share-based compensation charges, were marginally lower in 2012, at $12.7m or 7% of revenue (2011: $12.9m or 8% of revenue). For 2013, administrative expenses are expected to be around $14m, spread evenly through the year.

 

Operating Loss

Underlying operating loss was $2.9m (before exceptional charge), compared to a loss of $7.5m in 2011 before exceptional charges.

 

Share-based compensation charges, calculated in accordance with IFRS 2, and associated payroll taxes amounted to $3.3m in 2012, compared to $3.6m in 2011. The decrease reflects new share-based awards in 2012 being offset by a credit of $2.2m recognised in respect of the lapsing of 2010 executive long-term incentive plan awards due to the non-market performance conditions not being achieved. Based on the share price as at 28 December 2012 and planned share-based awards for 2013, the share-based compensation charge in 2013, including the associated payroll taxes, is estimated to be approximately $6m, slightly second-half weighted.

 

Total intangible asset amortisation charges recognised in 2012 in respect of the 2007 acquisitions, and on the Dynamic Hearing acquisition, amounted to $1.7m (2011: $5.5m). The charge for 2013, relating primarily to the Dynamic Hearing acquisition, is expected to be $1.4m, spread evenly through the year.

 

There was an exceptional charge in 2012 of $1.4m for the estimated cost of the enhanced transfer value offer in respect of the Company's defined benefit pension scheme.

Exceptional charges in 2011 totalled a net of $7.6m for restructuring and an inventory write-down net of a curtailment gain of $1.8m on the defined benefit pension scheme. The IFRS operating loss was $9.3m in 2012 (2011: $24.2m loss).

 

Financial income amounted to $1.4m, with finance expenses of $1.5m, resulting in net finance expense in 2012 of $0.1m (2011: $0.1m income). These sums include non-cash income and expenses associated with the defined benefit pension scheme and notional interest on the acquisition deferred consideration. The net interest income, in cash terms, was $0.2m (2011: $0.2m).

 

Taxation

The total effective tax rate was 35% credit (2011: 25.6% credit), primarily reflecting the benefit from additional allowances on research and development expenditure, offset by certain expenses which are not deductible for tax purposes. The effective tax rate in 2013 will benefit from the introduction of the UK Patent Box regime from 1 April 2013.

 

Cash Flow & Balance Sheet

Summarised Consolidated Cash Flow



52 weeks ended 30 December 2012

2012

2011


$m

$m

Loss before tax

(9.4)

(24.1)

Depreciation & amortisation

9.5

13.7

Net finance expense / (income)

0.1

(0.1)

Earnings / (loss) before interest, tax, depreciation and amortisation

0.2

(10.5)

Share-based compensation charge

2.6

4.1

Change in working capital:



-     (increase) / decrease in inventories/receivables

(10.1)

4.2

-     increase / (decrease) in payables/provisions

10.6

(18.9)

Pension curtailment gain

-

(1.8)

Payments to Defined Benefit Pension scheme

-

(4.5)

Foreign exchange

(0.3)

0.2

Income taxes (paid) / received

-

(0.3)

Net cash flow from operating activities

3.0

(27.5)

Capital expenditure

(6.1)

(6.5)

Free cash flow

(3.1)

(34.0)

Purchase of shares by employee share trust

-

(5.4)

Proceeds of new issue shares

0.6

0.7

Deferred consideration  / acquisition of subsidiary

(3.2)

(5.1)

Interest received

0.2

0.2

Foreign exchange (losses) / gains

0.1

(0.1)

Net cash outflow

(5.4)

(43.7)

Opening cash balances*

53.4

97.1

Closing cash balances*

48.0

53.4

*includes cash and cash equivalents and short-term deposit balances

Cash and short-term deposits amounted to $48.0m at 30 December 2012 (1 January 2012: $53.4m).

Net cash inflow from operating activities was $3.0m (2011: $27.5m outflow), driven by the improved trading performance and total working capital remaining broadly flat.

 

The Company paid $3.2m (2011: $0.8m) for deferred consideration as milestones were achieved on the 2007 acquisition of Sonaptic (ANC) and further payments are expected in 2013 as milestones are met.

 

Cash outflow on capital expenditure amounted to $6.1m (2011: $6.5m) and relates primarily to software licenses and IT equipment.

 

The value of inventory held at 30 December 2012 was $24.7m or 65 days inventory (1 January 2012: $22.9m or 103 days inventory). It is anticipated that inventory levels will be in the range of 70 to 100 days in 2013 in order to meet fluctuations in demand. Trade receivables amounted to $33.9m or 49 days sales outstanding at 30 December 2012 (1 January 2012: $25.9m or 51 days sales outstanding). It is expected that the number of days sales outstanding will average around 50 in 2013. Trade payables at 30 December 2012 amounted to $24.3m or 52 days purchases (1 January 2012: $16.5m or 53 days purchases). It is anticipated that the number of days purchases will average around 50 in 2013.

 

Treasury and Foreign Exchange

Nearly all revenue and cost of goods sold are denominated in US dollars, so there is a natural and effective hedge down to the gross margin level. However, approximately two-thirds of operating costs are denominated in Sterling, and this represents a structural currency exposure derived from the UK base of the Company. During 2012, there was currency hedging in place throughout the year, ranging from three to twelve months forward in time, with an average rate over the year of $1.545 to £1 (2011: $1.60 to £1). It is estimated that during 2012 and going into 2013, every one cent decrease in the US dollar/Sterling exchange rate (i.e. weakening of Sterling) has the effect of decreasing the Company's overheads and increasing operating profit by $300,000 on an annualised basis. To give some short-term certainty, the majority of the Sterling-dominated overheads for all of 2013 have been hedged at an average rate of $1.60 to £1, resulting in an increased overheads cost of $1.7m in 2013 over 2012 purely due to exchange rates.

 

Share Repurchases

Only a very small quantity of shares (1,981 shares in the Company) were purchased in 2012 by one of the employee share trusts in relation to employee share-based awards (2011: 1,422,545 ordinary shares in the Company were purchased by employee trust at a cost of $5.4m). This employee share trust is likely to make further purchases of shares in the Company going forward to satisfy employee share-based awards and in order to minimise the dilution impact of those share-based awards, however this is unlikely to be before 2014.

 

Defined Benefit Pension Scheme

During the year no payments were made into the closed defined benefit pension scheme (2011: $4.5m contributions were paid by the Company into the Scheme). As at 30 December 2012 the Company was in the middle of an Enhanced Transfer Value (ETV) offer to the 83 deferred members of the scheme and that offer closes in mid February 2013. An exceptional charge of $1.4m has been estimated and recognised in the 2012 financial statements of the Group and Company based on the estimated take up of the ETV offer; this will be adjusted to the final figure in the 2013 financial statements. A cash payment by the Company into the Scheme of around $1.6m is scheduled for the first quarter of 2013 in respect of this ETV exercise.

 

 

Q4 2012

 

The Company's financial performance for Q4 2012 is summarised below.

 




Q4 2012

Q3 2012

Q4 2011




$m

% revs

$m

% revs

$m

% revs

Revenue


56.1


53.0


36.9











Gross profit (IFRS)


24.6

43.9%

25.2

47.5%

16.0

43.4%

Exceptional charge


-

-

-

-

2.4

6.5%

Gross profit (Underlying)


24.6

43.9%

25.2

47.5%

18.4

49.9%

Overheads









Research & Development

(13.7)

24%

(12.5)

24%

(12.8)

35%


Distribution & Selling

(6.1)

11%

(6.1)

11%

(5.3)

14%


Administration


(3.3)

6%

(3.2)

6%

(3.2)

9%










Underlying* operating  profit / (loss)

1.5

3%

3.4

7%

(2.9)

-8%











Share-based compensation

0.8

-1%

(1.5)

3%

(0.4)

1%


Amortisation charges

(0.4)

1%

(0.3)

1%

(1.5)

4%


Exceptional items :








-recognised in cost of sales

-

-

-

-

(2.4)

6%


-pension past service cost


 (1.4)

 2%

 -

 -

-

 -

Operating profit / (loss)


0.5

1%

1.6

3%

(7.2)

-19%










Net financing (expense) / income


(0.4)


-


0.3











Profit / (loss) before tax


0.1

-

1.6

-3%

(6.9)

-19%










Income tax credit / (expense)


1.0


(0.4)


1.6











Profit / (loss) after tax


1.1

2%

1.2

2%

(5.3)

-14%










Average £/$ exchange rate


 1.55  


 1.55 


    1.60











 

*Underlying Q4 results exclude: charges for the amortisation of acquired intangible assets (Q4 2012: $0.4m; Q4 2011: $1.5m) and share-based compensation charges, including associated payroll taxes (Q4 2012: $0.8m credit; Q4 2011: $0.4m charge). Also, in Q4 2012 an exceptional charge of $1.4m is excluded (Q4 2011 an exceptional charge of $2.4m is excluded). Underlying results are reconciled to the results reported in accordance with IFRS in notes 5 and 6 to the financial information.

 

Revenue for Q4 2012 amounted to $56.1m, an increase of 52% from Q4 2011 revenue of $36.9m (Q3 2012: $53.0m). The revenue increase reflects the strong growth in the Company's sales of both Audio Hubs and MEMS microphones into the smartphone and tablet computer markets. The largest customer represented 36% of Q4 2012 revenues, compared to 33% in Q3 2012 and 19% in Q4 2011.

 

Gross profit was $24.6m, compared with $18.4m in Q4 2011 (Q3 2012: $25.2m). In Q4 2012, gross margin fell to 43.9% from 49.9% in Q4 2011 (Q3 2012: 47.5%) as a result of a change in product mix, compounded by a delay in qualification on a lower cost  manufacturing source for a high volume product, and costs associated with the steep production ramp of the MEMS microphone product line. This lower gross margin is expected to continue in Q1 2013 before recovering as the Company moves through 2013, with gross margin recovering strongly in the second half towards traditional levels as mix shifts to more value-added products, the lower cost manufacturing source is qualified and MEMS microphone production reaches economic scale.

  

Total underlying operating expenses were $23.1m in Q4 2012 compared to $21.8m in Q3 2012 (Q4 2011: $21.3m), the increase being related to research and development costs for both Audio Hub and MEMS microphone products. Excluded from underlying expenses are: i) Share-based compensation, calculated in accordance with IFRS 2, and associated payroll taxes, which amounted to a $0.8m credit in Q4 2012, being a $2.3m reduction from the $1.5m charge in Q3 2012 (Q4 2011: $0.4m charge), reflecting  a credit for executive share awards which shall lapse as the performance conditions have not been met, and: ii) Amortisation charges relating to the intangible assets arising from acquisitions in prior years, which amounted to $0.4m in Q4 2012, compared to $0.3m in Q3 2012 and $1.5m in Q4 2011; and (iii) the exceptional charge of $1.4m for the estimate of the accounting cost of the enhanced transfer value offer in respect of the defined benefit pension scheme.

 

Underlying operating profit in Q4 2012 was $1.5m, compared with a $3.4m profit in Q3 2012 (Q4 2011: $2.9m loss). This decline in the operating result, compared to Q3 2012, primarily results from the increase in research and development costs and lower gross margin due to product mix.

 

 


Condensed consolidated income statement

Year 2012


Year 2011

For the period ended 30 December 2012


52-week period from 2 January

2012 to 30 December 2012


52-week period from

3 January 2011 to 1 January 2012



Before exceptional

charge

Exceptional charge

 (Note 4)

Total


Before exceptional

items

Exceptional items

 (Note 4)

Total


Notes

$'000

$'000

    $'000


$'000

$'000

  $'000

Revenue

3

179,749

-

179,749


156,912

-

156,912

Cost of sales


(95,536)

-

(95,536)


(80,804)

(5,900)

(86,704)



_______

_______

_______


_______

_______

_______

Gross profit

3

84,213

-

84,213


76,108

(5,900)

70,208

Distribution and selling costs

5

(23,902)

-

(23,902)


(24,379)

(1,933)

(26,312)

Research and development expenses

5

(54,839)

-

(54,839)


(54,829)

(1,473)

(56,302)

Administrative expenses

5

(13,382)

-

(13,382)


(13,510)

(72)

(13,582)

(Past service cost) /curtailment gain on defined benefit plan

 

4

 

-

 

(1,400)

 

(1,400)


-

 

1,829

1,829



_______

_______

_______


_______

_______

_______

Operating loss

6

(7,910)

(1,400)

(9,310)


(16,610)

(7,549)

(24,159)










Financial income


1,489

-

1,489


1,576

-

1,576

Financial expenses


(1,529)

-

(1,529)


(1,470)

-

(1,470)



_______

_______

_______


_______

_______

_______

Net financing (expense) / income


(40)

-

(40)


106

-

106



_______

_______

_______


_______

_______

_______

Loss before tax


(7,950)

(1,400)

(9,350)


(16,504)

(7,549)

(24,053)

Income tax credit

7

2,952

322

3,274


4,167

2,000

6,167



_______

_______

_______


_______

_______

_______

Loss for the period attributable to the Owners of the Company


 

(4,998)

 

(1,078)

 

(6,076)


 

(12,337)

 

(5,549)

 

(17,886)



               

               

               


              

               

              










Basic loss per share (cents)

8



(5.22)




(15.39)





               




              

Diluted loss per share (cents)

8



(5.22)




(15.39)





                




              










The results for the 52 week period ended 30 December 2012 and for the 52 week period ended 1 January 2012 have been extracted from the financial statements for those periods. These financial statements have been reported on by the Company's auditors.

 

Condensed consolidated income statement

Q4 2012


Q4 2011


Q3 2012

For the period ended 30 December 2012

(continued)


13-week period from 1 October 2012 to 30 December 2012


13-week period from 3 October 2011 to 1 January 2012


13-week period from 2 July 2012 to 30 September 2012



Before exceptional charge

Exceptional charge

 (Note 4)

Total


Before exceptional charge

Exceptional charge

 (Note 4)

Total




(Unaudited)

(Unaudited)

(Unaudited)


(Unaudited)

(Unaudited)

(Unaudited)


(Unaudited)


Notes

$'000

$'000

$'000


$'000

$'000

$'000


$'000

Revenue

3

56,063

-

56,063


36,876

-

36,876


53,048

Cost of sales


(31,453)

-

(31,453)


(18,481)

(2,400)

(20,881)


(27,869)



_______

_______

_______


_______

_______

_______


_______

Gross profit

3

24,610

-

24,610


18,395

(2,400)

15,995


25,179

Distribution and selling costs

5

(5,638)

-

(5,638)


(5,177)

-

(5,177)


(6,517)

Research and development expenses

5

(14,056)

-

(14,056)


(14,783)

-

(14,783)


(13,587)

Administrative expenses

5

(3,066)


(3,066)


(3,224)

-

(3,224)


(3,493)

Past service cost on defined benefit plan

4

-

(1,400)

(1,400)


-

-

-


-



_______

_______

_______


_______

_______

_______


_______

Operating profit / (loss)

6

1,850

(1,400)

450


(4,789)

(2,400)

(7,189)


1,582












Financial income


330

-

330


739

-

739


378

Financial expenses


(692)

-

(692)


(464)

-

(464)


(316)



_______

_______

_______


_______

_______

_______


_______

Net financing (expense) / income


(362)

-

(362)


275

-

275


62



_______

_______

_______


_______

_______

_______


_______

Profit / (loss) before tax


1,488

(1,400)

88


(4,514)

(2,400)

(6,914)


1,644

Income tax credit / (expense)

7

633

322

955


990

635

1,625


(403)



_______

_______

_______


_______

_______

_______


_______

Profit / (loss)  for the period attributable to the Owners of the Company


 

2,121

 

(1,078)

 

1,043


 

(3,524)

 

(1,765)

 

(5,289)


 

1,241



              

              

              


              

              

              


              












Basic earnings / (loss) per share (cents)

8



0.89




(4.55)


1.06





               




               


               

Diluted earnings / (loss) per share (cents)

8



0.89




(4.55)


1.06





               




               


               












The results for the 52 week period ended 30 December 2012 and for the 52 week period ended 1 January 2012 have been extracted from the financial statements for those periods. These financial statements have been reported on by the Company's auditors. The quarterly information is not audited.

 

 

Condensed consolidated statement of comprehensive income



 

For the period ended 30 December 2012









Q4 2012

Q4 2011

Q3 2012

2012

2011



13-week period from 1 October 2012 to 30 December 2012

13-week period from 3 October 2011 to 1 January 2012

13-week period from 2 July 2012 to 30 September 2012

52-week period from 2 January 2012 to 30 December 2012

52-week period from 3 January 2011 to 1 January 2012



(Unaudited)

(Unaudited)

(Unaudited)





$'000

$'000

$'000

$'000

$'000








Profit / (loss) for the period


1,043

(5,289)

1,241

(6,076)

(17,886)



_______

_______

_______

_______

_______

Other comprehensive income:







Actuarial gain / (loss) on net defined benefit obligations


1,433

(3,707)

-

(477)

(3,477)

Increase in defined benefit liabilities recognised in accordance with IFRIC 14 (note 9)


-

(1,500)

-

-

(1,500)

Movement in unrecognised surplus on defined benefit plan


-

3,783

-

301

(301)

Deferred tax on net defined benefit obligations recognised in equity


(331)

309

(31)

10

1,320

Foreign exchange translation differences on foreign operations


(12)

1

9

(2)

3

Effective portion of changes in fair value of cash flow hedges


(417)

74

776

773

(180)



_______

_______

_______

_______

_______

Other comprehensive income for the period


673

(1,040)

754

605

(4,135)



_______

_______

_______

_______

_______

Total comprehensive income for the period attributable

 to Owners of the Company


1,716

(6,329)

1,995

(5,471)

(22,021)



              

              

              

              

              

 

The results for the 52 week period ended 30 December 2012 and for the 52 week period ended 1 January 2012 have been extracted from the financial statements for those periods.  These financial statements have been reported on by the Company's auditors. The quarterly information is not audited.

 


 

Condensed consolidated balance sheet





As at 30 December 2012

 

 

Notes

As at 30 December 2012

As at 30 September 2012

As at 1 January

2012




(Unaudited)

(Restated)

Assets


$'000

$'000

$'000

Property, plant and equipment


24,142

24,794

25,907

Intangible assets


32,360

32,733

32,924

Deferred tax assets


13,386

13,057

9,640



________

________

________

Total non-current assets


69,888

70,584

68,471



________

________

________

Inventories


24,702

25,326

22,901

Current tax assets


-

-

67

Trade and other receivables


37,805

35,386

29,667

Other investments, including derivatives


621

1,038

-

Short-term deposits


28,000

35,000

33,000

Cash and cash equivalents


19,974

14,233

20,409



________

________

________

Total current assets


111,102

110,983

106,044



________

________

________

Total assets

3

180,990

181,567

174,515



               

               

              

Equity





Issued share capital


194

194

193

Share premium account


61,253

61,171

60,699

Capital redemption reserve


503

503

503

Hedging reserve


621

1,038

(152)

Retained earnings


77,339

76,156

80,541



________

________

________

Total equity attributable to equity holders of the parent


 

139,910

 

139,062

 

141,784



________

________

________

Liabilities





Employee benefits

9

1,676

3,165

1,500

Other payables


1,622

1,733

3,982



________

________

________

Total non-current liabilities


3,298

4,898

5,482



________

________

________

Income tax payable


80

102

116

Trade and other payables, including derivatives


37,702

37,093

25,979

Provisions


-

412

1,154



________

________

________

Total current liabilities


37,782

37,607

27,249



________

________

________

Total liabilities


41,080

42,505

32,731



________

________

________

Total equity and liabilities


180,990

181,567

174,515



               

               

               






The financial position as at 30 December 2012 and as at 1 January 2012 have been extracted from the financial statements for those periods.  These financial statements have been reported on by the Company's auditors. The quarterly information at 30 September 2012 is not audited.

 

 

 

 

 

 

 

 

Condensed consolidated statement of

changes in equity

Attributable to owners of the Company


 

Share capital

 

Share premium

 

Capital redemption reserve

Hedging reserve

 

Retained earnings

Total equity

 


$000

$000

$000

$000

$000

$000

 

Balance at 3 January 2011

193

60,047

503

28

105,817

166,588

 


________

________

________

________

________

________

 

Loss for the period

-

-

-

-

(17,886)

(17,886)

 

Other comprehensive income:







 

Actuarial loss on net defined benefit obligations

-

-

-

-

(3,477)

(3,477)

 

Increase in defined benefit liabilities recognised in accordance with IFRIC 14

-

-

-

-

(1,500)

(1,500)

 

Unrecognised surplus on defined benefit plan

-

-

-

-

(301)

(301)

 

Deferred tax on net defined benefit obligations recognised in equity

-

-

-

-

1,320

1,320

 

Foreign exchange translation differences on foreign operations

-

-

-

-

3

3

 

Effective portion of changes in fair value of cash flow hedges

-

-

-

(180)

-

(180)

 


________

________

________

________

________

________

 

Total comprehensive income for the period ended 1 January 2012

-

-

-

(180)

(21,841)

(22,021)

 


________

________

________

________

________

________

 

Equity settled share-based payment transactions

-

-

-

-

4,119

4,119

 

Deferred tax on equity settled share-based payment transactions recognised in equity

-

-

-

-

(2,164)

(2,164)

 

Share options exercised by employees

-

652

-

-

-

652

 

Company shares acquired by employee trust

-

-

-

-

(5,390)

(5,390)

 


________

________

________

________

________

________

 

Total contributions by and distributions to owners of the Company

-

652

-

-

(3,435)

(2,783)

 


________

________

________

________

________

________

 


________

________

________

________

________

________

 

Balance at 1 January 2012

193

60,699

503

(152)

80,541

141,784

 


                

                

                

                

                

                

 


$000

$000

$000

$000

$000

$000

 

Balance at 2 January 2012

193

60,699

503

(152)

80,541

141,784

 


________

________

________

________

________

________

 

Loss for the period

-

-

-

-

(6,076)

(6,076)

 

Other comprehensive income:







 

Actuarial loss on net defined benefit obligations

-

-

-

-

(477)

(477)

 

Movement in unrecognised surplus on defined benefit plan

-

-

-

-

301

301

 

Deferred tax on net defined benefit obligations recognised in equity

-

-

-

-

10

10

 

Foreign exchange translation differences on foreign operations

-

-

-

-

(2)

(2)

 

Effective portion of changes in fair value of cash flow hedges

-

-

-

773

-

773

 


________

________

________

________

________

________

 

Total comprehensive income for the period ended 30 December 2012

-

-

-

773

(6,244)

(5,471)

 


________

________

________

________

________

________

 

Equity settled share-based payment transactions

-

-

-

-

2,626

2,626

 

Deferred tax on equity settled share-based payment transactions recognised in equity

-

-

-

-

423

423

 

Share options exercised by employees

1

554

-

-

-

555

 

Company shares acquired by employee trust

-

-

-

-

(7)

(7)

 


________

________

________

________

________

________

 

Total contributions by and distributions to owners of the Company

1

554

-

-

3,042

3,597

 


________

________

________

________

________

________

 


________

________

________

________

________

________

 

Balance at 30 December 2012

194

61,253

503

621

77,339

139,910

 


                

                

                

                

                

                

Condensed consolidated statement of cash flows

For the period ended 30 December 2012

Q4 2012

Q4 2011

Q3 2012

2011

 


13-week period from 1 October 2012 to 30 December 2012

13-week period from 3 October 2011 to 1 January 2012

13-week period from 2 July 2012 to 30 September 2012

52-week period from 2 January 2012 to 30 December 2012

52-week period from 3 January 2011 to 1 January 2012

 


$'000

$'000

$'000

$'000

$'000

 


(Unaudited)

(Unaudited)

(Unaudited)



 

Cash flows from operating activities






 

Profit / (loss) for the period

1,043

(5,289)

1,241

(6,076)

(17,886)

 

Adjustments for:






 

Depreciation and amortisation

2,111

3,653

2,069

9,499

13,654

 

Foreign exchange (gains) / losses 

(182)

335

(16)

(283)

219

 

Net financing expense / (income)

362

(275)

(62)

40

(106)

 

Equity-settled share-based payment (credit) / expense

(651)

428

1,248

2,626

4,100

 

Curtailment gain on defined benefit plan

-

-

-

-

(1,829)

 

Income tax (credit) / expense 

(955)

(1,625)

403

(3,274)

(6,167)

 


_______

_______

_______

_______

_______

 


1,728

(2,773)

4,883

2,532

(8,015)

 

Decrease / (increase)  in inventories

624

6,516

(1,732)

(1,801)

6,227

 

(Increase) / decrease in trade and other receivables

(2,715)

5,976

(7,343)

(8,266)

(2,025)

 

Increase / (decrease) in trade and other payables

1,283

(1,745)

6,503

11,769

(19,999)

 

Decrease in provisions and employee benefits

(412)

(246)

(26)

(1,154)

(3,388)

 


_______

_______

_______

_______

_______

 

Cash generated from / (absorbed by) the operations

508

7,728

2,285

3,080

(27,200)

 

Income taxes paid

(28)

(11)

(22)

(31)

(317)

 


_______

_______

_______

_______

_______

 

Net cash inflow / (outflow) from operating activities

480

7,717

2,263

3,049

(27,517)

 


_______

_______

_______

_______

_______

 

Interest received

49

50

79

225

337

 

Acquisition of property, plant and equipment

(477)

(621)

(614)

(2,360)

(2,357)

 

Acquisition of intangible assets

(665)

(627)

(568)

(3,788)

(4,178)

 

Acquisition of subsidiary, net of cash acquired

-

(548)

-

-

(4,305)

 

Deferred consideration on acquisitions in prior period

(800)

(800)

(800)

(3,200)

(800)

 

Amounts withdrawn from short-term deposits

7,000

-

2,000

5,000

43,000

 


_______

_______

_______

_______

_______

 

Net cash inflow / (outflow) from investing activities

5,107

(2,546)

97

(4,123)

31,697

 


_______

_______

_______

_______

_______

 

Cash flows from financing activities






 

Proceeds from the issue of share capital

82

-

113

555

652

 

Company shares acquired by employee trust

-

(17)

-

(7)

(5,390)

 

Interest paid

(6)

(11)

(10)

(29)

(95)

 


_______

_______

_______

_______

_______

 

Net cash inflow / (outflow) from financing activities

76

(28)

103

519

(4,833)

 


_______

_______

_______

_______

_______

 

Net  increase / (decrease) in cash and cash equivalents

5,663

5,143

2,463

(555)

(653)

 

Cash and cash equivalents at start of period

14,233

15,179

11,690

20,409

21,083

 

Effect of exchange rate fluctuations on cash held

78

87

80

120

(21)

 


_______

_______

_______

_______

_______

 

Cash and cash equivalents at end of period

19,974

20,409

14,233

19,974

20,409

 


              

              

              

              

              

 

Cash and cash equivalents at end of period

19,974

20,409

14,233

19,974

20,409

 

Short-term deposits at end of period

28,000

33,000

35,000

28,000

33,000

 


_______

_______

_______

_______

_______

 

Total cash and short-term deposits at end of period

47,974

53,409

49,233

47,974

53,409

 


              

              

              

              

              

 







 

The results for the 52 week period ended 30 December 2012 and for the 52 week period ended 1 January 2012 have been extracted from the financial statements for those periods.  These financial statements have been reported on by the Company's auditors. The quarterly information is not audited.

 


Notes to the Preliminary Announcement

 

1.    Basis of preparation

 

The condensed consolidated financial information set out above contains the financial information of Wolfson Microelectronics plc (the "Company") and its subsidiaries (together referred to as the "Group") for the thirteen and fifty-two week periods ended 30 December 2012. The comparative periods are the thirteen and fifty-two week periods ended 1 January 2012.

 

This preliminary announcement was authorised for issue by the Board of Directors on 5 February 2013.  

 

A copy of this preliminary announcement is available on the Company's website at www.wolfsonmicro.com .

 

The financial information set out in this announcement for the fifty-two week period ended 30 December 2012 and the fifty-two week period ended 1 January 2012 does not constitute the Company's statutory accounts for those periods within the meaning of Section 434 of the Companies Act 2006.  Statutory accounts for the fifty-two week period ended 1 January 2012 are available on the Company's website at www.wolfsonmicro.com and have been delivered to the Registrar of Companies, and those for the fifty-two week period ended 30 December 2012 will be delivered in due course. Both sets of accounts have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The auditors have reported on those financial statements; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

 

The financial information set out in this announcement has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("adopted IFRS").  The financial information is presented in US dollars rounded to the nearest thousand.

 

The condensed set of financial information has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated financial statements for the fifty-two week period ended 1 January 2012.

 

As permitted by IAS 1 : Presentation of Financial Statements, the Group has disclosed additional information in respect of exceptional items on the face of the income statement, for the fifty-two week period ended 30 December 2012 and the fifty-two week period ended 1 January 2012, in order to aid understanding of the Group's financial performance.  An item is treated as exceptional if it is considered that by virtue of its nature, scale of incidence and being of such significance that separate disclosure is required for the financial statements to be properly understood.

 

Restatement of comparatives

During 2012, the provisional fair value of the contingent consideration in respect of the acquisition, in 2011, of Dynamic Hearing Pty Ltd was finalised, resulting in an increase in contingent consideration payable of $131,000 and a corresponding increase of $131,000 in goodwill. The amounts for intangible assets and other payables at 1 January 2012 have been restated accordingly.

 

None of the new standards, amendments to standards and interpretations, which are mandatory for the first time for financial periods commencing on 1 January 2012, are currently relevant for the Group.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.     Basis of preparation (continued)

 

In the process of applying the Group's accounting policies, management necessarily makes judgements and estimates that have a significant effect on the amounts recognised in the condensed financial statements.  Changes in the assumptions underlying the estimates could result in a significant impact to the financial information.  The most critical of these accounting judgement and estimation areas are included in the Group's 2011 consolidated financial statements and the main areas of judgement and estimation are similar to those disclosed in the financial statements for the fifty-two week period ended 1 January 2012.

 

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the fifty-two week period ended 30 December 2012 (which began on 2 January 2012) and have not been early adopted by the Group:

·      Amendment to 'IAS 19 'Employee Benefits' issued in June 2011. The amendments aim to improve the recognition and disclosure requirements for defined benefit plans. The new requirements include: the immediate recognition of all past service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability or asset. The new requirements are effective for annual periods beginning on or after 1 January 2013, with earlier application permitted. The effect of the change in calculation of the expected return on plan assets, had this change applied in 2012, would have increased the expected return on plan assets by approximately $0.03 million but the current estimated effect for the financial year 2013  is a reduction in the expected return on plan assets of approximately $0.2 million.

·      IFRS 9 'Financial instruments' issued in 2009 and in October 2010.  This addresses the classification and measurement of financial assets and financial liabilities. IFRS 9 replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. The standard is not applicable until 1 January 2015.

·      Amendments to IAS 1 'Financial Statement Presentation' issued in June 2011. These amendments improve how components of other comprehensive income are presented. The new requirements are effective for annual periods beginning on or after 1 July 2012.

·      IFRS 13 Fair Value Measurement. IFRS 13 defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. The new requirements are effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.

·      IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements' and IFRS 12 'Disclosure of Interests in Other Entities', issued in May 2011. IFRS 10 provides a single consolidation model that identifies control as the basis for consolidation for all types of entities. IFRS 10 replaces IAS 27 Consolidated and Separate Financial Statements. IFRS 11 Joint Arrangements establishes principles for the financial reporting by parties to a joint arrangement. IFRS 11 supersedes IAS 31 Interests in Joint Ventures and SIC-13-Jointly Controlled Entities-Non-monetary Contributions by Venturers. IFRS 12 combines, enhances and replaces the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. As a consequence of these new IFRSs, the IASB also issued amended and retitled IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures. The new requirements are effective for annual periods beginning on or after 1 January 2014, with earlier application permitted.

 

2.    Basis of consolidation of the Group

 

The financial information consolidates the results of and net assets of Wolfson Microelectronics plc and its subsidiaries. Subsidiaries are included in the consolidated financial statements from the date on which control commences to the date that control ceases. 

 

3.    Segment information

 

The chief operating decision-maker is the Chief Executive Officer ('CEO') of the Company.  The Chief Executive Officer reviews the Group's internal reporting in order to assess performance and allocate resources.  Management has determined the operating segments based on these reports. 

 

The Group has three operating segments which are based on product groups. The Group has two reportable segments which are the Group's Audio Hubs and Discrete and Power Products segments.  These are reported separately to the chief operating decision-maker to allow greater management focus on the Audio Hubs strategy.  The following summary describes the operations in the Group's reportable segments:

 

 

 

3.    Segment information (continued)

 

Audio Hubs - this segment includes the supply and sale of Wolfson's Audio Hubs high performance audio integrated circuit solutions.  Audio Hubs are feature-rich devices which contain many of Wolfson's audio technologies combined into a single Hub device.

 

Discrete and Power Products - this segment includes the supply and sale of integrated circuits which are discrete components, such as : Analogue-to-Digital Converters; Digital-to-Analogue Converters; and this segment also includes those components which are power management integrated circuits and the silicon microphone devices based on Micro-Electro-Mechanical Systems ('MEMS') technology.

 

The other operating segment does not meet any of the quantitative thresholds for determining a reportable segment in the fifty-two week period ended 30 December 2012 or in the fifty-two week period ended 1 January 2012 and, accordingly, the relevant revenue and segment gross profits are shown as 'other operating segment'.

 

The CEO assesses the performance of the operating segments based on revenue and a measure of gross profit. Segment gross profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of the segment. The gross profit measurement basis excludes the effects of non-recurring expenditure from operating segments, such as restructuring costs and exceptional inventory write downs.  Interest income and expenditure are not included in the result for each operating segment that is reviewed by the Chief Executive Officer.  Other information provided to the CEO is measured in a manner consistent with that in the financial statements.  The segment information is prepared using accounting policies consistent with those of the Group as a whole.  There were no inter-segment transactions in the periods presented.

 

The assets and liabilities and capital expenditure of the Group are not reviewed by the chief operating decision-maker on a segment basis.  Therefore none of the Group's assets and liabilities are segmental assets and segmental liabilities respectively and all are unallocated for segmental disclosure purposes.

 

All segments are continuing operations.

 


Q4 2012

Q4 2011

Q3 2012

2012

2011


13-week period from 1 October 2012 to 30 December 2012

13-week period from 3 October 2011 to 1 January 2012

13-week period from 2 July 2012 to 30 September 2012

52-week period from 2 January 2012 to 30 December 2012

52-week period from 3 January 2011 to 1 January 2012

               

$000

$000

$000

$000

$000







Segment revenue:






Audio Hubs

41,614

26,398

40,285

134,092

105,367

Discrete and Power Products

14,404

10,387

12,733

45,477

50,851

Other operating segment

45

91

30

180

694


_______

_______

_______

_______

_______







Total revenue for the period

56,063

36,876

53,048

179,749

156,912


_______

_______

_______

_______

_______

Segment gross profit:






Audio Hubs

17,483

13,204

19,494

62,518

52,432

Discrete and Power Products

7,153

5,147

5,648

21,642

23,174

Other operating segment

(26)

44

37

53

502


_______

_______

_______

_______

_______

Total gross profit for segments in  the period

24,610

18,395

25,179

84,213

76,108


_______

_______

_______

_______

_______







 



 

3.    Segment information (continued)

 

 

A reconciliation of gross profit to total profit / (loss) before income tax is provided as follows:

 


Q4 2012

Q4 2011

Q3 2012

2012

2011


13-week period from 1 October 2012 to 30 December 2012

13-week period from 3 October 2011 to 1 January 2012

13-week period from 2 July 2012 to 30 September 2012

52-week period from 2 January 2012 to 30 December 2012

52-week period from 3 January 2011 to 1 January 2012

  

$000

$000

$000

$000

$000







Gross profit for segments

24,610

18,395

25,179

84,213

76,108

Exceptional charge - Cost of sales

-

(2,400)

-

-

(5,900)


______

______

______

______

______

Gross profit for the period

24,610

15,995

25,179

84,213

70,208

Corporate overheads

(22,760)

(23,184)

(23,597)

(92,123)

(92,718)

Other exceptional items

(1,400)

-

-

(1,400)

(1,649)


______

______

______

______

______







Operating profit / (loss) for the period

450

(7,189)

1,582

(9,310)

(24,159)

Financial income

330

739

378

1,489

1,576

Financial expense

(692)

(464)

(316)

(1,529)

(1,470)


______

______

______

______

______

Profit  / (loss) before tax

88

(6,914)

1,644

(9,350)

(24,053)


______

______

______

______

______







 

 

Reportable segments' assets are reconciled to total assets as follows:

 

 

 



As at 30 December 2012

As at 30 September 2012

As at 1 January

2012



$000

$000

$000





(Restated)

Total assets for reportable segments


-

-

-

Assets for other operating segments


-

-

-

Goodwill and acquired intangible assets:

from acquisition of Sonaptic Limited


20,037

20,182

19,189

Goodwill and acquired intangible assets: 

from acquisition of Oligon Limited


4,204

4,329

4,704

Goodwill and acquired intangible assets: 

from acquisition of Dynamic Hearing Pty Limited


6,040

6,318

6,895

Other unallocated assets


150,709

150,738

143,727



_______

_______

_______

Consolidated total assets


180,990

181,567

174,515



             

              

              

 

 

 

 

 

 

 

 

 



 

4.    Exceptional items

 

Exceptional charge recognised in the 52 week period ended 30 December 2012:

Past service cost on defined benefit plan

In November 2012, the Company initiated an Enhanced Transfer Value (ETV) offer to the 83 deferred members of the Company's defined benefit pension scheme and this offer is scheduled to close in February 2013.  The ETV offer is likely to result in a cash contribution by the Company into the scheme in the first half of 2013, depending on the level of take up of the ETV offer.  For accounting purposes, the Company has estimated the projected level of take up of the ETV offer and has recognised an exceptional charge of $1.4 million, in the 52 week period ended 30 December 2012. The charge reflects the estimated accounting cost of the ETV compared to the net IAS 19 liability for relevant deferred members of the scheme. Once the ETV offer closes the difference between this estimated cost and the actual accounting cost of the ETVs, for those members that decide to take up the offer, will be recognised in the Company's financial statements. Further details regarding the defined benefit pension scheme are contained in note 9.

 

Exceptional items recognised in the 52 week period ended 1 January 2012:

Restructuring costs

In July 2011, the Company announced a cost reduction and refocusing programme which was actioned in the second half of 2011.The total exceptional restructuring cost of $6.978 million comprised:

(i)   operating expense of $3.478 million, which was mainly employee termination costs; and

(ii) an inventory write down of $3.5 million. 

 

Exceptional inventory write down

In the course of the process to realign the Company's supply chain to better meet the Company's future product and anticipated demand requirements, involving the relocation of certain production support functions to the Far East and a streamlining of the subcontract manufacturing supply base, an inventory loss of $2.4 million was identified. 

 

Curtailment gain on defined benefit plan

In quarter two of 2011, a $1.8 million curtailment gain arose on the closure of the defined benefit pension plan to future accrual. The plan closed to future accrual with effect from 30 April 2011 and therefore the Company is no longer required to pay contributions in respect of future accrual. Due to its size and non-recurring nature, the curtailment gain was reported separately as an exceptional item within the condensed consolidated income statement for the fifty-two week period ended 1 January 2012.

 

The exceptional items were recognised in the captions in the condensed consolidated income statement as shown in the table below.  There were no exceptional items recognised in quarter three 2012.


Q4 2012

Q4 2011

Q3 2012

2012

2011


13-week period from 1 October 2012 to 30 December 2012

13-week period from 3 October 2011 to 1 January 2012

13-week period from 2 July 2012 to 30 September 2012

52-week period from 2 January 2012 to 30 December 2012

52-week period from 3 January 2011 to 1 January 2012


$000

$000

$000

$000

$000







Costs of sales - inventory write down

-

-

-

-

(3,500)

Distribution and selling costs

-

-

-

-

(1,933)

Research and development expenses

-

-

-

-

(1,473)

Administrative expenses

-

-

-

-

(72)


______

______

______

______

______

Total restructuring costs

-

-

-

-

(6,978)


______

______

______

______

______

Costs of sales - inventory write down

-

(2,400)

-

-

(2,400)


______

______

______

______

______

(Past service cost) / curtailment gain on defined benefit plan

(1,400)

-

-

(1,400)

1,829


______

______

______

______

______

Total exceptional items recognised in the period (before tax)

(1,400)

(2,400)

-

(1,400)

  (7,549)  


             

             

             

             

             

 

 

 



 

 

5.    Operating expenses: reconciliation from Underlying to IFRS

 


Underlying

Share-based compensation (including related payroll taxes)

Amortisation  of acquired intangible assets

Exceptional items

IFRS

               

$000

$000

$000

$000

$000

Year 2012

52-week period from 2 January to 30 December 2012






Distribution and selling costs

(23,266)

(636)

-

-

(23,902)

Research and development expenses

(51,065)

(2,041)

(1,733)

-

(54,839)

Administrative expenses

(12,748)

(634)

-

-

(13,382)

Past service cost on defined benefit plan

-

-

-

(1,400)

(1,400)


(87,079)

(3,311)

(1,733)

(1,400)

(93,523)


             

             

             

             

             







Year 2011

52-week period from 3 January 2011 to 1 January 2012






Distribution and selling costs

(23,427)

(952)

-

(1,933)

(26,312)

Research and development expenses

(47,346)

(1,999)

(5,484)

(1,473)

(56,302)

Administrative expenses

(12,874)

(636)

-

(72)

(13,582)

Curtailment gain on defined benefit plan

-

-

-

1,829

1,829


_______

_______

_______

_______

_______


(83,647)

(3,587)

(5,484)

(1,649)

(94,367)


             

             

             

             

             







 


Underlying

Share-based compensation (including related payroll taxes)

Amortisation  of acquired intangible assets

Exceptional items

IFRS

               

$000

$000

$000

$000

$000

Q4 2012

13-week period from 1 October  to 30 December 2012






Distribution and selling costs

(6,123)

485

-

-

(5,638)

Research and development expenses

(13,701)

48

(403)

-

(14,056)

Administrative expenses

(3,350)

284

-

-

(3,066)

Past service cost on defined benefit plan

-

-

-

(1,400)

(1,400)


_______

_______

_______

_______

_______


(23,174)

817

(403)

(1,400)

(24,160)


             

             

             

             

             

Q4 2011

13-week period from 3 October 2011 to 1 January 2012






Distribution and selling costs

(5,269)

92

-

-

(5,177)

Research and development expenses

(12,801)

(473)

(1,509)

-

(14,783)

Administrative expenses

(3,248)

24

-

-

(3,224)


_______

_______

_______

_______

_______


(21,318)

(357)

(1,509)

-

(23,184)


             

             

             

             

             

Q3 2012

13-week period from 2 July to 30 September 2012






Distribution and selling costs

(6,083)

(434)

-

-

(6,517)

Research and development expenses

(12,570)

(700)

(317)

-

(13,587)

Administrative expenses

(3,172)

(321)

-

-

(3,493)


_______

_______

_______

_______

_______


(21,825)

(1,455)

(317)

-

(23,597)


             

             

             

             

             







 



 

 

6.      Operating profit / (loss): reconciliation from Underlying to IFRS 

 


Q4 2012

Q4 2011

Q3 2012

2012

2011


13-week period from 1 October 2012 to 30 December 2012

13-week period from 3 October 2011 to 1 January 2012

13-week period from 2 July 2012 to 30 September 2012

52-week period from 2 January 2012 to 30 December 2012

52-week period from 3 January 2011 to 1 January 2012

               

$000

$000

$000

$000

$000







Underlying operating profit / (loss)

1,436

(2,923)

3,354

(2,866)

(7,539)

Share-based compensation

817

(357)

(1,455)

(3,311)

(3,587)

Amortisation of acquired intangible assets

(403)

(1,509)

(317)

(1,733)

(5,484)

Exceptional items - operating expenses

(1,400)

-

-

(1,400)

(1,649)

Exceptional charges - cost of sales

-

(2,400)

-

-

(5,900)


______

______

______

______

______

Operating profit / (loss) (IFRS)

450

(7,189)

1,582

(9,310)

(24,159)


______

______

______

______

______







 

7.    Income tax credit

 

The income tax credit for the fifty-two week period ended 30 December 2012 is a total effective tax rate of 35% (a credit) (2011: credit of 25.6%). This reflects the UK corporation tax rate applicable for that 52-week period of 24.5% as favourably impacted by tax allowances on research and development expenditure and partially offset by the adverse effect of disallowable expenses.The effective tax rate in 2013 is expected to benefit from the introduction of the UK Patent Box regime from 1 April 2013.

 

 

8.   Earnings per share

 


Q4 2012

Q4 2011

Q3 2012

2012

2011


13-week period from 1 October 2012 to 30 December 2012

13-week period from 3 October 2011 to 1 January 2012

13-week period from 2 July 2012 to 30 September 2012

52-week period from 2 January 2012 to 30 December 2012

52-week period from 3 January 2011 to 1 January 2012


$000

$000

$000

$000

$000

Profit / (loss) for the period attributable to equity shareholders (basic and diluted)

1,043

(5,289)

1,241

(6,076)

(17,886)







Exceptional items after tax*

1,078

1,765

-

1,078

5,549







Amortisation of acquired intangible assets*

303

1,109

240

1,308

4,031







Share-based payment (credit) / expenses and related payroll taxes*

(617)

262

1,099

2,500

2,636


_______

_______

_______

_______

_______

Underlying profit / (loss) for the period attributable to equity shareholders (basic and diluted)

1,807

(2,153)

2,580

(1,190)

(5,670)


              

              

              

              

              








cents

cents

cents

cents

cents







Basic earnings / (loss) per share

 0.89

(4.55)

1.06

(5.22)

(15.39)


              

              

              

              

              

Diluted earnings / (loss) per share

0.89

(4.55)

1.06

(5.22)

(15.39)


              

              

              

              

              

Underlying basic earnings / (loss) per share

1.55

(1.85)

2.21

(1.02)

(4.88)


              

              

              

              

              

Underlying diluted earnings / (loss) per share

 1.54

(1.85)

2.19

(1.02)

(4.88)


              

              

              

              

              

* After the estimated tax impact of this item








 

8.   Earnings per share (continued)

 

The weighted average number of ordinary shares used in the calculation of basic and diluted earnings / (loss) per share for each period were calculated as follows:

 


Q4 2012

Q4 2011

Q3 2012

2012

2011


13-week period from 1 October 2012 to 30 December 2012

13-week period from 3 October 2011 to 1 January 2012

13-week period from 2 July 2012 to 30 September 2012

52-week period from 2 January 2012 to 30 December 2012

52-week period from 3 January 2011 to 1 January 2012








No. of shares

No. of shares

No. of shares

No. of shares

No. of shares







Issued ordinary shares at start of period

116,589,853

116,308,102

116,540,373

116,308,427

115,929,217







Effect of shares issued during the period from exercise of employee share options

40,020

164

12,527

168,804

269,158


_______

_______

_______

_______

_______

Weighted average number of ordinary shares at end of period - for basic earnings / (loss) per share and for diluted loss per share

116,629,873

116,308,266

116,552,900

116,477,231

116,198,375







Effect of dilutive share options in issue

962,469

300,537

1,066,286

989,619

950,498


_______

_______

_______

_______

_______

Weighted average number of ordinary shares at end of period - for diluted earnings per share

117,592,342

116,608,803

117,619,186

117,466,850

117,148,873


              

              

              

              

              

 

During the fifty-two week period ended 30 December 2012, the Company issued 335,015 ordinary 0.1 pence shares (fifty-two week period ended 1 January 2012: 379,210 ordinary shares) under employee share schemes for a consideration received of $555,000 (fifty-two week period ended 1 January 2012:$652,000).

 

9.   Employee benefits

 

Defined benefit obligations

The defined benefit pension obligation is calculated using an actuarial update as at 30 December 2012. The Company makes contributions to a UK-based defined benefit plan that provides pension benefits for UK employees upon retirement. The defined benefit plan and actuarial assumptions are based on sterling denominated assets and liabilities.  The plan was closed to new entrants with effect from 2 July 2002.  The plan closed to future accrual with effect from 30 April 2011 and therefore the Company is no longer required to pay contributions in respect of future accrual.  In the fifty-two week period ended 1 January 2012, the Company recognised, in the income statement as an exceptional item, the curtailment gain of $1.829 million which arose on the closure of the plan to future accrual (see note 4). 

 

The deficit contributions due under the schedule of contributions dated 25 March 2010 were all paid as part of the $4.5 million contribution paid by the Company in 2011.  A revised schedule of contributions, dated 14 August 2012, has since been put in place.  Under this revised schedule, the Company will pay deficit contributions of $0.5 million by 28 February 2014 and $1.3 million by 28 February 2015. During the 52 week period ended 30 December 2012, the Company did not pay any deficit contributions into the plan as none were due to be paid in that period. Therefore the total amount due under the current schedule of contributions is $1.8 million as at 30 December 2012.  In accordance with IFRIC 14, the present value of this remaining commitment (being $1.5 million) was recognised as a liability as at 30 December 2012.  There was a similar commitment at 1 January 2012 in respect of the schedule of contributions in place at that date.

 

The Company and the Trustees of the Plan have agreed on an outline funding policy which will aim to eliminate £1 million of buyout deficit every year, either by means of liability reduction measures, contributions, or both. The Company is targeting to completely close the scheme over the next ten years through a combination of liability reduction exercises, such as buy ins, buy outs and enhanced transfer values, all of which will likely cost more than the IAS 19 funded obligations assume.

 

Enhanced Transfer Value offer

In November 2012, the Company initiated an Enhanced Transfer Value (ETV) offer to the 83 deferred members of this scheme and this offer is scheduled to close in February 2013.  Details of the accounting treatment of this ETV offer are contained in note 4.



 

 

9.   Employee benefits (continued)

 

The main reason for the increase in the present value of funded obligations as at 30 December 2012, compared to the position as at 1 January 2012, was the reduction in the discount rate assumption from 4.7% to 4.3%. It is the accounting policy of the Company and the Group to recognise all actuarial gains and losses in the period in which they occur directly in other comprehensive income. 

 


At 30 December 2012

At 1 January 2012


$000

$000




Present value of funded obligations

(31,142)

(26,413)

Fair value of plan assets

30,966

26,714


________

________

Net (liability) /surplus for defined benefit obligations

(176)

301

Unrecognised surplus

-

(301)

Increase in liabilities recognised in accordance with IFRIC 14

(1,500)

(1,500)


________

________

Recognised liability for defined benefit obligations

(1,676)

(1,500)


                

                

 

The expense / (credit) is recognised in the following line items in the income statement:

 


52 weeks ended

30 December 2012

52 weeks ended

1 January 2012

               

$000

$000




Distribution and selling costs

-

26

Research and development expenses

-

71

Administrative expenses

-

29


_______

_______

Total current service costs

-

126


               

               




Curtailment gain: exceptional item (note 4)

-

(1,829)


               

               




Exchange differences:



Distribution and selling costs

(2)

58

Research and development expenses

(7)

164

Administrative expenses

(3)

66


_______

_______


(12)

288


               

               




Financial income

(1,246)

(1,335)

Financial expense

1,258

1,271


               

               

The Company also has a Group Personal Pension Plan which is a defined contribution pension scheme.

 

Share-based payments

The share-based payment expense recognised for each period, in accordance with IFRS 2 Share-based Payment, was:


52 weeks ended

30 December

2012

52 weeks ended

1 January

2012

               

$000

$000

Total expense recognised in personnel expenses during the period

 

2,676

 

4,100


               

               

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Q4 and Full Year Results 2012 - RNS