The Group's record results for the year stemmed primarily from increased Galaxy™ family related revenues along with increased sales of our other rough-diamond planning and processing products.
The Group reported record fourth quarter revenues in Q4 2014 of US$ 18.3 million, profit from operations of US$ 5.2 million and net profit of US$ 3.9 million, as compared to revenues of US$ 16.7 million, profit from operations of US$ 5.1 million and net profit of US$ 4.5 million reported in Q4 2013, and as compared to revenues of US$ 20.4 million, profit from operations of US$ 6.8 million and net profit of US$ 5.7 million reported in Q3 2014.
Despite a challenging operating environment in Q4 2014 and on a year-over-year basis, the Group reported record fourth quarter revenues on increased rough-diamond planning and processing products and increased Galaxy™ family related recurring revenues stemming from a broader installed base.
On a sequential quarterly basis, the decrease in revenues, especially in India, was due to a number of factors:
• Eroded manufacturer margins associated with disproportionately increased rough diamond prices, and eroded polished diamond prices (due to higher polished inventory levels on the back of restrained demand from markets ex-U.S. and pipeline skewing due to extended certification times);
• Reduced working capital credit lines available to our customers;
• Decreased volume of rough diamonds in the manufacturing pipeline resulting in less than anticipated Galaxy™ processing revenues, as sightholders left some 10% of the offered goods on the table at the last sight of 2014; and
• The Diwali holiday in India.
Galaxy™ penetration continues to grow, with deliveries in Q4 2014 of 7 Galaxy™ family systems to customers. As of December 31, 2014, the Group has an installed base of 190 Galaxy™ family systems. Overall recurring revenues for the year ended December 31, 2014 (including Galaxy™-related, Quazer services, annual maintenance contracts, etc.) represented over 35% of our overall revenue.
Balance Sheet and Cash Flow Highlights
As at December 31, 2014, cash and cash equivalents and short-term investments (bank deposits) (Cash Balances) increased to US$ 45.5 million as compared to US$ 40.7 million as of September 30, 2014 and US$ 33.1 million as of December 31, 2013. The sequential increase in Cash Balances since September 30, 2014 was primarily due to the Group's Q4 2014 operating results and lower trade receivables, offset somewhat by lower trade and other payables.
The US$ 12.4 million increase in Cash Balances since December 31, 2013 follows the Group's record operating results for the year ended December 31, 2014, and after the payment of US$ 17.4 million in dividends in 2014 - the US$ 10.4 million interim dividend for 2014 paid in August 2014 and the US$ 7.0 million final dividend for the fiscal year 2013 paid in May 2014 and the Group's US$ 1.0 million buy-back of its shares in the open market in Q4 2014, offset somewhat by higher inventories, in part associated with the introduction of new products (e.g. Galaxy™ Ultra and polished trade products).