Final Results

Rotork PLC 22 March 2001 Rotork p.l.c. Preliminary Announcement Rotork p.l.c., the international specialist engineering group, announces audited results for the year ended 31 December 2000. 2000 1999 Turnover £107.9m £117.5m Operating profit £19.8m £26.0m Profit before taxation £20.6m £26.9m - before goodwill amortisation £21.6m £27.8m Earnings per share - basic 15.6p 20.3p - diluted 15.6p 20.3p - basic before goodwill amortisation 16.8p 21.3p Dividend per share 12.2p 12.2p Highlights of the year included: * Gross margin maintained near 1999 levels * New IQ actuator launched; well received by customers * Move to new US production facility completed on time and under budget * Order book up 19% on previous year * Performance reflects reduced capital expenditure in the hydrocarbon sector Chief Executive, Bill Whiteley, said: 'Following a difficult eighteen months, activity in the hydrocarbon sector has returned to more normal levels. With the new IQII actuator now in full production and our closing order book up nearly 20% on last year the outlook for the current year is more promising.' For further information, please contact: Rotork p.l.c. Tel: 01225 733200 Bill Whiteley, Chief Executive Bob Slater, Finance Director Financial Dynamics Tel: 0207 831 3113 Tom Baldock PRELIMINARY STATEMENT Introduction Lower investment in the hydrocarbon sector and consolidation within the industry over the last eighteen months resulted in reduced levels of capital investment and therefore contributed to lower demand for actuators and associated products. Over 40% of Rotork actuators are shipped to customers in these sectors and the result of this reduced spend was that the order book at the beginning of 2000 was lower than at the previous year-end. Nevertheless, gross margin in 2000 was maintained at 1999 levels underlining the quality of our products and customer support. In addition activity in this sector now appears to be returning to more normal levels and I am pleased to report that our closing order book was nearly 20% higher than at the end of the previous year. Operating Review The most significant development programme undertaken to date at Rotork is now complete and the latest version of the IQ intelligent actuator is in full production at our Bath and Rochester facilities. The increased functionality obtained by utilising advanced electronic techniques is meeting with widespread customer approval. During the development programme the opportunity was taken to identify lower cost overseas sources for some of the more significant electronic and mechanical assemblies. We intend to make greater use of these and other low cost sources in the future to further reduce costs across our complete product range. The new production facility for our American operations situated in Rochester New York was completed on schedule and under budget in May. We took the opportunity to introduce the modern production methods that had already been successfully installed at our Bath plant to improve the efficiency and capacity of this operation. Rotork Gears are also using this facility as a base for their expanding American operations and the resulting improved service levels to US customers have already created further business opportunities for these products. Rotork Gears now contributes significantly to our profitability and this is due in part to the successful integration of acquisitions made in recent years. The latest of these was the purchase in October of the business and assets of the actuator division of Skil Controls Limited previously located in Skelmersdale. This business had a specialised product, which is capable of being marketed through our existing international sales network. Although currently relatively small, we believe that potential exists for significant growth. The year saw the opening of our wholly owned company in the People's Republic of China and business levels there to date have been encouraging. The rest of our Far East operations experienced a mixed year but all have had acceptable returns and the outlook in most of these territories is now more positive than it had been for some time. Our Fluid Power plants in the USA and Italy are particularly dependent of oil industry business and as a result experienced a difficult trading environment during the year. We have redesigned our processes in both plants and have an ambitious product development programme. As a result of restructuring, a new Fluid Power management team has been put in place. I am pleased to report that the fluid power order book at the end of the year was higher than it has been in the recent past and there is currently much more optimism about our prospects. Dividend In view of the current trading position the directors are recommending that the dividend be held at last year's level with a final dividend of 7.8p bringing the total for the year to 12.2p. This will be paid on 21 May to shareholders on the register on 30 March. Outlook Our strategic focus has continued to be the design, manufacture and marketing of actuator, system and related products. Our Product development programme in the three main activities, Electric Actuators, Fluid System and Rotork Gears is providing a greater breadth of solutions to customers across our market sectors, supported by acquisition where appropriate. Activity levels are steadily improving and our marketing companies view the year ahead with greater confidence. The second half of 2000 saw an improvement in order intake into our plants, and this trend has continued into the early part of the current year. The introduction of our new IQ actuator is strengthening our market position and we will build on this success with further product developments that will incorporate its innovative concepts. The strength of sterling, particularly against the Euro, continues to cause difficulties for us but with some signs of favourable movement this year, together with improvements in activity from our main customer sectors, the outlook for the current year is more promising. Audited Consolidated Profit and Loss Account for the year ended 31 December 2000 Group Group 2000 1999 £'000 £'000 Turnover 107,880 117,535 Cost of sales (59,021) (63,626) _______ ______ Gross profit 48,859 53,909 Distribution costs (2,286) (2,023) Administrative expenses (27,502) (26,021) Other operating income 680 95 Operating profit 19,751 25,960 Operating profit before amortisation of goodwill 20,787 26,855 Amortisation of goodwill (1,036) (895) ______ _______ Operating profit 19,751 25,960 Net interest receivable and similar items 831 987 _______ _______ Profit on ordinary activities before taxation 20,582 26,947 Tax on profit on ordinary activities (7,110) (9,477) Profit for the financial year 13,472 17,470 Dividends including non equity (10,504) (10,546) _______ ______ Retained profit for the financial year 2,968 6,924 _______ ______ pence pence Basic earnings per share 15.6 20.3 Basic earnings per share before goodwill amortisation 16.8 21.3 Diluted earnings per share 15.6 20.3 All results relate to continuing operations Audited Balance Sheet at 31 December 2000 Group Group 2000 1999 £'000 £'000 Fixed assets Intangible assets 18,166 19,175 Tangible assets 15,763 14,412 33,929 33,587 Current assets Stocks 14,553 13,790 Debtors due within one year 32,562 27,806 Debtors due after more than one year 384 581 Cash at bank and in hand 16,820 25,788 64,319 67,965 Creditors: Amounts falling due within one year (31,491) (35,824) Net current assets 32,828 32,141 Total assets less current liabilities 66,757 65,728 Creditors: Amounts falling due after more than one year (1,011) (1,758) Provisions for liabilities and charges (3,293) (4,221) ______ ______ Net assets 62,453 59,749 ===== ===== Rotork shareholders' funds Equity 62,394 59,690 Non-equity 59 59 _______ _______ Capital employed 62,453 59,749 ===== ===== Note: The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2000 or 1999. The financial information for 1999 is derived from the statutory accounts for 1999 which have been delivered to the Registrar of Companies. The auditors have reported on the 1999 and 2000 accounts; their reports were unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The statutory accounts for 2000 will be delivered to the Registrar of Companies following the company's annual general meeting. Audited Statement of Group Cash Flow for the year ended 31 December 2000 Group Group 2000 1999 £'000 £'000 Operating profit 19,751 25,960 Depreciation and amortisation 2,995 2,758 Profit on sale of fixed assets (101) - Movement in working capital (6,236) (2,772) ______ ______ Net cash inflow from operating activities 16,409 25,946 Returns on investments and servicing of finance 863 894 Taxation (8,539) (10,268) Capital expenditure (3,057) (2,497) Acquisitions and disposals (394) (14,893) Dividends paid on equity ordinary shares (10,543) (9,817) Financing (1,615) 903 _______ ______ Decrease in cash and term deposits in the period (6,876) (9,732) ====== =====

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