Final Results - Year Ended 31 December 1999

Rotork PLC 23 March 2000 Rotork p.l.c. Preliminary Announcement Rotork p.l.c., the international specialist engineering group, announces audited results for the year ended 31 December 1999. 1999 1998 Turnover £117.5m £101.4m Operating profit £26.0m £23.6m Profit before taxation £26.9m £25.4m - before goodwill amortisation £27.8m £25.7m Earnings per share - basic 20.3p 18.9p - diluted 20.3p 18.9p - basic before goodwill 21.3p 19.3p amortisation Dividend per share 12.2p 10.9p Highlights of the year included: - 10% increase in operating profit - 16% increase in turnover - 10% increase in basic earnings per share before goodwill amortisation - 12% increase in dividend Chief Executive, Bill Whiteley, said: '1999 was an important year for Rotork p.l.c. The strategy of expanding the valve gearbox and fluid power businesses was actively pursued through acquisitions together with the formation of Rotork Gears and Rotork Fluid System. Substantial progress was made with the development of the second generation of non-intrusive electric actuators and in making the company less reliant on the UK cost base. The strong pound, low levels of investment by international oil companies, and the legacy of economic setbacks in some developing markets all made for a challenging trading environment. Increased profits from North America and Rotork Gears were the most important contributors to growth for the year.' For further information, please contact: Rotork p.l.c Tel: 01225 733200 Bill Whiteley, Chief Executive Bob Slater, Finance Director Financial Dynamics Tel: 0171 831 3113 Tom Baldock PRELIMINARY STATEMENT INTRODUCTION 1999 was an important year for Rotork. Our strategy of expanding the valve gearbox and fluid power businesses was actively pursued through acquisitions in the year and two new operating businesses, Rotork Gears and Rotork Fluid System were formed. Substantial progress was made with the development of a second generation of non-intrusive electric actuators and in making the company less reliant on its UK cost base. The strong pound, lower levels of investment by international oil companies, and the legacy of economic setbacks in some developing markets all made for a challenging trading environment. Increased profits from North America and Rotork Gears were the most important contributors to growth for the year. RESULTS SUMMARY It is a pleasure to be able to report that 1999 delivered a year of further growth in both profit and earnings for Rotork. Sales increased by 15.9% to £117.5 million and operating profit increased by 10.2% to £26.0 million. Pre- goodwill earnings per share at 21.3p were 10.4% ahead of last year. The balance sheet continues to reflect the company's working capital control and strong cash flow. OPERATING REVIEW The markets that Rotork serve in the Americas have seen strong growth in the last few years and the company has increased its penetration into sectors such as water treatment. To meet the demand, a new production facility is being built in Rochester NY which is scheduled for completion in May. This will give increased capacity for electric actuators and the broader range of fluid power products. It will also provide a production platform for Rotork Gears to enhance its service to American and Canadian customers. A strong sales performance outside the UK resulted in good profit contributions from North America and Canada. In Europe the operations in Spain and France performed well, with Italy and the Netherlands showing improvement from their position at the interim statement. Japan commenced business as a wholly owned subsidiary in July and trading in its first few months of operation exceeded our expectations in what is a very important market. The Far Eastern operations exceeded prior year profits. 1999 has seen further organic growth and the development of the fluid power and gearbox operations. The two acquisitions made during the year have integrated well into the existing Rotork businesses. Valvekits has met expectations while the product and integration work at Rotork Fluid System will enable it to realise the benefits from enhanced geographic and product coverage. Increased research and development expenditure has been directed at both electric and fluid power products. The second generation of the successful IQ actuator, now being launched, utilises advances in chip and communications technology to give enhanced customer benefits. 'Flowpak' represents a new approach to integrating hydraulic or pneumatic controls with digital supervisory systems. DIVIDEND The directors are recommending an increased final dividend of 7.8p per share (1998 7.0p) bringing the total for the year to 12.2p (1998 10.9p). This represents an increase of 11.9% with dividend cover of 1.7 times post tax earnings. This will be paid on 22 May to shareholders on the register on 14 April. OUTLOOK Order input in the second half of 1999 resulted in a reduced order book compared with the previous year end. The strength of sterling against the Euro and the delayed recovery of expenditure in the oil and gas markets is continuing to suppress activity levels. However, project activity is expected to increase during the year and this together with the benefits of new products and component cost initiatives should lead to improved levels of business later in the year. The global reach of our business combined with the technological focus and quality and dedication of Rotork personnel around the world give us the platform to meet the challenges ahead. Audited Consolidated Profit and Loss Account for the year ended 31 December 1999 1999 1998 £'000 £'000 Turnover Continuing operations 110,362 101,440 Acquisitions 7,173 - _______ ______ Total turnover 117,535 101,440 Cost of sales (63,626) (54,311) _______ ______ Gross profit 53,909 47,129 Distribution costs (2,023) (1,922) Administrative expenses (26,021) (22,465) Other operating income 95 820 Operating profit Continuing operations 24,616 23,562 Acquisitions 1,344 - ______ ______ Total operating profit 25,960 23,562 Operating profit before 26,855 23,881 amortisation of goodwill (895) (319) Amortisation of goodwill ______ _______ 25,960 23,562 Operating profit Net interest receivable and 987 1,845 similar items _______ _______ Profit on ordinary activities 26,947 25,407 before taxation Taxation on profit on ordinary (9,477) (9,063) activities Profit for the financial year 17,470 16,344 Preference dividends on non- (6) (77) equity shares Ordinary dividends on equity (10,540) (9,379) shares _______ ______ Retained profit for the financial 6,924 6,888 year _______ ______ Pence pence Earnings per share 20.3 18.9 Earnings per share before 21.3 19.3 goodwill amortisation Diluted earnings per share 20.3 18.9 Audited Balance Sheet at 31 December 1999 Group Group 1999 1998 £'000 £'000 Fixed assets Intangible assets 19,175 5,343 Tangible assets 14,412 11,424 33,587 16,767 Current assets Stocks 13,790 13,371 Debtors due within one year 27,806 26,550 Debtors due after more than one 581 754 year Cash at bank and in hand 25,788 32,971 67,965 73,646 Creditors: Amounts falling due within one (35,824) (32,595) year Net current assets 32,141 41,051 Total assets less current 65,728 57,818 liabilities Creditors: Amounts falling due after more (1,758) (384) than one year Provisions for liabilities and (4,221) (5,015) charges ______ ______ Net assets 59,749 52,419 ===== ===== Rotork shareholders' funds Equity 59,690 52,359 Non-equity 59 60 _______ _______ Capital employed 59,749 52,419 ===== ===== Note: The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 1999 or 1998. The financial information for 1998 is derived from the statutory accounts for 1998 which have been delivered to the Registrar of Companies. The auditors have reported on the 1998 and 1999 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 1999 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 1999 1999 1998 £'000 £'000 Operating profit 25,960 23,562 Depreciation and amortisation 2,758 1,813 Decrease in working capital (2,772) (3,482) ______ ______ Net cash inflow from operating 25,946 21,893 activities Returns on investments and 894 1,768 servicing of finance Taxation (10,268) (8,346) Capital expenditure (2,497) (2,328) Acquisitions and disposals (14,893) (3,547) Dividends paid on equity ordinary (9,817) (8,391) shares Financing 903 (2,268) _______ ______ Decrease in cash and term (9,732) (1,219) deposits in the period ====== =====

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