Interim Results
Rotork PLC
06 August 2003
6 August 2003
Rotork p.l.c.
Interim Announcement
Rotork p.l.c., the international specialist engineering group, today announces
interim results for the six months ended 30 June 2003.
Financial Highlights
Continued growth in turnover, earnings and cashflow
• Profit before taxation and goodwill amortisation increased by 8.6% to
£13.9m (2002: £12.8m)
• Order book up 11% since year end 2002
• Completion of Luton property sale created net cash inflow of £1.6m and
profits of £0.6m
• Earnings per share increased by 13.3% to 10.2p (2002: 9.0p)
• Interim dividend increased by 5% to 5.25p (2002: 5.0p)
Operational Highlights
• Electric Actuators - Order input increased 6% compared to second half
2002. Shift in industry mix towards Oil and Gas and geographical mix
towards Europe and Far East
• Rotork Fluid Systems - Move to larger manufacturing facility in Italy now
enables larger and more complex projects
• Rotork Gears - 10% increase in sales output and profits up 18%. Leeds
operation increased margin based on purchasing initiatives.
Chief Executive Bill Whiteley, commenting on the results said:
'Progress resulting from good activity levels in the oil and gas sector and in
important markets in Asia and Europe is being constrained by reduced levels of
demand in the Americas, which performed well in 2002. The extent of our growth
for the year will, therefore, depend upon the performance of the US market in
the second half.'
For further information, please contact:
Rotork p.l.c. Tel: 01225 733200
Bill Whiteley, Chief Executive
Bob Slater, Finance Director
Financial Dynamics Tel: 020 7269 7273
Peter Otero
REVIEW OF OPERATIONS
Financial Results
We are pleased to report continued growth in turnover, earnings and cashflow in
the six months to 30 June.
Turnover on continuing operations was up 2% over the prior year, with operating
profit up 5%. Net profit before tax and goodwill, on continuing operations, was
up 6 % and represented an increase in net margin from 20.0% to 20.7%. Earnings
per share on this pre-exceptional basis increased from 9.0p to 9.5p.
When adding in the gain on sale at the end of April of the freehold in Luton,
occupied by the Rotork Control & Safety business disposed of in November last
year, net profit was up 9% year on year and earnings per share at 10.2p
increased by 13%.
Order book at the end of June was up 11% over the year-end figure, with the
biggest increase being in the Fluid System business where a large Oil and Gas
project remained in work in progress at the half year.
Completion of the Luton property sale created a net cash inflow of £1.6 m and
produced a profit on disposal of £0.6m. Operating cash inflow was strong at
£3.0m which, when combined with the receipt from the property disposal and the
payment of £1.2m on share buybacks in March, resulted in cash balances of
£23.8m, up £3.4m since the year-end.
Operating review
Electric Actuators
Order input values for electric actuators were similar to the first half of last
year, and 6% higher than the second half. Within this there was a change in both
the industry and geographic mix. Oil and gas input represented nearly half of
our unit input as project activity which was evident last year came through in
increased order flow in the first six months of the current year. This was
particularly marked in the Far East and Europe. Water industry demand was down
on the comparative period in spite of a modest increase in units sold to the UK.
This was due to reduced activity in North America and the Far East. The
proportion of electric actuators going to the power market was down slightly due
to the lack of activity in this sector other than in the Far East where we
recorded further gains. Geographically there was an increase in units destined
for Europe and the Far East at the expense of the Americas.
Overall sales output was up 4% and profits up 9% over the comparative period.
The improved margin was due to continued cost initiatives and a favourable
product mix. Good profit progress was achieved in a number of our European and
Far Eastern companies while sales and profits were down in the US and Canada.
The Venezuela operation, which recorded a loss in 2002, traded at above break
even despite continued difficulties in the country. The Malaysian manufacturing
plant, which commenced production in December 2002, has, as expected, recorded a
small operating loss. While still operating at below break even, production
levels have increased as the year progressed.
The quarter turn variant of our successful IQII range of intelligent actuators,
the IQT, will be launched on target in the second half of the current year.
Rotork Fluid System
The manufacturing facility of this division successfully moved into much larger
premises in Lucca, Italy, which has enabled it to take on larger and more
complex projects. Order intake is slightly up on the prior year. Phasing of
shipments has resulted in output and profits being down on the comparative
period, although results for the year are still expected to be ahead of the
prior year. A large Middle Eastern project, which was won in the period under
review, will be delivered in the second half. The US division's performance was
disappointing and recorded a loss in the period. Progress in terms of
international coverage and increased breadth of product offering continues to be
made.
Rotork Gears
Gears made good progress with sales output up 10% and profits up 18%. The
operation in Leeds benefited from improved margins due in part to purchasing
initiatives. The results of Gears BV, based in the Netherlands, have responded
well to the management changes made towards the end of last year, recording much
improved profitability.
Dividend
An interim dividend of 5.25p per ordinary share will be paid on 29 September to
all shareholders on the register at 15 August 2003. This represents an increase
of 5 % year on year.
Outlook
As indicated above progress resulting from good activity levels in the oil and
gas sector and in important markets in Asia and Europe is being constrained by
reduced levels of demand in the Americas, which performed well in 2002. The
extent of our growth for the year will depend upon the performance of the US
market in the second half.
As previously notified we intend to give a trading update in late November.
BILL WHITELEY
Chief Executive
5 August 2003
Consolidated Profit and Loss Account
Unaudited
First half First half Full year
2003 2002 2002
£m £m £m
Turnover
Continuing operations 64.3 63.1 129.7
Discontinued operations - 1.9 3.8
64.3 65.0 133.5
Operating profit
Continuing operations 12.3 11.7 25.2
Discontinued operations - 0.2 0.5
12.3 11.9 25.7
Operating profit before amortisation of goodwill 13.0 12.6 27.0
Amortisation of goodwill (all continuing operations) (0.7) (0.7) (1.3)
Operating profit 12.3 11.9 25.7
Profit on disposal of fixed asset (discontinued 0.6 - -
operations)
Net interest and similar income 0.3 0.2 0.5
Profit on ordinary activities before taxation 13.2 12.1 26.2
Taxation
UK (1.6) (1.5) (4.1)
Overseas (2.8) (2.9) (4.8)
Profit on ordinary activities after taxation 8.8 7.7 17.3
Dividend (4.5) (4.3) (12.0)
Retained profit 4.3 3.4 5.3
Pence pence pence
Earnings per share 10.2 9.0 20.1
Earnings per share before goodwill amortisation 11.0 9.8 21.6
Diluted earnings per share 10.2 9.0 20.0
Statement of the Group's Total Recognised Gains and
losses
First half First half Full year
2003 2002 2002
£m £m £m
Profit for the period 8.9 7.7 17.3
Exchange differences 1.2 (0.7) (1.6)
Total recognised gains and losses for the period 10.1 7.0 15.7
Balance Sheet
Unaudited
30 June 30 June 31 Dec
2003 2002 2002
£m £m £m
Fixed assets
Intangibles 20.2 21.3 20.9
Tangibles 14.0 14.8 14.8
Investments 0.4 0.3 0.9
34.6 36.4 36.6
Current assets
Stock 18.7 20.0 17.7
Debtors 32.1 36.2 32.8
Cash 23.8 13.2 20.4
74.6 69.4 70.9
Creditors: amounts falling due within one year (30.7) (33.0) (33.6)
Net current assets 43.9 36.4 37.3
Total assets less current liabilities 78.5 72.8 73.9
Creditors: amounts falling due after more than one year (0.2) (0.3) (0.2)
Provisions for liabilities and charges (2.3) (2.3) (2.0)
Net assets 76.0 70.2 71.7
Share capital 4.3 4.4 4.4
Reserves 71.7 65.8 67.3
Shareholders' funds 76.0 70.2 71.7
Cash Flow
First half First half Full year
2003 2002 2002
£m £m £m
Net cashflow from operating activities 15.6 10.8 25.8
Returns on investments and servicing of finance 0.3 0.2 0.3
Taxation (3.9) (4.6) (9.0)
Net capital expenditure and financial investments
Sale of Luton property 1.6 - -
Other (1.2) (0.9) (2.3)
0.4 (0.9) (2.3)
Acquisitions and disposals - (7.7) (6.2)
Dividends paid (7.6) (7.1) (11.4)
Financing
Purchase of own equity ordinary shares (1.2) - -
Other (0.2) 0.3 0.1
(1.4) 0.3 0.1
Increase / (decrease) in cash and term deposits 3.4 (9.0) (2.7)
Notes to the Interim Report
1. Status of Interim Report
The interim report was approved by the Directors on 5 August 2003. It
should be read in conjunction with the 2002 Annual Report, which contains
the most recent audited financial statements.
The financial information for the six months to 30 June 2003 and the
comparative figures for the six months to 30 June 2002 are unaudited and
have been prepared on the basis of the accounting policies set out in the
Group's statutory accounts for the year ended 31 December 2002.
The financial information for the year ended 31 December 2002 is an
abridged version of the full accounts for that year, which received an
unqualified report from the auditors and which have been filed with the
Registrar of Companies.
2. Geographical analysis
Turnover Operating profit Operating profit
before goodwill after goodwill
amortisation amortisation
First First Full First First Full First First Full
half half year half half year half half year
2003 £m 2002 £m 2002 £m 2003 £m 2002 £m 2002 £m 2003 £m 2002 £m 2002 £m
Analysis by geographical
origin
Europe 33.2 31.4 62.5 7.7 7.5 15.5 7.3 7.1 14.6
Americas 19.1 22.2 45.4 2.5 2.7 6.7 2.3 2.5 6.4
Rest of world 12.0 9.5 21.8 2.8 2.2 4.3 2.7 2.1 4.2
Continuing operations 64.3 63.1 129.7 13.0 12.4 26.5 12.3 11.7 25.2
Discontinued operations - 1.9 3.8 - 0.2 0.5 - 0.2 0.5
64.3 65.0 133.5 13.0 12.6 27.0 12.3 11.9 25.7
Analysis by operation
Electrics 51.3 49.5 102.3 11.2 10.3 22.2 10.9 10.0 21.7
Gears 7.8 7.1 14.5 1.5 1.3 2.6 1.3 1.1 2.1
Fluid system 7.2 8.3 16.7 0.3 0.8 1.7 0.1 0.6 1.4
Inter-segmental elimination (2.0) (1.8) (3.8) - - - - - -
Continuing operations 64.3 63.1 129.7 13.0 12.4 26.5 12.3 11.7 25.2
Discontinued operations - 1.9 3.8 - 0.2 0.5 - 0.2 0.5
64.3 65.0 133.5 13.0 12.6 27.0 12.3 11.9 25.7
Turnover - analysis by destination
First First Full
half half year
2003 £m 2002 £m 2002 £m
Europe 29.2 26.3 52.8
Americas 19.8 23.4 47.8
Rest of world 15.3 13.4 29.1
Continuing operations 64.3 63.1 129.7
Discontinued operations - 1.9 3.8
64.3 65.0 133.5
Net assets by geographical origin
First First Full
half half year
2003 £m 2002 £m 2002 £m
Europe 45.3 39.6 37.6
Americas 20.7 21.7 22.2
Rest of world 10.0 8.4 11.5
Continuing operations 76.0 69.7 71.3
Discontinued operations - 0.5 0.4
76.0 70.2 71.7
Net assets by operation
First First Full
half half year
2003 £m 2002 £m 2002 £m
Electric 54.3 46.5 47.9
Gears 11.5 12.0 12.5
Fluid system 10.2 11.2 10.9
Continuing operations 76.0 69.7 71.3
Discontinued operations - 0.5 0.4
76.0 70.2 71.7
The prior year segmental information has been restated to reflect the
re-allocation of goodwill to each segment.
3. Earnings per share
Earnings per share is calculated using the profit attributable to the
ordinary shareholders for the period and 86.0 million shares (six months to
30 June 2002: 86.0 million; year to 31 December 2002: 86.1 million) being
the weighted average ordinary shares in issue.
The adjusted earnings per share is based on the profit for the period
attributable to the ordinary shareholders before the amortisation of
goodwill. The adjusted numbers provide a more consistent measure of
operating performance.
Diluted earnings per share is calculated using the profit attributable to
the ordinary shareholders for the period and the weighted average ordinary
shares in issue adjusted to assume conversion of all dilutive potential
ordinary shares under the group's option schemes.
4. Reconciliation of operating profit to operating cashflow
First First Full
half half year
2003 2002 2002
£m £m £m
Operating profit 12.3 11.9 25.7
Depreciation and amortisation 1.8 1.8 3.5
Profit on sale of fixed assets - - (0.5)
(Increase) / decrease in stock (0.6) (0.5) 0.8
Decrease / (increase) in debtors 0.9 0.5 (1.2)
Increase / (decrease) in creditors 1.2 (2.9) (2.5)
Net cashflow from operating activities 15.6 10.8 25.8
5. Disposal
On 30 April 2003 the freehold property occupied by Rotork Control and
Safety, the business disposed of in November 2002, was sold for £1,675,000.
The net gain on the disposal was £600,000.
6. Shareholder information
This interim report is being sent to all shareholders and copies are
available to the public from the Registered Office at the address below.
The interim report is also available on the company's website at
www.rotork.com.
We offer shareholders a dividend reinvestment plan (DRIP) under which
shareholders can reinvest their cash dividends in the company, by buying
shares in the market at competitive dealing rates. If you have already
elected to join the DRIP, there is no further action for you to take.
If you would like to join for the first time, please contact our registrars
below.
Lloyds TSB Registrars
The Causeway
Worthing
West Sussex
BN99 6DA
Share dividend helpline number - 0870 241 3018
7. Group information
Secretary and registered office:
Stephen Rhys Jones
Rotork plc
Rotork House
Brassmill Lane
Bath BA1 3JQ
Company website:
www.rotork.com
This information is provided by RNS
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