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Oystertec PLC (OYS)

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Thursday 20 March, 2003

Oystertec PLC

Final Results

Oystertec PLC
20 March 2003
                                                                   20 March 2003


                                 Oystertec Plc

Preliminary results for the twelve months ended 31st December 2002


Oystertec plc, the engineering Intellectual Property group, announces
preliminary results for twelve months ended 31 December 2002.


  • Group turnover of £112,431,000  (2001: £6,621,000), with pre-tax profits
    of £465,000 (2001: £11,265,000 loss) and earnings per share of 0.01p (2001:
    8.21p loss)

  • Operating profit before goodwill amortisation and exceptional items of the
    divisions was £110,000 profit for IBP and £82,000 profit for Europower. The
    prior year comparatives were respectively £5.5m loss and £0.8m loss (for
    nine months), of which only £0.7m loss was accounted for in the group's
    results to 31 December 2001, following the acquisition of IBP on 23 November
    2001

  • Head office costs before exceptional items and interest were £1,835,000
    (2001: £2,364,000)

  • Satisfactory progress in licence discussions and launch of new technology

  • The Board remains confident of achieving market expectations for 2003.
    While sales in January and February were disappointing, they were offset by
    higher margins



Commenting on the results, Angus Monro, Executive Chairman said:


'Despite difficult trading conditions in our key markets, Oystertec is now a
profitable and cash generative group.  Our restructuring programmes continue as
planned, which are focussed on driving out fixed costs and improving margins.'

'Our Oyster Converter was successfully launched last year, with sales in line
with expectations and we have made considerable progress in the technical
development of our industrial and automotive products. This year we will launch
our new hydraulic technology and expect to generate revenues from automotive
fittings.'

For further information please contact:

Angus Monro                                           Tel: 020 7466 5000
Executive Chairman, Oystertec

Adrian Binney                                         Tel: 020 7466 5000
Finance Director, Oystertec

Bobby Morse/Suzanne Dunne                             Tel: 020 7466 5000
Buchanan Communications


OYSTERTEC PLC

Preliminary results for the Year ended 31 December 2002


Divisional Results Summary                                             Plumbing    Industrial         Total
                                                                      12 Months      9 Months
                                                                          £'000         £'000         £'000

Turnover                                                                 92,323        20,108       112,431

Operating profit before the following ('trading profit')                    110            82           192
Profit on asset sales                                                       119             0           119
Goodwill                                                                  3,529         (369)         3,160
Exceptional items                                                         (107)         (631)         (738)

Operating profit/(loss) before head office costs                          3,651         (918)         2,733

Head office costs                                                                                   (1,835)

Group operating profit before interest                                                                  898


CHAIRMAN'S REVIEW

Good progress in 2002

Good progress has been made during 2002. I am pleased to report that trading
profits were delivered by our two operating Divisions as indicated above;
previously both were loss making.

I would like to emphasise the following:

•     Strategically, the acquisition of Europower in March 2002
was very important to the group. It has enabled us to accelerate the development
of our range of industrial products. It is my view that the importance of
Europower to the group will grow significantly over the coming years.

•     IBP has delivered a good trading performance, given
difficult market conditions. We continue to focus on taking cost out of the
business and improving the efficiency of our manufacturing facilities.

•     The first Oystertec product has been successfully launched
with sales in line with expectations. Good progress has also been made in the
industrial division, in the development of Oyster hydraulic and automotive
fittings.

•     After paying all restructuring costs, the group had
positive cash generation of £1.2m before financing the purchase of Europower.


Outlook


•     Both businesses are trading in difficult international
markets. Sales for the first two months are below expectations, but we are
pleased to report that margins are continuing to improve. We are not expecting
sales in either division to match last year's levels and our strategy for the
year is focused on continuing to drive-out costs. Given no further deterioration
of market conditions, we remain confident that we will achieve our expectations
for 2003.

•     We will continue to drive the Oystertec product
development programme, with the focus on achieving international licence deals.


FINANCIAL REVIEW

Results


•     The unaudited results include the first full year of IBP
and the results of Europower for the nine months following its acquisition in
March 2003.

•     Operating profit before goodwill amortisation and
exceptional items of the divisions was £110,000 for IBP (2001: £738,000 loss)
and £82,000 profit for Europower (2001: £nil). Head office costs before
exceptional items and interest were £1,835,000 (2001: £2,364,000).

•     Exceptional costs charged to profit and loss account
totalling £738,000 were all headcount reduction related, mostly by Europower at
the Market Weighton head office. See the cashflow section below for comments on
the provisions for restructuring as at 31 December 2001.

•     Net interest costs were £433,000 during the year (2001:
£121,000 net interest receivable), reflecting the banking facilities taken on
with the purchase of Europower and financing rationalisation programmes.

•     The charge to taxation of £427,000 (2001: £9,000 credit)
mainly relates to profits in Spain (IBP) and South Africa (Europower). The group
has tax losses available for relief against future profits, particularly in the
UK, France, Germany and the USA.

Cashflow

•     £6.9m positive cashflow was generated by IBP, before
paying rationalisation costs of £5.6m, being those provided for prior to 31
December 2001. This generation came from stock and debtor reductions, plus the
sale of properties.

•     Europower also had positive cashflow of £1.1m, before
paying the exceptional charges of £0.6m, being generated mainly from stock
reductions.

•     Debt of £6.6m was taken over on the purchase of Europower
and £2.3m of cash resources was used to purchase Europower and cover the costs
of acquisition.

•     Net debt at 31 December 2002 was £6.7m (2001: net cash of
£0.3m), including £2.7m due on the original purchase of intellectual property.
This increase was entirely due to the Europower acquisition and the actual cash
generation in the year after financing head office charges was £1.2m.


Oystertec Plc

Unaudited Consolidated Profit and Loss Account for the year ended 31 December
2002


                                                                                                   Year ended
                                                           Year ended 31 December 2002            31 December
                                        Note    Continuing   Acquisition            Total                2001
                                                     £'000         £'000            £'000               £'000

Turnover                                      1     92,323        20,108         112,431                6,621

Cost of sales - recurring                         (73,467)      (15,693)        (89,160)              (5,427)
Cost of sales - exceptional                              -             -               -              (4,150)
Cost of sales - goodwill                             3,529         (369)           3,160                  275

Gross profit/(loss)                                 22,385         4,046          26,431              (2,681)
Distribution                                       (9,405)       (1,557)        (10,962)                (966)
Administration - recurring                        (11,142)       (2,776)        (13,918)              (3,330)
Administration - exceptional                         (107)         (631)           (738)              (4,409)

Operating profit/(loss)                       1      1,731         (918)             813             (11,386)
Profit on disposal of fixed assets                     119             -             119                    -
Loss on disposal of subsidiary                        (34)             -            (34)                    -

Profit/(loss) on ordinary activities
before interest and taxation                         1,816         (918)             898             (11,386)

Interest  - receivable                                 182             1             183                  155
          - payable                                  (455)         (161)           (616)                 (34)

Profit/(loss) on ordinary activities
before taxation                               1      1,543       (1,078)             465             (11,265)
Taxation                                             (363)          (64)           (427)                    9

Profit/(loss) on ordinary
activities after taxation                            1,180       (1,142)              38             (11,256)

Profit/(loss) attributable to
minority
interests - equity                                                                  (18)                   20

Profit/(loss) attributable to
ordinary shareholders and
retained for the year                                                                 20             (11,236)

Earnings per share (p)                                                              0.01               (8.21)
Diluted earnings per share (p)                                                      0.01                    -


Oystertec Plc

Unaudited Consolidated Balance Sheet at 31 December 2002

                                                                                                   31 December
                                                  Notes                  31 December 2002                 2001
                                                                 £'000              £'000                £'000
Fixed assets
Intangible assets, positive goodwill               2(a)                             6,312                    -
Intangible assets, negative goodwill               2(a)                          (11,350)             (15,249)
                                                                                  (5,038)             (15,249)
Intangible assets, other                           2(b)                             3,403                3,000
Tangible assets                                       3                            21,117               24,894
Investments - joint venture gross assets                         6,152                                       -
            - joint venture gross                              (1,025)                                       -
              liabilities
                                                                 5,127                                       -
            - other                                                 44                                       -
                                                                                    5,171                    -
                                                                                   24,653               12,645

Current assets
Stocks                                                          21,420                                  18,555
Assets held for resale                                             255                                   1,859
Pension debtor due within one year                                 552                                     824
Pension debtor due after one year                                4,336                                   4,533
Other debtors                                                   21,498                                  18,820
Cash held at bank and in hand                                    6,811                                   5,635
                                                                54,872                                  50,226

Creditors: amounts falling due within one year
Bank loans and overdrafts                                      (6,597)                                 (1,474)
Loan notes                                                     (3,274)                                       -
Other creditors                                               (16,976)                                (13,085)
                                                              (26,847)                                (14,559)

Net current assets                                                                 28,025               35,667
Total assets less current liabilities                                              52,678               48,312
Creditors: due after more than one year
Due on the purchase of intellectual property                   (2,721)                                 (2,866)
Bank loans                                                       (450)                                 (1,023)
Other creditors                                                (1,494)                                       -
                                                                                  (4,665)              (3,889)

Provisions
Rationalisation costs                                          (6,010)                                (11,220)
Vacant properties                                                (401)                                       -
Pension liabilities                                            (6,724)                                 (5,536)
                                                                                 (13,135)             (16,756)
Net assets                                                                         34,878               27,667

Capital and reserves
Share capital                                                                         125                  107
Share premium account                                                              46,894               36,184
Profit and loss account                                                          (12,141)             (13,384)
Equity shareholders' funds                                                         34,878               22,907
Minority interest - equity                                                              -                4,760
                                                                                   34,878               27,667


Oystertec Plc

Unaudited Consolidated Cash Flow Statement for the year ended 31 December 2002


                                                                     Note      Year ended           Year ended
                                                                              31 December          31 December
                                                                                     2002                 2001
                                                                                    £'000                £'000

Net cash inflow/(outflow) from operating activities                     5           3,004              (1,872)
Returns on investments and servicing of finance                         5           (433)                  121
Taxation paid                                                                       (424)                    -
Capital expenditure and financial investment                            5         (2,436)                (583)
Acquisitions and disposals                                              5        (11,559)             (27,836)
Net cash outflow before management of liquid resources and
financing                                                                        (11,848)             (30,170)
Management of liquid resources - increase in
short-term deposits                                                               (3,274)                    -
Financing                                                               5          11,792               36,494
Increase/(decrease) in cash in the year                                           (3,330)                6,324


Consolidated Reconciliation of Cash Flow to Movement in Net Debt for the year 
ended 31 December 2002

Increase/(decrease) in cash in the year                                           (3,330)                6,324

Cash inflow from increase in loans                                                (2,696)                (360)
Repayment of loans                                                                  1,415                    -
Short term deposits                                                                 3,274                    -
Repayment of finance leases and hire purchase contracts                                72                    -
Repayment of deferred consideration                                                   145                  134
Change in net debt resulting from cash flows                                      (1,120)                6,098

Inception of deferred consideration                                                     -              (3,000)
Finance leases acquired with acquisition                                            (533)                  (4)
Inception of loan notes                                                           (3,274)                    -
Debt acquired with acquisition                                                    (3,388)              (1,688)
Debt transferred on loss of control in joint venture                                1,076                    -
Foreign exchange differences                                                          290                 (30)
Other                                                                                (16)                    -
Movement in net debt                                                              (6,965)                1,376

Net funds/(debt) at the beginning of the year                                         268              (1,108)
Net (debt)/funds at the end of the year                                           (6,697)                  268




Oystertec Plc

Unaudited Notes to the Preliminary Announcement for the year ended 31 December
2002

1.      Analysis of Turnover and Profit/(Loss) After Taxation

                                                             Year ended 31 December 2002            Year ended
                                               Continuing                                          31 December
                                               operations      Acquisition         Total                  2001
                                                    £'000            £'000         £'000                 £'000
(a) Turnover analysis:
By origin:
UK                                                 27,430           14,373        41,803                 2,194
Europe                                             60,483            2,026        62,509                 4,427
Rest of the world                                   4,410            3,709         8,119                     -
                                                   92,323           20,108       112,431                 6,621
By destination:
UK                                                 20,921            7,366        28,287                 1,689
Europe                                             67,252            6,586        73,838                 4,613
Rest of the world                                   4,150            6,156        10,306                   319
                                                   92,323           20,108       112,431                 6,621
(b) Profit/(loss) analysis
Divisional profit/(loss) before goodwill and
exceptional items:
Plumbing                                              110                -           110                 (738)
Industrial                                              -               82            82                     -
                                                      110               82           192                 (738)
Head office costs                                 (1,801)                -       (1,801)               (2,872)
Goodwill                                            3,529            (369)         3,160                   275
Exceptional operating costs                         (107)            (631)         (738)               (8,051)
Operating profit/(loss)                             1,731            (918)           813              (11,386)
Exceptional non-operating items                        85                -            85                     -
Net interest (payable)/receivable                   (273)            (160)         (433)                   121
Profit/(loss) before tax                            1,543          (1,078)           465              (11,265)
Analysis of operating profit/(loss):
UK                                                  2,122            (736)            1,386            (9,103)
Europe                                              (556)             (73)            (629)            (2,283)
Rest of the world                                     165            (109)               56                  -
                                                    1,731            (918)              813           (11,386)
Analysis of profit/(loss) before tax:
UK                                                  2,119            (807)            1,312            (8,973)
Europe                                              (552)            (103)            (655)            (2,292)
Rest of the world                                    (24)            (168)            (192)                  -
                                                    1,543          (1,078)              465           (11,265)



1.       Analysis of Turnover and Profit/(Loss) After Taxation (continued)


(c) Net assets:
Plumbing     -  subsidiaries                       18,587                -          18,587              26,005
             -  joint venture                       5,127                -           5,127                   -
Industrial                                              -           11,993          11,993                   -
Head office                                         (829)                -           (829)               1,662
                                                   22,885           11,993          34,878              27,667
Analysed:
UK                                                (2,067)           11,234           9,167               5,576
Europe                                             21,629              143          21,772              22,091
Rest of the world                                   3,323              616           3,939                   -
                                                   22,885           11,993          34,878              27,667


2. Intangible Assets


                                                                   Positive        Negative
(a) Goodwill                                                       goodwill        goodwill               Total
                                                                      £'000           £'000               £'000
Cost
At 1 January 2002                                                         -        (15,524)            (15,524)
Additions (note 4)                                                    6,681               -               6,681
Adjustments                                                               -             616                 616
Loss of control in joint venture                                          -            (13)                (13)
Exchange differences                                                      -           (233)               (233)
At 31 December 2002                                                   6,681        (15,154)             (8,473)

Amortisation
At 1 January 2002                                                         -             275                 275
Amortisation for the year                                             (369)           3,529               3,160
At 31 December 2002                                                   (369)           3,804               3,435

Net book value
At 31 December 2002                                                   6,312        (11,350)             (5,038)
At 31 December 2001                                                       -        (15,249)            (15,249)



(b) Others                                               Intellectual          Development
                                                             property                costs               Total
                                                                £'000                £'000               £'000
Cost
At 1 January 2002                                               3,000                    -               3,000
Additions                                                           -                  403                 403
At 31 December 2002                                             3,000                  403               3,403
Amortisation
At 1 January 2002                                                   -                    -                   -
Amortisation for the year                                           -                    -                   -
At 31 December 2002                                                 -                    -                   -
Net book value
At 31 December 2002                                             3,000                  403               3,403
At 31 December 2001                                             3,000                    -               3,000

3. Fixed Assets


                                          Land and           Plant and
                                         buildings           machinery                Other               Total
                                             £'000               £'000                £'000               £'000
Cost
At 1 January 2002                            7,839              15,765                1,553              25,157
Acquisitions                                 3,371               2,494                  107               5,972
Loss of control in joint venture           (1,794)             (8,214)                (590)            (10,598)
Additions                                      235               2,526                  218               2,979
Disposals                                    (318)               (215)                 (61)               (594)
Reclassifications                               92               (153)                   29                (32)
Exchange differences                           267                 795                  110               1,172
At 31 December 2002                          9,692              12,998                1,366              24,056

Accumulated depreciation
At 1 January 2002                               19                 137                  107                 263
Loss of control in joint venture              (32)             (1,063)                (195)             (1,290)
Charge for the year                            296               2,924                  808               4,028
Disposals                                        -               (108)                 (20)               (128)
Reclassifications                                -                   -                 (32)                (32)
Exchange differences                             -                  71                   27                  98
At 31 December 2002                            283               1,961                  695               2,939

Net book value
At 31 December 2002                          9,409              11,037                  671              21,117
At 31 December 2001                          7,820              15,628                1,446              24,894





4. Analysis of the Acquisition of Europower Plc


Net assets at the date of                            Book                       Adjustments        Fair value
acquisition (18 March 2002):                        value       Revaluation           Other          to group
                                                    £'000             £'000           £'000             £'000

Goodwill                                            1,477                 -         (1,477)                 -
Tangible fixed assets                               6,688             (735)              19             5,972
Stocks                                              8,205                 -         (2,104)             6,101
Debtors                                             6,489                 -             152             6,641
Cash at bank and in hand                              974                 -               -               974
Creditors due within one year                     (9,312)                 -             987           (8,325)
Creditors due after one year                      (3,425)                 -           (291)           (3,716)
Provisions                                          (195)                 -         (1,130)           (1,325)
                                                   10,901             (735)         (3,844)             6,322
Goodwill arising on acquisition (note 2                                                                 6,681
(a))
                                                                                                       13,003

Discharged by:
Cash consideration                                                                                      9,300
Issue of loan notes                                                                                     3,274
Costs associated with the acquisition                                                                     429
                                                                                                       13,003

5. Notes to the Cash Flow

                                                                               Year ended           Year ended
                                                                              31 December          31 December
                                                                                     2002                 2001
                                                                                    £'000                £'000
(a) Reconciliation of operating profit/(loss) to net cash flow from the
operating activities
Operating profit/(loss)                                                               813             (11,386)
Depreciation and profits on sale of tangible fixed assets                           4,018                  409
Goodwill amortisation (net)                                                       (3,160)                (275)
Decrease in stocks                                                                  2,362                   65
Decrease in debtors                                                                 4,427                4,639
Increase/(decrease) in creditors                                                      125              (3,258)
Increase/(decrease) in provisions                                                 (5,581)                7,934
Net cash inflow/(outflow) arising from operating activities                         3,004              (1,872)

(b) Analysis of returns on investments and financial investments
Bank interest received                                                                183                  155
Bank interest paid                                                                  (588)                 (34)
Finance lease interest paid                                                          (28)                    -
                                                                                    (433)                  121

(c) Analysis of capital expenditure and financial investments
Payments to acquire tangible fixed assets                                         (2,651)                (772)
Payments to acquire intangible fixed assets                                         (403)                    -
Receipts from sales of tangible fixed assets                                          618                  189
                                                                                  (2,436)                (583)

(d) Acquisitions and disposals
Consideration for acquisitions (including costs)                                  (9,729)             (30,269)
Additional costs incurred on acquisitions                                           (204)                    -
Net (overdraft)/cash acquired                                                     (2,634)                2,433
Net cash disposed of on loss of control in subsidiary                               (474)                    -
Loan in respect of other investment                                                  (44)                    -
Cash consideration on disposal of subsidiaries, less costs incurred                 1,526                    -
                                                                                 (11,559)             (27,836)

(e) Financing
Issue of ordinary shares                                                           11,465               38,558
Costs of issuing ordinary shares                                                    (737)              (2,290)
Increase in loan funding                                                            2,696                  360
Repayment of long term loans                                                      (1,415)                    -
Repayment of finance leases                                                          (72)                    -
Repayment of deferred consideration                                                 (145)                (134)
                                                                                   11,792               36,494

5. Notes to the Cash Flow (continued)

(f) Analysis of net funds/(debt)


                            At 1 January    Cash flows  Acquisitions       Exchange     Other non         At 31
                                    2002                  / transfers   differences          cash      December 
                                                                                        movements          2002
                                   £'000         £'000          £'000         £'000         £'000         £'000


Cash at bank and in hand           5,635       (2,059)              -          (23)          (16)         3,537
Bank overdrafts                    (449)       (1,271)              -           256             -       (1,464)
Net cash/(overdrafts)              5,186       (3,330)              -           233          (16)         2,073
Deposits guaranteeing loan
notes
                                       -         3,274              -             -             -         3,274
Deferred consideration           (2,866)           145              -             -             -       (2,721)
Bank loans                       (2,048)       (1,281)        (2,312)            58             -       (5,583)
Loan notes                             -             -              -             -       (3,274)       (3,274)
Finance leases                       (4)            72          (533)           (1)             -         (466)

Debt                             (4,918)         2,210        (2,845)            57       (3,274)       (8,770)

Net funds/(debt)                     268       (1,120)        (2,845)           290       (3,290)       (6,697)


The total movement in cash flows and acquisitions/transfers of (£3,965) above is analysed as follows:

                                                                                                              £'000

Net debt (including net overdrafts) take up on the acquisition of Europower Plc                             (6,630)
Cash used to finance the acquisition of Europower Plc, before new equity finance                            (2,275)
Net debt transferred in respect of the joint venture                                                            602
New deposits guaranteeing loan notes                                                                          3,274
Exchange differences                                                                                          (115)
Payments against rationalisation provisions                                                                 (5,450)
Exceptional costs charged in the year                                                                         (738)
Proceeds from the sale of properties and subsidiaries                                                         1,820
True cash flow movements before exceptional and other payments above                                          5,547
                                                                                                            (3,965)


(g) Effect of acquisitions                                         Continuing    Acquisitions         Total
                                                                   operations
Cash flows can be split between continuing operations and               £'000           £'000         £'000
acquisitions as follows:

Net cash inflow from operating activities                               1,494           1,510         3,004
Returns on investment and servicing of finance                          (273)           (160)         (433)
Taxation paid                                                           (339)            (85)         (424)
Capital expenditure and financial investment                          (2,226)           (210)       (2,436)
Acquisitions and disposals                                                848        (12,407)      (11,559)
Management of liquid resources                                        (3,274)               -       (3,274)
Financing                                                              12,260           (468)        11,792


6. Statement of Total Recognised Gains and Losses

                                                                                Year ended          Year ended
                                                                               31 December         31 December
                                                                                      2002                2001
                                                                                     £'000               £'000

Profit/(loss) attributable to the members of the group                                  20            (11,236)

Other recognised gains and losses for the year:
Unrealised gain/(loss) on translation of foreign currency:

Investment in subsidiaries                                                           1,223               (467)
Total recognised gains and losses relating to the year                               1,243            (11,703)



7. Supplementary Notes to the Preliminary Announcement



a)       The above results and these notes, which were approved by the Board on
Tuesday 18 March 2003, do not constitute statutory accounts within the meaning
of section 240 of the Companies Act 1985. Full statutory accounts for the year
ended 31 December 2002 will be delivered to the Registrar of Companies in due
course. The audit report in respect of the full statutory accounts for the year
ended 31 December 2002 is yet to be signed.



The full statutory accounts for the period ended 31 December 2001 have been
filed with the Registrar of Companies and carried an unqualified audit report
and did not contain a statement under S237(2) or (3) of the Companies Act 1985.



b)      A copy of the unaudited preliminary statement is available from the
Company Secretary, Oystertec Plc, Southgate, Market Weighton, East Yorkshire,
YO43 3BG. The Annual General Meeting is scheduled for 11:30 am on Thursday 26
June 2003 at Oystertec Plc, address as above. Confirmation of this, together
with copies of the full statutory accounts, will be posted to shareholders well
in advance of this date.



c)       The above results and notes have been prepared on the same basis as set
out in the previous year's annual accounts.


                      This information is provided by RNS
            The company news service from the London Stock Exchange