Final Results
Date/Range: 18-MAR-2002
Short Abstract: THE ROXBORO GROUP PLC PRELIMINARY RESULTS
The Roxboro Group PLC, the international specialist electronics company, today
announces preliminary results for the year ended 31 December 2001.
The Roxboro Group is built upon two distinct core competences: electronic
lighting and electronic measurement. In both these fields, Roxboro’s companies,
Dialight in lighting, and Solartron & Weston in measurement, are acknowledged
leaders.
– Resilient performance in unprecedented year of deterioration in the
telecoms market
– Group turnover up 2% to £174.9m
– Dialight Signals Division sales more than double.
– Operating cash generation strong
– Pre-tax profit* £15.3m
– Net borrowings reduced by 19% to £8.6m
– Full Year Dividend up 5%
– Acquisition of Garufo GmbH announced
* pre goodwill and exceptionals
Harry Tee, Group Chief Executive said:
‘ The outstanding growth at the Signals Division of Dialight demonstrates the
success of our strategy in electronic lighting. This coincided with a
significant fall in demand at Dialight’s Opto-Electronics Division, which sells
to the telecoms industry, and which caused the weakness of our results in 2001.
Although there are early indications of a gradual improvement, profits in the
first half of the current year will be constrained by the continuation of recent
trends in weak markets. I remain very confident of our strategies and in
particular our success in electronic lighting. Our LED traffic signals will
soon be seen around London.’
CHAIRMAN AND CHIEF EXECUTIVE’S REVIEW
Roxboro has again delivered a resilient operating performance and strong cash
generation, despite a year characterised by an unprecedented downturn in demand
in the telecoms industry – one of our key markets. The general economic slowdown
in the industrialised world, exacerbated by the uncertainties caused by the
terrorist attacks in the United States, also led to an extremely difficult
trading environment.
Critical to Roxboro’s ability to weather the storm has been our spread of
businesses and the efforts and initiatives of our operating companies to
continue to push ahead with our focused strategies. The positive and successful
implementation of our plans, despite poor market conditions, owes much to the
commitment and determination of Roxboro’s people. Dialight, and later in the
year Weston, suffered the consequences of sharp sector downturns in demand, and
part of our response to these market dynamics had to be the difficult decision
to reduce our workforce, while at the same time continuing to build on growth
opportunities. All of these plans were carried through successfully including
the physical relocation of Weston in the UK.
Despite the demanding trading background, Group turnover increased in the year.
This was primarily as a result of the outstanding growth in sales of our traffic
signal modules, which incorporate the latest high brightness LED (light emitting
diode) electronic lighting technology, more than offsetting a substantial
reduction in sales of over £20m of opto-electronic devices.
Financial Performance
As a result of strong growth at Dialight Signals and Solartron, Group turnover
in the year to 31 December 2001 increased by 2% to £174.9m (2000: £171.6m).
This was achieved despite a significant fall in sales at Dialight
Opto-Electronics due to the weakness of the telecoms industry. The impact of
the negative operational gearing at the highly automated Opto-Electronics
Division resulted in Group operating profits before goodwill reducing in the
year to £16.3m (2000: operating profit before goodwill and exceptionals £24.7m).
In our trading update in November we indicated that the Group would generate
profit before tax and goodwill of around £15 million for the year. Our
expectations were realised and we are able to report we have achieved a slightly
better result, having recorded a profit before tax and goodwill amortisation of
£15.3m. We also indicated the full year dividend would be increased in line
with the interim dividend (a 3.3% increase). Underlining the Board’s
confidence in the Group’s prospects, the final dividend will be increased by
more than this, to 6.9p, an increase of 6% over last year, giving a full
dividend of 10p per share (2000: 9.5p per share). This will be covered 1.6
times by earnings. The dividend will be paid on 30 April 2002 to shareholders
on the register at 2 April 2002.
Despite the difficult market conditions, operational cash flows remained
positive at £19.8m (2000: £27.3m), with second half cashflows particularly
strong. Year-end debt reduced to £8.6m (2000: £10.6m) which taken as a
percentage of shareholders’ funds results in year-end gearing of less than 15%.
Our balance sheet is strong which supports our ability to invest in the
opportunities we have identified. Our spend on capital investment increased to
£6.2m (2000: £5.7m), including the opening of a manufacturing facility in
Ensenada, Mexico, while investment in new product development, an important
driver of future growth, was increased to £9.9m (2000: £8.2m).
Acquisition
The acquisition of Garufo GmbH, announced today, will enable Dialight to drive
the penetration of electronic lighting technology in Europe as it is
successfully achieving in North America. The cash consideration was €4.9 million
(excluding costs) of which €1.5 million of this being deferred and held in
escrow for 12 months and €0.5 million deferred and held in escrow for 24 months,
both being contingent on certain conditions being met. We also committed to
purchase the freehold of the land and buildings for a further €1.6 million in
cash. Garufo, which had sales last year of €2.5 million, has both a high
quality range of electronic lighting products and strong relationships with key
European customers which will be of great benefit in developing our European
position in this market. We believe this is an excellent first step in
achieving our objectives in this emerging market in Europe.
Dialight
2001 2000
£m £m
Turnover 65.9 71.0
Operating Profit 6.2 15.2
The advent of electronic lighting utilising the very latest LED (light emitting
diode) technology has opened up a considerable opportunity for Dialight, our
specialist company in this field, and for Roxboro. With only 10% of the US
traffic signal market converted to this technology, Dialight has now shipped
over 1 million units in the USA in the past three years. With around 10 million
road signals in the United States yet to be converted there is still much to go
for. With new products now also introduced into rail signals, airport runway
lighting, beacons and obstruction lights, we believe that the market for
electronic lighting, replacing old fashioned light bulbs, will continue to grow
very strongly over the next decade.
Building on the strong position we have created in the US electronic lighting
market, Roxboro is now turning its attention to Europe and other markets. The
acquisition of Garufo GmbH, the leading German company in this emerging market
will accelerate our growth in Europe. Garufo will form a key part of Dialight’s
strategy in developing the market for electronic lighting products in the rest
of the world outside the United States. Further initiatives are also planned for
Europe and Asia as we drive Dialight into a global leadership position in the
application of LED lighting technology.
Your Board intends that Roxboro will be at the vanguard of this global
revolution in lighting by investing aggressively in product development and
market expansion in this new and exciting market. At Dialight we will continue
to build upon our strategy of accelerating the adoption of LED lighting
technology into new markets including rail signals, runway lighting, beacons
obstruction lighting, architectural lighting and signage, and so building an
ever more powerful market position.
The management of Dialight has now been strengthened by the appointment of two
Vice Presidents/General Managers who have responsibility for the Opto-Electronic
Division and the Signals Division, reporting to the CEO of Dialight. In
addition, a Vice President has been appointed in Europe to drive our European
ambitions for the division, exemplified by the acquisition of Garufo.
Weston
2001 2000
£m £m
Turnover 40.2 39.0
Operating Profit 6.3 7.5
The sad events of 11 September in the USA and the consequential downturn in the
aerospace sector had clear ramifications at Weston, our aerospace sensor
subsidiary. As a result the workforce was reduced towards the end of the year
as customers’ demand reduced and we have right-sized the company for what will
be a slower year in 2002. Weston remains a strong, profitable supplier to blue
chip OEMs in the sector.
During the year new Long Term Agreements were signed with Rolls-Royce, Hamilton
Sundstrand and Honeywell, further building Weston’s position in the market. New
opportunities in the power generation industry are also being vigorously pursued
as an offset to weakness in the aerospace sector. This is being supported by
maintenance of our industry-leading drive towards world-class manufacturing in
response to challenging times, supported by the Group’s RoBusT (Roxboro
Business Techniques) programme, which incorporates the very latest lean
manufacturing techniques and processes.
Weston has now successfully brought into production the range of sensors
developed for the Rolls-Royce Trent 500 engine and has been commended by
Rolls-Royce for its execution of this final and important stage of the project.
Our initiatives in non-aerospace applications such as gas turbines used in power
generation will go some way to offsetting the aerospace downturn and in the
medium term are expected to reinforce Weston’s position as the world leader in
temperature measurement in gas turbines.
Weston Pressure Systems maintained its market dominance in pressure scanning,
securing a number of significant new accounts, most notably Bombardier and
Embraer in wind tunnel flight test systems and Snecma in turbo-machinery test
equipment.
Solartron
2001 2000
£m £m
Turnover 68.8 61.6
Operating Profit 6.5 4.9
Despite the economic weakness in Asia, the USA and certain parts of Europe our
other markets remained fairly robust throughout the year and Solartron benefited
from the successful execution and implementation of our strategy in the oil and
gas sector with a strong performance.
Solartron Mobrey made excellent progress during the year as a range of new
products began to make their mark. Applying the RoBusT techniques, now used
universally throughout Roxboro, the company is continuing to demonstrate
operational improvements which have resulted in greater customer satisfaction.
At Solartron Analytical, new products were the key to another strong performance
and in particular the demand for our new Battery Analyser, used in both research
and production of battery materials, has proven to be very encouraging.
Solartron Metrology proved once again to be resilient in the face of weak demand
in the key USA and Asia markets, and produced another satisfactory performance.
There was particular success in Germany where the company now has a direct sales
structure.
The Dualstream II Wet Gas measurement system from Solartron ISA is gaining rapid
recognition in the gas production industry. The system offers the gas industry
in-line, real time and accurate measurement of the total output of a well at the
point of extraction. It also includes an accurate measurement of the proportion
of gas and liquid. Initial results from the first systems to be installed are
very encouraging with the systems producing greater accuracies than conventional
techniques, offering the customer an excellent payback on their investment.
These measurement systems are often configured at the well head in sub-sea
applications to depths of 3000 metres or more and provide the industry with
accurate information that was previously unobtainable. The expansion of
Dualstream II projects in the Mexican Gulf resulted in some deliveries
previously expected to take place in 2001, being delayed until 2002. These will
have the upside of greater financial value to the Group as the deliveries are
made in the current year. The Dualstream II has also been recognised by winning
a prestigious UK technology award early in 2002.
Board
We are delighted to welcome Bill Whiteley, who is Chief Executive of Rotork plc,
Jeff Hewitt, Deputy Chairman and Finance Director of Electrocomponents plc and
Robert Jeens, previously Group Finance Director of Woolwich PLC to the Board,
following the retirement last year of Lindsay Bury and Richard Koch. We thank
Lindsay and Richard for their help and support over the years and welcome Bill,
Jeff and Robert. Roxboro has a strong board of Independent Directors and will
continue to strive for the highest standards of Corporate Governance.
Outlook
Roxboro addresses a range of markets, both industrially and geographically, and
following the events of last year, a great deal of uncertainty still exists
across a number of these markets. Though the major negative impact last year was
at the Opto-Electronics Division of Dialight, due to the telecoms sector
downturn, we now view the prospects of some recovery in volumes favourably as
destocking by our customers comes to an end. Demand for telecoms equipment,
however, is unlikely to show a positive trend until later in the year at the
earliest.
At the Signals Division of Dialight we expect to see continued growth, as the
adoption rate for electronic lighting gathers pace.
The aerospace industry is entering a period of very weak demand caused by the
sharp slow-down for new aircraft. This will undoubtedly impact upon the short
term results of Weston, although new business wins will go some way to
offsetting this downturn late in the current year but more particularly in 2003.
Solartron should continue to make satisfactory progress as demand for gas
related projects remains strong.
We expect profits in the first half of the current year to be constrained by the
continuation of the recent trends in weak markets. However, the Board remains
confident of Roxboro’s prospects, as the Group continues to drive into emerging
high growth markets.
Sir Alan Cockshaw Harry Tee
Chairman Group Chief Executive
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2001
Notes 2001 2000
£’000 £’000
Turnover 1(a) 174,934 171,632
Cost of sales (121,754) (111,192)
Gross profit 53,180 60,440
Distribution costs (20,742) (21,525)
Administrative expenses (after goodwill amortisation of £950,000 (2000: (17,061) (14,986)
£938,000) )
Operating profit 1(b)/2 15,377 23,929
Operating profit before goodwill amortisation 16,327 24,867
Goodwill amortisation (950) (938)
Exceptional items:
Costs of restructuring an operating division – (3,561)
Profit on disposal of property – 3,504
Profit on ordinary activities before interest 15,377 23,872
Net interest payable (978) (2,193)
Profit on ordinary activities before taxation 14,399 21,679
Tax on profit on ordinary activities (5,187) (7,227)
Profit for the financial year 9,212 14,452
Dividends 3 (5,682) (5,372)
Retained profit for the financial year 3,530 9,080
Pence Pence
Earnings per share – basic 4 16.2 25.6
– adjusted 4 17.9 25.8
– diluted 4 16.2 25.4
All of the above results are derived from continuing operations.
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2001
2001 2000
£’000 £’000
Profit for the year attributable to equity shareholders 9,212 14,452
Currency translation differences on foreign currency net investments 484 1,090
Total gains recognised in the year 9,696 15,542
GROUP BALANCE SHEETS
at 31 December 2001
2001 2000
£’000 £’000
Fixed assets
Intangible assets 16,833 17,783
Tangible assets 24,542 23,705
Investments 16 16
41,391 41,504
Current assets
Stocks 25,022 21,602
Debtors 31,583 33,727
Cash at bank and in hand 6,708 8,557
63,313 63,886
Creditors:
Amounts falling due within one year
Borrowings (15,142) (1,870)
Other creditors (27,439) (29,396)
(42,581) (31,266)
Net current assets 20,732 32,620
Total assets less current liabilities 62,123 74,124
Creditors:
Amounts falling due after more than one year
Borrowings (117) (17,254)
Provisions for liabilities and charges (2,358) (1,508)
Equity shareholders’ funds 59,648 55,362
Capital and reserves
Called up share capital 567 565
Share premium account 5,822 5,370
Capital redemption reserve 51 51
Profit and loss account 53,208 49,376
59,648 55,362
GROUP STATEMENT OF CASH FLOWS
for the year ended 31 December 2001
Note 2001 2000
£’000 £’000
Cash inflow from operating activities 2 19,807 27,298
Outflow related to 2000 exceptional items (940) (3,221)
18,867 24,077
Returns on investments and servicing of finance
Interest paid (1,167) (2,541)
Interest received 223 332
Net cash outflow from returns on investment (944) (2,209)
and servicing of finance
Taxation (5,189) (7,934)
Capital expenditure and financial investment
Purchase of tangible fixed assets (6,182) (5,659)
Sale of tangible fixed assets 554 365
Exceptional item: Sale of property (net of related costs) – 18,815
Net cash (outflow)/inflow from investing activities (5,628) 13,521
Acquisitions and disposals
Purchase of subsidiary undertakings – (23,395)
Equity dividends paid (5,445) (5,017)
Cash inflow/(outflow) before use of liquid resources and financing 1,661 (957)
Financing
Issue of ordinary share capital 272 479
Loan advance – 22,950
Loan repayments (3,786) (18,474)
Capital element of finance lease rental payments (79) (89)
(3,593) 4,866
(Decrease)/increase in cash in the year (1,932) 3,909
Reconciliation of net cash flow to movements in net debt
(Decrease)/increase in cash in the year (1,932) 3,909
Cash outflow/(inflow) from change in debt and lease financing 3,865 (4,387)
Change in net debt resulting from cash flows 1,933 (478)
Translation difference 83 117
Movement in net debt in the year 2,016 (361)
Net debt at beginning of year (10,567) (10,206)
Net debt at end of year (8,551) (10,567)
NOTES TO THE ACCOUNTS
1. Segmental information
Turnover, operating profit and net assets are analysed below:
2001 2000
£’000 £’000
a) Turnover
By geographical destination:
UK 35,364 38,977
USA 90,005 83,867
Other European countries 32,745 30,743
Rest of the world 16,820 18,045
174,934 171,632
By geographical origin:
UK 93,097 86,357
USA 79,502 82,839
Other European countries 13,788 12,866
186,387 182,062
Inter-segment sales (11,453) (10,430)
174,934 171,632
By business operation:
Dialight 65,921 70,989
Weston 40,212 39,019
Solartron 68,801 61,624
174,934 171,632
b) Operating profit
2001 2000
£’000 £’000
By geographical origin:
UK 11,725 12,425
USA 7,522 15,382
Other European countries (158) (247)
Operating profit before central costs and goodwill amortisation 19,089 27,560
Central costs (2,762) (2,693)
Goodwill amortisation (950) (938)
Operating profit on ordinary activities 15,377 23,929
By business operation:
Dialight 6,223 15,150
Weston 6,348 7,505
Solartron 6,518 4,905
Operating profit before central costs and goodwill amortisation 19,089 27,560
Central costs (2,762) (2,693)
Goodwill amortisation (950) (938)
Operating profit on ordinary activities 15,377 23,929
The goodwill amortisation and the 2000 exceptional cost of £3,561,000 relate to
the Solartron business.
c) Net assets 2001 2000
£’000 £’000
By geographical origin:
UK 32,894 34,618
USA 20,746 17,234
Other European countries 893 1,304
54,533 53,156
Unallocated central net assets 5,115 2,206
59,648 55,362
By business operation:
Dialight 20,052 18,755
Weston 14,363 9,770
Solartron 20,118 24,631
54,533 53,156
Unallocated central net assets 5,115 2,206
59,648 55,362
Unallocated central net assets include goodwill of £16,833,000 (2000:
£17,783,000) which all relates to the Solartron business.
2. Operating profit
2001 2000
£’000 £’000
Reconciliation of operating profit to cash inflow from operating activities
Operating profit 15,377 23,929
Depreciation charges 5,068 5,501
Goodwill amortisation 950 938
Profit on sale of tangible fixed assets (379) (202)
Increase in stocks (3,257) (1,799)
Increase in debtors 2,432 (872)
Decrease in creditors (420) (397)
Other non cash items 36 200
Net cash inflow from operating activities 19,807 27,298
3. Dividends
The directors have proposed a final dividend of 6.9p (2000: 6.5p) which is subject to shareholder
approval at the Annual General Meeting on 24 April 2002, and if approved, will be payable on 30
April 2002 to shareholders on the register on 2 April 2002.
4. Earnings per Share
The calculation of earnings per ordinary share is based on profit of £9,212,000 (2000: £14,452,000)
and on 56,705,000 (2000: 56,422,000) ordinary shares, being the average number of ordinary shares
in issue during the year.
The diluted earnings per share is based on profit for the year of £9,212,000 (2000: £14,452,000),
and on 56,802,000 (2000: 56,800,000) ordinary shares, calculated as follows:
2001 2000
Thousands Thousands
Basic weighted average number of shares 56,705 56,422
Dilutive potential ordinary shares:
Employee share options 97 378
56,802 56,800
Reconciliation to adjusted earnings per share
2001 2000
Pence Pence
Basic earnings per share 16.2 25.6
Non-recurring exceptional costs – (1.5)
Goodwill amortisation 1.7 1.7
Adjusted earnings per share 17.9 25.8
5. The Annual Report and Accounts for the year ended 31 December 2001 which were approved by the Board
of directors on 18 March 2002 includes an unqualified audit opinion and accounts will be despatched
to shareholders on 21 March 2002. The accounts will be available from that date from the Company
Secretary at the Company’s registered office, Byron House, Cambridge Business Park, Cambridge, CB4
4WZ.
6. The above financial information does not constitute statutory accounts as defined in section 240 of
the Companies Act 1985. The comparative financial information for the year ended 31 December 2000
is abridged and has been extracted from the statutory accounts, on which the auditors issued an
unqualified opinion, and which have been delivered to the Registrar of Companies.
This information is provided by RNS
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