Final Results
03 March 2003 - 6:00PM
UK Regulatory
RNS Number:1311I
Hydro International PLC
03 March 2003
HYDRO INTERNATIONAL plc
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2002
CHAIRMAN'S STATEMENT
Performance
Hydro achieved further substantial increases in turnover, profit and earnings in
the year to 31 December 2002. Underlying profit before tax (which excludes
exceptional net licence income) increased by 49% to #654,000 which when combined
with #247,000 of net licence income from DI Corporation of Korea resulted in a
total pre-tax profit of #901,000. Cash flows during the year have been strong
and the Group's bank borrowings have now been fully repaid and the year end cash
balance of #1.3 million is 18% higher than that of the previous year. The
closing order book of #2.4m was some 30% higher than that at 31 December 2001.
Trading
Group turnover grew by 21% to #7.8 million in 2002, with most of the increase
attributable to the UK market. The long anticipated spending by the water
companies to meet their Asset Management Plan 3 ("AMP3") targets on the combined
sewer overflows (CSO) is now evident and Hydro is in the enviable position of
offering a complete portfolio of screening products to the industry following
the introduction during the year of the Hydro-StaticTM Screen and the
acquisition of the world wide rights to a powered screen (the Heliscreen(R)).
Sales in the stormwater and construction industry have also been strong
throughout the year, despite earlier talk of a slow down.
The US construction market, into which we sell the Downstream DefenderTM product
suffered a downturn in the first half of the year. This situation improved
markedly during the second six months of 2002 whilst the municipal wastewater
market remained buoyant throughout the year.
In July Hydro signed a licence agreement with DI Corporation whereby DI will
sell Hydro products in the Korean market. This exclusive licence agreement is
for an initial period of ten years, with a set up fee of US$600,000, of which a
significant portion is recognised in the current year, followed thereafter by
annual minimum royalties. Our presence in Australia and New Zealand has been
strengthened with additional sales representative agreements for CSO products
and stormwater flow controls.
Dividend
Following the reduction in the share premium approved by the High Court in
March, the Company now has a positive profit and loss reserve. Consequently, the
directors are of the view that this facility, coupled with a further increase in
reserves arising from profits generated in the year, supports their
recommendation that the Company makes its first dividend payment which is
proposed to be a final distribution of 1.0 pence per share. It would be the
board's intention to make final dividend payments in future years where such a
distribution is considered appropriate.
Prospects
We expect to see continued activity in the UK CSO market as the AMP 3 programme
progresses. The first signs of an emerging CSO market in the US are now
appearing and we are positioning resources to exploit this potential. These
factors combined with the strong opening order book augur well for continued
progress in the year ahead. However, whilst the current outlook is promising,
the possible impact of global uncertainties on economic activity and in
particular on the construction and environmental sectors means the year ahead
should be approached with an appropriate degree of caution.
Staff
I would like to thank the Hydro team for their hard work and dedication over the
last twelve months and to congratulate them on the results achieved.
Roger Lockwood 3 March 2003
Chairman
Preliminary Results
Consolidated Profit and Loss Account
Year ended 31 December 2002
2001
2002 restated*
#000 #000
Turnover - continuing operations 7,760 6,400
Gross profit 3,702 3,156
Total administrative expenses (3,067) (2,728)
Exceptional other operating income
- net licence income 247 -
Operating profit - continuing operations 882 428
Net interest receivable 19 12
Profit on ordinary activities before taxation 901 440
Taxation on profit on ordinary activities (190) (141)
Profit for the financial year 711 299
Dividends proposed (135) -
Retained profit for the financial year 576 299
Earnings per ordinary share 5.29p 2.23p
Diluted earnings per ordinary share 5.18p 2.21p
* The consolidated profit and loss account for the year ended 31 December 2001
has been restated for the adoption of FRS 19 (see note 2).
1. Basis of preparation
The preliminary announcement has been drawn up using the same accounting
policies as for the year ended 31 December 2001 with the exception of the
policy relating to deferred taxation, the changes to which are described in
note 2 below. A new accounting policy for intangible fixed assets has been
adopted, as described in note 3 below.
2. Deferred taxation
This is the first year of adoption of FRS 19 (Deferred Tax). FRS 19 requires
the full provision to be made for deferred tax. It replaces "partial
provision" rules previously allowed under Statement of Standard Accounting
Practice No. 15.
In accordance with FRS 19, deferred taxation is provided in full on timing
differences which represent an asset or liability at the balance sheet date,
at rates expected to apply when they crystallise based on current tax rates
and laws. Timing differences arise from the inclusion of items of income and
expenditure in taxation computations in periods different from those in
which they are included in the financial statements. Deferred tax assets are
recognised to the extent that it is regarded as more likely than not that
they will be recovered. Deferred tax assets and liabilities are not
discounted.
The effect of the change in accounting policy is that a deferred tax asset
of #145,000 has been recognised as a prior year adjustment as at 1 January
2001. The tax charge is increased and the retained profit is reduced, in the
year ended 31 December 2001 by #55,000. Therefore the net effect of this
adjustment is that net assets and equity shareholders' funds are increased
by #90,000 as at 31 December 2001.
3. Intangible fixed assets
Patents are valued at cost on acquisition and amortisation is provided so as
to write off the cost of the intangible fixed asset by equal annual
instalments over their estimated useful life. A period of five years has
been taken for the amortisation of the acquired rights to the powered screen
patent purchased in the current year.
4. Earnings per share
The earnings per ordinary share for each year have been calculated on the
profit after tax for the year, divided by the weighted average number of
ordinary shares in issue in the relevant year. The number of ordinary shares
used in the calculation is 13,441,802 shares (2001 - 13,357,079 shares). The
diluted earnings per ordinary share is calculated after the inclusion of
share options and the weighted average of ordinary shares used in the
calculation is 13,729,105 (2001 -13,437,786)
5. Status of information
The financial information set out above is unaudited and does not amount
to full accounts for the purposes of Section 240 of the Companies Act
1985. The accounts to year ended 31 December 2002 are not yet audited
but will be finalised on the basis of the results included in this
announcement. The profit and loss account and cash flow statement for
the year to 31 December 2001 and the balance sheet as at that date
represent an abridged version of the audited accounts of the Group which
have been filed with the Registrar of Companies. The auditors reported
on the accounts for the year ended 31 December 2001. Their report was
unqualified and did not contain statements under Section 237(2) or (3)
of the Companies Act 1985.
Full audited accounts of Hydro International plc for the twelve months
ended 31 December 2002 will be dispatched to shareholders within the
next 60 days and copies will be available from the Company's registered
office from 1 May 2003. The audited accounts will be delivered to the
Registrar of Companies following the Annual General Meeting. This
announcement was approved by the Board of Hydro International plc on 28
February 2003.
Enquiries
Keith Marshall, Director/Company Secretary, Hydro International plc (01275)
878371
Statement of Total Recognised Gains and Losses
Year ended 31 December 2002
2002 2001
#000 restated*
#000
Profit for the financial year 711 299
Currency translation differences on foreign currency net investments (15) (2)
Total recognised gains and losses related to the year 696 297
FRS 19 prior period adjustment (see note 2) (55) -
Total recognised gains and losses since last annual report 641 297
* The statement of total recognised gains and losses for the year ended 31
December 2001 has been restated for the adoption of FRS 19 (see note 2).
Consolidated Balance Sheets
31 December 2002
2002 2001
#000 restated*
#000
Fixed assets
Intangible assets 116 -
Tangible assets 645 630
761 630
Current assets
Stocks 77 76
Debtors 2,747 1,957
Cash and short term deposits 1,318 1,117
4,142 3,150
Creditors: amounts falling due within one year (2,411) (1,595)
Net current assets 1,731 1,555
Total assets less current 2,492 2,185
Liabilities
Creditors: amounts falling due after more than one year (21) (299)
Net assets 2,471 1,886
Capital and reserves
Called up share capital 677 671
Share premium 792 2,148
Profit and loss account 1,002 (933)
Total equity shareholders' funds 2,471 1,886
* The consolidated balance sheet as at 31 December 2001 has been restated for
the adoption of FRS 19 (see note 2).
Reconciliation of Movement in Group Shareholders' Funds
Year ended 31 December 2002
2002 2001
#000 restated*
#000
Total recognised gains and losses relating to the year 696 297
Dividend (135) -
Proceeds from issue of new shares 24 28
Net increase in shareholders' funds 585 325
Opening shareholders' funds 1,886 1,561
Closing shareholders' funds 2,471 1,886
*The opening shareholders' funds at 1 January 2002 as previously reported
amounted to #1,796,000 before the prior year adjustment of #90,000 (see note 2).
Consolidated Cash Flow Statement
Year ended 31 December 2002
Notes 2002 2001
#000 #000
Net cash inflow from operating activities (1) 763 302
Returns on investments and servicing of finance
Interest received 30 41
Interest paid (12) (40)
Net cash inflow from returns on 18 1
investments and servicing of finance
Taxation
UK corporation tax paid (10) (10)
Overseas tax paid (118) (3)
Net cash outflow on taxation (128) (13)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (83) (111)
Payments to acquire intangible fixed assets (60) -
Receipts from sale of tangible fixed assets 3 9
Net cash outflow from capital expenditure (140) (102)
and financial investment
Cash inflow before management of liquid 513 188
resources and financing
Management of liquid resources
Cash placed on short term deposits (11) -
Financing
Repayment of borrowings (321) (119)
Issue of ordinary share capital 24 28
Increase in cash in year 205 97
(2)
Notes to the Consolidated Cash Flow Statement
Year ended 31 December 2002
(1) Reconciliation of the operating profit to net cash inflow from operating
activities
2002 2001
#000 #000
Operating profit 882 428
Depreciation charges 98 91
Amortisation charges 4 -
Increase in stocks (1) (24)
Increase in debtors (815) (396)
Increase in creditors 596 196
(Profit)/loss on sale of fixed assets (1) 7
Net cash inflow from operating activities 763 302
(2) Reconciliation of net cash flow to movement in net funds/(debt)
2002 2001
#000 #000
Increase in cash for the year 205 97
Cash outflow from the reduction in debt 321 119
Change in net debt resulting from cash flows 526 216
New finance leases (32) -
Translation differences (15) (2)
Movement in net debt in the year 479 214
Net debt at 1 January (3) (217)
Net funds/(debt) at 31 December 476 (3)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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