RNS Number:4261P
Oystertec PLC
05 September 2003
For Immediate Release Friday 5th September 2003
Oystertec PLC
Interim Results for the six months ended 30th June 2003
Oystertec PLC ("Oystertec"), the engineering intellectual property group, is
pleased to announce its interim results for the six months ended 30th June 2003.
Highlights for the period were as follows:
- Operating profit before goodwill and exceptional items of #1.49m (2002: loss
of #1.27m)
- Successful focus on earnings growth, with earnings per share of 0.56p (2002:
0.09p)
- Good progress in developing and marketing the Oystertec product range
- Increase in gearing as expected with interest cover of 5.5 times: second half
to be cash generative.
- On going rationalisation programme significantly reducing costs in second
half
- Performance improvement anticipated to continue.
Commenting on the interim results, Angus Monro, Chairman, said:
"We are pleased with these results and remain confident about the future
prospects for the group".
For further information please contact:
Angus Monro Tel: 01430 875 246
Chairman, Oystertec
Adrian Binney Tel: 01430 875 246
Finance Director, Oystertec
Bobby Morse/Suzanne Dunne Tel: 020 7466 5000
Buchanan Communications
OYSTERTEC PLC
Results at a Glance
Six Months to 30 June 2003
#'000 IBP Europower Total
2003 2002 2003 2002 2003 2002
6 months 6 months 6 months 3 months
Turnover (excluding joint ventures) 39,199 40,892 12,752 7,389 51,951 48,281
---------- --------- --------- --------- --------- ---------
Divisional profit/(loss), including
share of joint ventures 1,956 (41) 218 (229) 2,174 (270)
--------- --------- --------- ---------
Corporate costs (686) (999)
--------- --------
Operating profit/(loss) before the
following ('trading profit') 1,488 (1,269)
Goodwill 986 1,742
Exceptional operating items (833) (277)
Exceptional non-operating items 372 86
--------- ---------
Profit on ordinary activities
before interest 2,013 282
--------- ---------
CHAIRMAN'S STATEMENT
I am delighted to report that we have produced significant profit growth in the
six months to 30 June 2003. This reflects our strategy of driving down costs in
our operating divisions and achieving higher quality of earnings.
Together our plumbing and industrial businesses generated profits of #2.17m,
before goodwill and exceptional costs, in comparison to a loss of #(0.27)m for
the same period last year. Corporate costs were reduced from #1.00m to #0.69m.
Group operating profits before goodwill and exceptional items were therefore
#1.49m against losses of #(1.27)m last year.
Gearing has increased as anticipated, through financing of rationalisation costs
and the building up of stocks in advance of factory closures. We remain
comfortably within our banking facilities and anticipate the second half year to
be significantly cash-generative.
We are pleased with these results, which demonstrate the benefits of focusing on
reducing the cost base of the businesses. With factory closures and other cost
reduction measures occurring in recent weeks, we remain confident that our
performance will continue to improve through the year.
These results have been achieved in challenging markets through the hard work
and application of our employees, to whom the Board would like to express its
gratitude.
Review of the Businesses
IBP and Europower have responded very quickly to the changes imposed on them
since they were acquired and the following summary demonstrates the significant
progress made:
#'000 Six months ended 30 June (unaudited)
2003 2002 *2001
IBP
Trading profits/(losses)** 1,956 (41) (2,015)
Full time working employees 766 1,064 1,329
Europower
Trading profits/(losses)** 218 ***(672) (246)
Full time working employees 341 425 467
* - 2001 data is all pre-acquisition, except one month at IBP
** - Trading Profits are operating profits before goodwill and exceptional
items and includes Joint Venture profits, where applicable.
*** - Europower for 2002 - #(672) was for the full 6 month period, of which #
(229) was from the date of acquisition.
IBP
Sales have improved from the slow start to the year, such that sales in the six
months were only 4.1% down on last year. While trading conditions continue to be
difficult, we are concentrating on products and new market segments that provide
opportunities for new margin-enhancing business and sustainable growth.
The main focus of our rationalisation programmes has been the closure of
machining centres in Germany and the UK. The latter has occurred over recent
weeks, providing significant fixed and variable cost savings from the third
quarter onwards. Stock levels have been built up to manage the production
transfer to our Polish factory and most of the rationalisation expenditure on
this project is now completed.
Over #4.1m was incurred in rationalisation costs in the six months. Most of this
related to projects provided for in December 2001, but it also included #0.3m
incurred and charged as exceptional costs in the period, which was principally
in Portugal where a warehouse was closed.
With such exceptional costs being incurred and the short-term investment in
stock (#2.4m increase from 31 December 2002), the cash outflow of #5.3m (2002:
#0.2m net outflow) in the six month period was in line with expectations. With
the unwinding of the stock position, we anticipate the second half to be
significantly cash positive.
We are pleased with the progress of our Oyster plumbing products, with sales
increasing, particularly in the UK, Germany and Spain, while margins have also
improved. Direct marketing initiatives are now well underway and 20,000 starter
kits have been mailed direct to UK plumbers, with incentives for them to visit
key stockists.
Europower
Trading conditions have been tough particularly across Europe, leading to sales
being 13% down on last year. It is therefore significant that trading profits
have been generated. Fixed costs were #1.2m less than last years levels over the
same period; a reduction of 24%.
Our rationalisation projects continue, which have included the recent end to
rubber hose production at Whitby and the closure of the CNC machining centre at
Market Weighton.
Stock increases were responsible for the modest net cash outflow of #0.3m before
rationalisation expenditure of #0.2m.
Significant focus is being placed on new product areas: both modernising the
current Europower range and launching the new Oyster TL "Threadless" technology
for high pressure applications. The Oyster TL fitting is under test at a number
of major Europower OEM customers and stock build to support the launch will
commence in the second half.
Automotive
In Automotive, we have strengthened the management and product development team.
The product portfolio has been increased to include brakes, air conditioning,
engine and transmission oil cooling, as well as the original power steering and
turbo fittings. Application engineering and test programmes are now underway at
a considerable number of third parties.
The Oystertec fitting obtained full technical approval from both Gates and
Volvo. However, routing problems with the Gates pipe-work prevented a
mid-platform engineering change. We continue to have discussions with both
parties over new projects.
Product testing by Dana is due to be completed this year and licence discussions
are progressing well.
Outlook
Sales across the group in July and August 2003 are in line with our
expectations. We commence the second half with a degree of cautious optimism
despite certain markets remaining difficult, especially in industrial
applications.
As indicated, costs will be materially lower in the second half and we will
continue to push ahead with our remaining rationalisation projects, benefiting
2004 and beyond. As a result, we anticipate that our performance through the
second half will continue to improve.
We remain focussed on marketing the Oystertec products within plumbing,
hydraulics and automotive applications, so that revenues will grow from 2004
onwards.
Finally, we are confident that the group's outlook for the current financial
year is at least in line with market expectations.
Angus Monro
Chairman
4 September 2003
OYSTERTEC PLC
Consolidated Profit & Loss Account for the six months ended 30 June 2003
Six months Year ended Six months
ended 31 December ended
30 June 2003 2002 30 June 2002
#'000 #'000 #'000
Turnover of the group including its share of joint venture
turnover - note 1(a)
58,054 112,431 55,135
Share of joint venture turnover (6,103) - -
--------- --------- ---------
Group turnover - note 1(a) 51,951 112,431 55,135
Cost of sales --------- --------- ---------
- goodwill 986 3,160 1,742
- other (39,129) (89,160) (41,068)
--------- --------- ---------
(38,143) (86,000) (39,326)
--------- --------- ---------
Gross profit 13,808 26,431 15,809
Distribution costs (5,828) (10,962) (8,145)
Administration expenses - recurring (5,656) (13,918) (7,191)
Administration expenses - exceptional (833) (738) (277)
--------- --------- ---------
Group operating profit 1,491 813 196
Share of joint venture operating profit 150 - -
--------- --------- ---------
Total operating profit - note 1(b) 1,641 813 196
Profit on disposal of fixed assets 372 119 120
Loss on disposal of subsidiary - (34) (34)
--------- --------- ---------
Profit on ordinary activities before interest 2,013 898 282
Interest
- group receivable 45 183 88
- group payable (398) (616) (246)
- joint venture payable (11) - -
--------- --------- ---------
Profit on ordinary activities before taxation - note 1(b) 1,649 465 124
Taxation - group (200) (427) -
Taxation - joint venture (49) - -
--------- --------- ---------
Profit on ordinary activities after taxation 1,400 38 124
Profit/(loss) attributable to minority interests - equity - (18) 78
--------- --------- ---------
Profit attributable to ordinary shareholders and retained for
the period
1,400 20 202
--------- --------- ---------
Earnings per share (p) - note 4 0.56 0.01 0.09
--------- --------- ---------
Diluted earnings per share (p) - note 4 0.56 0.01 0.08
--------- --------- ---------
The company's 50% ownership of Tubo Tecnico Europeo SL (Tertub) was consolidated
as a subsidiary up to 31 December 2002 due to the dominant influence exercised
by the directors. From this date, such dominant influence had ceased and
accordingly the investment is now accounted for as a joint venture.
Supplementary Statements for the six months ended 30 June 2003
Consolidated Statement of Total Recognised Gains and Losses
Six months Year ended Six months
ended 31 December ended
30 June 2003 2002 30 June 2002
#'000 #'000 #'000
Profit attributable to the members of the group:
- Group 1,310 20 202
- Joint venture 90 - -
--------- --------- ---------
1,400 20 202
Unrealised gain on translation of foreign currency investment
in subsidiaries:
- Group 330 1,223 1,192
- Joint venture 350 - -
--------- --------- ---------
Total recognised gains and losses relating to the period 2,080 1,243 1,394
--------- --------- ---------
Note of Historical Cost Profits and Losses
There are no differences between the results reported and the results on a
historical cost basis.
Consolidated Balance Sheet at 30 June 2003
31 December 30 June
30 June 2003 2002 2002
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets - positive goodwill 6,060 6,312 7,217
Intangible assets - negative goodwill (9,904) (11,350) (13,451)
-------- --------- ---------
(3,844) (5,038) (6,234)
Intangible assets - other 3,592 3,403 3,143
Tangible assets 20,261 21,117 30,617
Investments - joint venture gross assets 6,454 6,152 -
Investments - joint venture gross liabilities (1,029) (1,025) -
Investments - other - 44 45
--------- --------- ---------
25,434 24,653 27,571
--------- ---------
Current assets
Stocks 25,079 21,420 22,084
Assets held for resale 272 255 299
Pension debtor due within one year 552 552 336
Pension debtor due after one year 3,567 4,336 4,937
Other debtors 23,668 21,498 26,792
Cash held at bank and in hand 2,816 6,811 8,575
--------- --------- ---------
55,954 54,872 63,023
--------- --------- ---------
Creditors: amounts falling due within one year
Bank loans and overdrafts (12,404) (6,597) (8,077)
Loan notes (32) (3,274) (3,273)
Other creditors (17,478) (16,976) (19,549)
--------- --------- ---------
(29,914) (26,847) (30,899)
--------- --------- ---------
Net current assets 26,040 28,025 32,124
--------- --------- ---------
Total assets less current liabilities 51,474 52,678 59,695
Creditors: due after more than one year
Due on the purchase of intellectual property (2,558) (2,721) (2,866)
Bank loans (911) (450) (927)
Other creditors (1,455) (1,494) -
--------- --------- ---------
(4,924) (4,665) (3,793)
--------- ---------
Provisions
Rationalisation costs (2,193) (6,010) (9,251)
Vacant properties (373) (401) -
Pension liabilities (7,026) (6,724) (6,638)
--------- --------- ---------
(9,592) (13,135) (15,889)
--------- --------- ---------
Net assets - note 1(c) 36,958 34,878 40,013
--------- --------- ---------
Capital and reserves
Share capital 125 125 125
Share premium account 46,894 46,894 46,894
Profit and loss account (10,061) (12,141) (11,990)
--------- --------- ---------
Equity shareholders' funds - note 2 36,958 34,878 35,029
Minority interest - equity - - 4,984
--------- --------- ---------
36,958 34,878 40,013
--------- --------- ---------
Consolidated Cash Flow Statement for the six months ended 30 June 2003
Six months Year ended Six months
ended 31 December ended
30 June 2003 2002 30 June 2002
#'000 #'000 #'000
Net cash inflow/(outflow) from operating activities -
note 3(a) (6,992) 3,004 797
Dividends from joint venture 141 - -
Returns on investments and servicing of finance - note 3(b) (353) (433) (158)
Taxation paid (4) (424) (269)
Capital expenditure and financial investment - note 3(c) 563 (2,436) (525)
Acquisitions and disposals - note 3(d) - (11,559) (10,997)
--------- --------- ---------
Net cash outflow before management of liquid resources and
financing (6,645) (11,848) (11,152)
Management of liquid resources - Decrease/(increase) in
short-term deposits 3,242 (3,274) (3,273)
Financing - note 3(e) (1,503) 11,792 12,322
--------- --------- ---------
Decrease in cash in the period (4,906) (3,330) (2,103)
--------- --------- ---------
Consolidated Reconciliation of Cash Flow to Movement in Net Debt
Six months Year ended Six months
ended 31 December ended
30 June 2003 2002 30 June 2002
#'000 #'000 #'000
Decrease in cash in the period (4,906) (3,330) (2,103)
Cash inflow from increase in loans (1,926) (2,696) (1,958)
Deposits guaranteeing loan notes - - 3,273
Repayment of loans - 1,415 360
Repayment of loan notes 3,242 - -
Increase/(decrease) in short term deposits (3,242) 3,274 -
Repayment of finance leases and hire purchase contracts 24 72 4
Repayment of deferred consideration 163 145 -
--------- --------- ---------
Change in net debt resulting from cash flows - note 3(f) (6,645) (1,120) (424)
Finance leases acquired with acquisition - (533) -
Inception of loan notes - (3,274) (3,273)
Debt acquired with acquisition - (3,388) (3,423)
Debt transferred on loss of control in joint venture - 1,076 -
Foreign exchange differences (191) 290 218
Other - (16) 36
--------- --------- ---------
Movement in net debt - note 3(f) (6,836) (6,965) (6,866)
Net (debt)/funds at beginning of the period - note 3(f) (6,697) 268 268
--------- --------- ---------
Net debt at the end of the period - note 3(f) (13,533) (6,697) (6,598)
--------- --------- ---------
Notes to the Accounts for the six months ended 30 June 2003
1. SEGMENTAL INFORMATION
Six months Year ended Six months ended
ended 31 December 30 June 2002
30 June 2003 2002
#'000 #'000 #'000
(a) Turnover analysis:
By division:
Plumbing division (excluding joint ventures) 39,199 79,783 40,892
Joint venture consolidated as subsidiary - 12,540 6,854
Share of joint venture turnover 6,103 - -
--------- --------- ---------
Total plumbing division 45,302 92,323 47,746
Industrial division 12,752 20,108 7,389
--------- --------- ---------
58,054 112,431 55,135
--------- --------- ---------
By origin:
Group (excluding joint ventures)
UK 21,972 41,803 19,400
Europe 24,637 49,969 27,619
Rest of the world 5,342 8,119 1,262
--------- --------- ---------
51,951 99,891 48,281
Joint venture consolidated as subsidiary - Europe - 12,540 6,854
--------- --------- ---------
51,951 112,431 55,135
Share of joint venture turnover - Europe 6,103 - -
--------- --------- ---------
58,054 112,431 55,135
--------- --------- ---------
By destination:
Group (excluding joint ventures)
UK 14,636 28,287 13,509
Europe 31,381 61,298 30,460
Rest of the world 5,934 10,306 4,312
--------- --------- ---------
51,951 99,891 48,281
Joint venture consolidated as subsidiary - Europe - 12,540 6,854
--------- --------- ---------
51,951 112,431 55,135
Share of joint venture turnover - Europe 6,103 - -
--------- --------- ---------
58,054 112,431 55,135
--------- --------- ---------
(b) Profit/(loss) analysis:
Divisional profit/(loss) before goodwill and exceptional items
Plumbing (including joint venture) 1,956 110 (41)
Industrial 218 82 (229)
--------- --------- ---------
2,174 192 (270)
Corporate costs (686) (1,801) (999)
Goodwill 986 3,160 1,742
Exceptional operating costs (833) (738) (277)
--------- --------- ---------
Total operating profit 1,641 813 196
Exceptional non-operating items 372 85 86
Net interest payable - group (353) (433) (158)
Net interest payable - joint venture (11) - -
--------- --------- ---------
Profit before tax 1,649 465 124
--------- --------- ---------
Six months Year ended Six months
ended 31 December ended
30 June 2003 2002 30 June 2002
#'000 #'000 #'000
Divisional analysis of profit/(loss) before tax:
Plumbing (including joint venture) 2,644 3,319 1,758
Industrial (28) (1,078) (648)
Corporate costs (967) (1,776) (986)
--------- --------- ---------
1,649 465 124
--------- --------- ---------
Geographical analysis of profit/(loss) before tax:
UK 1,070 1,312 (521)
Europe (including joint venture) (117) (655) 615
Rest of the world 696 (192) 30
--------- --------- ----------
1,649 465 124
--------- --------- ---------
(c) Net assets:
Divisional analysis:
Plumbing (including joint venture) 26,761 23,714 22,842
Industrial 11,994 11,993 12,356
Corporate (1,797) (829) (169)
--------- --------- ---------
36,958 34,878 35,029
--------- --------- ---------
Geographical analysis:
UK 14,211 9,167 18,932
Europe (including joint venture) 14,219 21,772 18,575
Rest of the world 8,528 3,939 (2,478)
--------- --------- ---------
36,958 34,878 35,029
--------- --------- ---------
All of the above activities are continuing.
2. RECONCILIATION OF EQUITY SHAREHOLDERS' FUNDS
Six months Year ended Six months
ended 31 December ended
30 June 2003 2002 30 June 2002
#'000 #'000 #'000
Total recognised gains and losses 2,080 1,243 1,394
New .hares issued - 10,728 10,728
-------- --------- ---------
Total movement during the period 2,080 11,971 12,122
Opening shareholders' funds 34,878 22,907 22,907
--------- --------- ---------
Closing shareholders' funds 36,958 34,878 35,029
--------- --------- ---------
3. NOTES TO THE STATEMENT OF CASH FLOWS
Six months Year ended Six months
ended 31 December ended
30 June 2003 2002 30 June 2002
#'000 #'000 #'000
(a) Reconciliation of operating profit to net cash flow from
operating activities
Operating profit 1,491 813 196
Depreciation and profits on sale of tangible fixed assets 1,147 4,018 1,709
Goodwill amortisation (net) (986) (3,160) (1,742)
Decrease/(increase) in stocks (3,104) 2,362 3,242
Decrease/(increase) in debtors (1,069) 4,427 (680)
Increase/(decrease) in creditors (285) 125 129
Decrease in provisions (4,186) (5,581) (2,057)
--------- --------- ---------
Net cash flow from operating activities (6,992) 3,004 797
--------- --------- ---------
(b) Analysis of returns on investments and financial investments
Bank interest received 45 183 88
Bank interest paid (382) (588) (246)
Finance lease interest paid (16) (28) -
--------- --------- ---------
(353) (433) (158)
--------- --------- ---------
(c) Analysis of capital expenditure and financial investments
Payments to acquire tangible fixed assets (1,550) (2,651) (780)
Payments to acquire intangible fixed assets - (403) (143)
Receipts from sales of tangible fixed assets 2,113 618 398
--------- --------- ---------
563 (2,436) (525)
--------- --------- ---------
(d) Acquisitions and disposals
Consideration for acquisitions (including costs) - (9,729) (9,730)
Additional costs incurred on acquisitions - (204) (130)
Net overdrafts acquired - (2,634) (2,638)
Net cash disposed of on loss of control in subsidiary - (474) -
Loan in respect of other investment - (44) -
Cash consideration paid re investments - - (45)
Cash consideration on disposal of subsidiaries, less costs
incurred
- 1,546
--------- 1,526 ---------
---------
Total costs of acquisitions and disposals - (11,559) (10,997)
--------- --------- ---------
Six months Year ended Six months
ended 31 December Ended
30 June 2003 2002 30 June 2002
#'000 #'000 #'000
(e) Financing
Issue of ordinary shares - 11,465 10,728
Costs of issuing ordinary shares - (737) -
Increase in loan funding 1,926 2,696 1,958
Repayment of loan notes (3,242) - -
Repayment of long term loans - (1,415) (360)
Repayment of finance leases (24) (72) (4)
Repayment of deferred consideration (163) (145) -
--------- --------- ---------
(1,503) 11,792 12,322
--------- --------- ---------
(f) Analysis of net debt
At Exchange At
1 January 2003 Cash flows differences 30 June 2003
#'000 #'000 #'000 #'000
Cash at bank and in hand 3,537 (551) (202) 2,784
Bank overdrafts (1,464) (4,355) (78) (5,897)
--------- --------- --------- ---------
Net cash/(overdrafts) 2,073 (4,906) (280) (3,113)
--------- --------- --------- ---------
Deposits guaranteeing loan notes 3,274 (3,242) - 32
Deferred consideration (2,721) 163 - (2,558)
Bank loans (5,583) (1,926) 91 (7,418)
Loan notes (3,274) 3,242 - (32)
Finance leases (466) 24 (2) (444)
--------- --------- --------- ---------
Debt (8,770) (1,739) 89 (10,420)
--------- --------- --------- ---------
Net debt (6,697) (6,645) (191) (13,533)
--------- --------- --------- ---------
The increase in net debt during the period can be analysed as follows:
Six months
ended
30 June 2003
#'000
Increase in net debt prior to the following items: (1,995)
Payments against provisions made in prior accounting periods for exceptional rationalisation
costs (3,817)
Payment of exceptional rationalisation items incurred in the period (833)
Exchange differences (191)
---------
(6,836)
---------
There were no significant non-cash transactions in the six months ended 30 June
2003 other than those detailed above.
4. EARNINGS PER SHARE
Earnings per share have been calculated in accordance with FRS 14, 'earnings per
share', by dividing the profit for the period by the weighted average number of
ordinary shares in issue during the period, based on the following information:
Six months Year ended Six months
ended 31 December ended
30 June 2003 2002 30 June 2002
Profit attributable to shareholders (#'000) 1,400 20 202
Basic weighted average share capital (thousands) 250,783 243,085 235,260
Diluted weighted average share capital (thousands) 250,78 270,439 261,722
--------- --------- ---------
The difference between the two calculations is wholly attributable to
outstanding share options, which only have a dilutive effect in periods when
profits are generated and the share options are 'in the money'.
5. BASIS OF PREPARATION
The interim accounts were approved by the board on 4 September 2003 and have
been prepared on the basis of accounting policies consistent with those set out
in the Annual Report and Accounts for the year ended 31 December 2002.
The accounts for the year ended 31 December 2002 were prepared in accordance
with FRS 19 to govern the treatment of deferred tax. It has not been necessary
to restate the accounts to 30 June 2002 for FRS 19.
The interim accounts are unaudited, but have been formally reviewed by the
auditors and their report is set out on the following page. The information
shown for the year ended 31 December 2002 does not constitute full financial
statements within the meaning of Section 240 of the Companies Act 1985 and has
been extracted from the full financial statements for that year, which received
an unqualified audit report and has been filed with the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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