Final Results
Roxboro Group PLC
15 March 2001
Date: Embargoed until 07:00am, Thursday 15th March 2001
Contacts: Harry Tee - Group Chief Executive
Alf Vaisey - Group Finance Director
The Roxboro Group PLC
Tel: 020 7796 4133 (15/03/01)
01223 424626 (thereafter)
Alistair Mackinnon-Musson
Philip Dennis
Hudson Sandler
Tel: 020 7796 4133
Email: roxboro@hspr.co.uk
THE ROXBORO GROUP PLC
RECORD GROWTH
The Roxboro Group PLC, the international specialist electronics company, today
announces record preliminary results for the year to 31 December 2000.
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.
Highlights
- Turnover up 37% to £171.6m (1999: £124.8m)
- Operating profit up 35% to £24.9m (1999: £18.5m)*
- PBT up 21% to £21.7m (1999: £17.9m)
- Basic EPS up 22% to 25.6p (1999: 20.9p)
- Adjusted EPS up 15% to 25.8p (1999: 22.5p)
- Cash flow from trading operations up 46% to £27.3m (1999: £18.7m)
- Dividend up 9% to 9.5p (1999: 8.7p)
*pre goodwill amortisation and 2000 exceptional items
o Strong growth in turnover and profits
o Acquisition of Mobrey successfully integrated with cost savings in a
full year of £3.5m achieved
o Farnborough site sold for £19.6m.
o Dialight produces an outstanding performance
Harry Tee, Group Chief Executive, said:
'This was a year of significant achievement, having delivered our strongest
ever profit growth and a very successful acquisition and integration.
The acquisition of Mobrey allowed us to reorganise Solartron, fully achieving
our cost reduction targets, and dispose of a large property. The gain on the
disposal fully offset the total restructuring costs while the cash generated
reduced our borrowings substantially.
Our electronic lighting business grew very strongly in the year with both its
opto electronic and transport product lines growing rapidly. Our investment
in electronic lighting is now paying off as the energy crisis in the USA is
driving the market for more efficient light sources for traffic lights and
other applications. The recent $10m contract award from California emphasises
what is happening'.
Chairman's Statement and Chief Executive's Review
The Roxboro Group delivered record profit and growth during 2000, showing that
our investment programme in our chosen markets is extremely effective.
Decisions taken over the past few years to invest in the development of our
electronic lighting business have created an entirely new market opportunity,
which is now being realised as growth in our electronic lighting products
accelerates.
2000 has been a year of significant achievement at Roxboro, having delivered
our strongest ever earnings growth and a very successful acquisition and
integration. Roxboro has now grown profits in nine out of the ten years since
its incorporation and is beginning to realise the benefits of a number of its
investments in new business opportunities. In particular, in our US based
electronic lighting business, Dialight, we are seeing exciting growth in our
new electronic lighting modules for traffic signals. In our electronic
measurement activities the January 2000 acquisition of Mobrey was successfully
integrated into Solartron and significantly strengthens our position in the
market. The acquisition of Mobrey allowed us to reorganise Solartron, fully
achieving our cost reduction targets, and dispose of a large property. The
gain on the disposal fully offset the total restructuring costs while the cash
generated reduced our borrowings substantially.
Financial Performance
Group turnover in the year to 31 December 2000 grew by 37% to £171.6m (1999: £
124.8m), while operating profit pre goodwill amortisation grew by 35% to £
24.9m (1999: £18.5m) with a significant contribution coming from Dialight.
Pre-tax profit improved 21% to £21.7m (1999: £17.9m), basic earnings per share
grew by 22% to 25.6p (1999: 20.9p) while adjusted earnings per share grew 15%
to 25.8p (1999: 22.5p). Strong operational cash flows were further enhanced by
the sale of the Farnborough site for £19.6m before expenses, leaving the Group
with net debt of £10.6m at year-end.
The Board is recommending a final dividend of 6.5p (1999: 5.9p), an increase
of 10% which will be paid on 27 April 2001 to shareholders on the register at
23 March 2001. The total dividend for the year will amount to 9.5p (1999:
8.7p), an overall proposed increase of 9%.
Following completion of the acquisition of Mobrey from Meggitt PLC for a
consideration of £23.9m (including costs), the company was successfully
integrated into our Solartron Division. The planned annualised cost reductions
of £3.5m were fully achieved by the year end and at less cost than had been
budgeted. The full benefits of the merger will be realised in 2001. Solartron
now has a very strong operational base, with a broad product offering into its
key markets and greater international presence.
The relocation of the Solartron business from Farnborough into the Slough and
Crawley facilities enabled us to dispose of the site to J. Sainsbury
Developments in July 2000. We then leased back the most modern building on the
site, into which Weston Aerospace will move in the first half of 2001.
Operations
Dialight
2000 1999
£m £m Increase
Turnover 71.0 52.6 35%
Operating Profit 15.2 8.9 70%
Dialight leads the world in the design and manufacture of electronic lighting
products utilising LED (light emitting diode) technology and addresses two
distinct markets. Dialight supplies opto-electronic assemblies to original
equipment manufacturers in the information, communications and telecoms (ICT)
sector who use them for status indication, channel identification and fault
analysis. Dialight is also the pioneer in the rapidly emerging market for
electronic lighting in the transport industry. Dialight's products are
increasingly replacing conventional incandescent light bulbs in traffic
signals, vehicle lighting and in the future, rail signals, runway lighting and
other lighting applications.
The company achieved very good revenue and profit growth in a buoyant market,
largely as a result of substantial growth in new products. The demand for
networks, modems, cellphones, base stations and other products associated with
the wireless and internet revolution, created unprecedented demand for our
opto electronic products and capacity was expanded to satisfy customer
requirements. The higher value products we are now offering our communications
customers also contributed to this growth.
Additionally, the rate of growth in our electronic lighting modules for
traffic signals increased as demand accelerates across the United States. The
Dialight product consumes only 10% of the power of conventional light sources
and lasts 10 times longer. As a result, this product line is now producing
exciting growth. Very recent contract awards valued at $10 million in
California and a further $1million in New Jersey, underpin the growth in this
sector going forward.
Additionally, the company has already begun to expand its value-added product
offering to the transport industry, with the development of rail signals,
obstruction lights, runway lighting, reading lights for aircraft and vehicles
and many other applications. Management is currently focusing its efforts on
increasing output to meet the increasing rate of demand for its transportation
products and on retaining its present position as the world leader. To cope
with anticipated growth, we are further expanding Dialight's manufacturing
facility in Mexico by moving to a new 33,000 sq. ft. factory in Ensenada. This
will be occupied by mid-year and will initially employ 100 staff but is
expected to grow quickly to over 200 people. Dialight is also moving its
headquarters in New Jersey into a new building better suited to the needs of a
rapidly growing company.
In two new initiatives Dialight has secured a licence to produce the SnapLED
technology of LumiLeds (a joint venture between Agilent and Philips) for
non-automotive applications and has agreed to acquire the assets and a licence
to produce the LumiLeds light engine which will be increasingly used as the
light source in traffic and rail signals.
These initiatives, together with substantial investment in capital equipment
and new product tooling at its plant in Roxboro, North Carolina, are designed
to secure Dialight's status as the pre-eminent company in the field of
electronic lighting across every sector.
BLP, based in the UK, continues to make progress in developing its market
position in the transport and energy management sectors. The company's success
in winning new business with Renault, Volvo and Ford builds on its success
with Jaguar where the company supplies Powermotive(TM) for every Jaguar model.
The company is also increasing its sales in the energy management sector,
particularly in the USA, driven by demand for remote on/off and connect/
disconnect functions in gas and electricity metering.
Solartron
2000 1999
£m £m Increase
Turnover 61.6 33.9 82%
Operating Profit 4.9 3.4 45%
For a generation, Solartron has been one of the leading suppliers of
electronic measurement technology to the energy and process sectors. At the
beginning of 2000 we acquired Mobrey, and the combined strength of the
integrated businesses will significantly improve Solartron's presence in its
chosen markets.
The acquisition of Mobrey and its subsequent integration into Solartron were
accomplished successfully and well within budget during the year. The current
year will benefit fully from the substantial cost savings achieved from
combining the businesses.
Following the acquisition and consequent internal reorganisation, Solartron
now has a number of focused brands addressing specific market segments.
Solartron Mobrey serves the process sector, Solartron ISA addresses the energy
sector, Solartron Metrology continues to focus on the quality control market,
while Solartron Analytical supplies the materials market.
Despite the energy market remaining weak, Solartron increased sales and
profits following the acquisition of Mobrey. With signs of market improvement
now becoming clear, particularly in gas extraction and with the full benefits
of the integration, we are looking for a further significant improvement in
2001. New contracts to supply our subsea gas measurement technology, secured
at the end of the year for gas platforms in the Gulf of Mexico and aggregating
over $5.5 million, are clear signs of increasing investment in the sector. At
year-end the combined order book was 35% stronger than at the start of the
year.
The company also continued to develop well in the materials and quality
controls markets with new products contributing to a good, profitable
performance.
Weston
2000 1999 Increase/
£m £m (Decrease)
Turnover 39.0 38.3 2%
Operating Profit 7.5 8.3 (9%)
Weston is a key supplier of electronic measurement products to the aerospace
market where it has established a reputation as a leader in temperature and
air pressure measurement by becoming the supplier of choice to major engine
manufacturers including Rolls-Royce, GE and Pratt and Whitney, among others.
Weston has reviewed its operations and has refocused to provide their
expertise directly into specific market areas. The acquisition of the US
company Norwich Aero Products in 1999 allowed Weston to substantially
strengthen its position in temperature measurement, particularly in the United
States, the world's largest market for aero engine manufacture and
refurbishment. This strategy has proven to be effective as Norwich grew sales
strongly during the year increasing Weston's share of the US market.
As part of the same focusing process, Pressure Systems Inc and Weston have
integrated their pressure measurement activities to form Weston Pressure
Systems. This business is a leader in air pressure measurement and pressure
scanning technology for aerospace applications. The company successfully
applied its sophisticated electronic pressure measurement and scanning systems
in upgrading the aero-engine test beds to Snecma of France.
Weston's technology in air pressure measurement is acknowledged as among the
best in the world with exceptional accuracy and outstanding long term
stability. These products are capable of measuring the air pressure as a
function of altitude to an accuracy measured in inches of altitude. For high
performance aircraft, both civil and military, this is an essential function -
and explains why the new Eurofighter will utilise Weston's pressure sensors.
The aerospace industry operates on long timescales. Projects initiated now may
not bear fruit for many years, but at Weston we have been investing carefully
to ensure the company is positioned to exploit future developments in the
sector. For example, the Trent 500 engine will be one of Rolls-Royce's main
products for the next decade and Weston has invested substantial time, money
and effort during the past year in developing an entire suite of temperature
sensors for the engine. Engineering and product development will continue in
2001 and Weston will see substantial revenue from this programme from 2004
onwards. In later years, Weston will also supply the substantial aftermarket
created by carriers replacing its sensor sets during each aircraft's life - a
timespan of up to 25 years.
Following four years of 20% growth the performance at Weston showed a slight
decline over the year, although it was pleasing to note a better second half.
Although sales were slightly higher, operating profits were reduced as a
result of product and programme mix changes resulting from alterations in the
phasing of certain programmes and the increased investment in engineering in
the development of customer-led programmes already won by the company,
including the Trent 500.
Board
At the Annual General Meeting Lindsay Bury, who has served on the Board for
the past seven years, will retire from the Board. Our thanks go to Lindsay
for his contribution to the Board and the Company.
Outlook
Volumes in the first two months of the current year for Dialight's opto
electronics product line were ahead of last year but at a lower level than
fourth quarter run rates. It is anticipated that volumes for the first half
of this year will be similar to the first half of last year with an
improvement expected in the second half. Demand for Dialight's electronic
lighting modules for traffic signals continues to accelerate and with
substantial new contracts already secured the product line is likely to grow
strongly this year.
Chairman's Statement and Chief Executive's Review contd
In Solartron we expect to see an improving market environment in 2001 and
beyond, as investment in the energy sector recovers after two weak years.
Investment in the gas industry in particular is growing, leading to improved
sales. Solartron will also enjoy the full benefit of the cost savings
achieved last year from the integration of Mobrey.
Increased investment in new programme engineering at Weston, together with the
new contracts won, will begin to show yields over the next few years as these
programmes come into production. However, the near term picture remains
relatively flat.
Having taken account of these factors, the Board looks forward to another year
of improved performance and remains confident that Roxboro will deliver
increased shareholder value in both the short and longer term.
Sir Alan Cockshaw Harry Tee
Chairman Group Chief Executive
15th March 2001
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2000
Notes 2000 1999
£'000 £'000
1(a)/
2a
Turnover - Continuing operations 171,632 124,836
Cost of sales (111,368) (78,091)
Gross profit 60,264 46,745
Distribution costs (21,525) (16,786)
Administrative expenses (after goodwill amortisation (14,810) (11,778)
of £938,000 (1999: £274,000) )
Operating profit - Continuing operations 1(b)/ 23,929 18,181
2a
Operating profit before goodwill amortisation 24,867 18,455
Goodwill amortisation (938) (274)
Exceptional items: 3
Costs of restructuring an operating division (3,561) -
Profit on disposal of property 3,504 -
Profit on ordinary activities before interest 23,872 18,181
Net interest payable (2,193) (329)
Profit on ordinary activities before taxation 21,679 17,852
Tax on profit on ordinary activities (7,227) (6,057)
Profit for the financial year attributable to members 14,452 11,795
of the parent company
Dividends 5 (5,372) (4,901)
Retained profit for the financial year 9,080 6,894
Pence Pence
Earnings per share - basic 6 25.6 20.9
- adjusted 6 25.8 22.5
- diluted 6 25.4 20.7
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2000
2000 1999
£'000 £'000
Profit for the year attributable to 14,452 11,795
equity shareholders
Currency translation differences on 1,090 362
foreign currency net investments
Total gains recognised in the year 15,542 12,157
GROUP BALANCE SHEETS
at 31 December 2000
2000 1999
£'000 £'000
Fixed assets
Intangible assets 17,783 6,572
Tangible assets 23,705 32,561
Investments 16 39
41,504 39,172
Current assets
Stocks 21,602 13,770
Debtors 33,727 24,686
Cash at bank and in hand 8,557 4,531
63,886 42,987
Creditors:
Amounts falling due within one year
Borrowings (1,870) (13,966)
Other creditors (29,396) (21,968)
(31,266) (35,934)
Net current assets 32,620 7,053
Total assets less current liabilities 74,124 46,225
Creditors:
Amounts falling due after more than one year
Borrowings (17,254) (771)
Provisions for liabilities and charges (1,508) (741)
55,362 44,713
Capital and reserves
Called up share capital 565 563
Share premium account 5,370 4,893
Capital redemption reserve 51 51
Other reserves - -
Profit and loss account 49,376 39,206
55,362 44,713
GROUP STATEMENT OF CASH FLOWS
for the year ended 31 December 2000
Note 2000 1999
£'000 £'000
Cash flow from operating activities
Net cash inflow from trading operations 2b 27,298 18,714
Outflow related to exceptional item: restructuring of (3,221) -
division
Cash flow from operating activities 24,077 18,714
Returns on investments and servicing of finance
Interest paid (2,541) (635)
Interest received 332 363
Net cash outflow from returns on investment (2,209) (272)
and servicing of finance
Taxation (7,934) (7,234)
Capital expenditure and financial investment
Purchase of tangible fixed assets (5,659)(19,580)
Sale of tangible fixed assets 365 106
Exceptional item: Sale of property (net of related 18,815 -
costs)
Net cash outflow from investing activities 13,521 (19,474)
Acquisitions and disposals
Purchase of subsidiary undertakings (23,395) (7,342)
Sale of subsidiary undertaking - (194)
(23,395) (7,536)
Equity dividends paid (5,017) (4,611)
Cash outflow before use of liquid resources and (957)(20,413)
financing
Financing
Issue of ordinary share capital 479 304
Loan advance 22,950 13,500
Loan repayments (18,474) (3,801)
Capital element of finance lease rental payments (89) (60)
4,866 9,943
Increase/(decrease) in cash in the year 3,909 (10,470)
Reconciliation of net cash flow to movements in net
debt
Increase/(decrease) in cash in the year 3,909 (10,470)
Cash inflow from increase in debt and lease financing (4,387) (9,639)
Change in net debt resulting from cash flows (478) (20,109)
Loans and finance leases acquired with subsidiary - (1,345)
undertakings
Loan notes issued - (590)
Translation difference 117 (58)
Movement in net debt in the year (361) (22,102)
Net debt at beginning of year (10,206) 11,896
Net debt at end of year (10,567) (10,206)
NOTES TO THE ACCOUNTS
1. Segmental information
Turnover, operating profit and net assets are analysed below:
2000 1999
£'000 £'000
a) Turnover
By
geographical
destination:
UK 38,977 29,974
USA 83,867 65,334
Other 30,743 15,896
European
countries
Rest of the 18,045 13,632
world
171,632 124,836
By
geographical
origin:
UK 86,357 66,882
USA 82,839 63,137
Other 12,866 1,763
European
countries
182,062 131,782
Inter-segment (10,430) (6,946)
sales
171,632 124,836
By Business operation:
Dialight 70,989 52,608
Weston 39,019 38,340
Solartron 61,624 33,888
171,632 124,836
b) Operating profit
2000 1999
£'000 £'000
By geographical origin:
UK 12,425 11,946
USA 15,382 8,814
Other European countries (247) (152)
Operating profit before 27,560 20,608
central costs and goodwill
amortisation
Central costs (2,693) (2,153)
Goodwill amortisation (938) (274)
Operating profit on ordinary 23,929 18,181
activities
By business operation:
Dialight 15,150 8,904
Weston 7,505 8,334
Solartron 4,905 3,370
Operating profit before 27,560 20,608
central costs and goodwill
amortisation
Central costs (2,693) (2,153)
Goodwill amortisation (938) (274)
Operating profit on ordinary 23,929 18,181
activities
c) Net assets 2000 1999
£'000 £'000
By geographical origin:
UK 34,618 19,220
USA 17,234 11,862
Other European countries 1,304 (99)
53,156 30,983
Unallocated central net 2,206 13,730
assets
55,362 44,713
By business operation:
Dialight 18,755 13,500
Weston 9,770 11,046
Solartron 24,631 6,437
53,156 30,983
Unallocated central net 2,206 13,730
assets
55,362 44,713
The comparative figures shown above in note 1 have been renamed and restated
following the reclassification of the Group into three business entities.
The reclassification achieved clarity with the Group's activities focussed
under three brand names.
Following the restatement, the figures for Solartron Metrology are now
included within the Solartron division. In 1999 Metrology had been included
within the Weston division (previously named Sensors division).
2. Operating profit
a) Acquisition
In the letter sent out to shareholders at the time of the acquisition of
the Mobrey group of companies, the Chairman of the Board explained that
the Mobrey business was to be fully integrated into the existing
Solartron Business. Following the successful integration of Solartron
and Mobrey it is not possible to identify separately the results of the
Mobrey business since acquisition.
Turnover for the Mobrey business for the period 7 January 2000 to 31
December 2000 (post-acquisition period) is £28,409,000.
2000 1999
£'000 £'000
b) Reconciliation of operating profit to net cash inflow from
operating activities
Operating profit 23,929 18,181
Depreciation charges 5,501 4,301
Goodwill amortisation 938 274
Profit on sale of tangible fixed assets (202) (26)
Increase in stocks (1,799)(2,337)
Increase in debtors (872)(3,084)
(Decrease)/increase in creditors (397) 1,314
Other non cash items 200 91
Net cash inflow from operating activities 27,298 18,714
3. Exceptional items
Costs of restructuring an operating division
Following the acquisition of the Mobrey group of companies in January 2000,
the Solartron division underwent a fundamental restructuring. The
restructuring programme included the integration of the manufacturing activity
of the Solartron and Mobrey businesses, and a substantial redundancy programme
across both businesses as part of the restructuring and formation of the new
company, Solartron Mobrey Limited. As at the end of the year, the
restructuring programme was operationally complete.
Profit on disposal of property
On 20 July 2000, the Group sold its interest in the freehold site at
Farnborough and surrendered its interest in the long leasehold. As a
consequence of the Farnborough site disposal agreement, Weston will relocate
to the more modern leased building. This building offers Weston more space
for future expansion.
The exceptional items give rise to an overall tax credit of £906,000.
4. Taxation
The taxation arising on ordinary activities includes overseas taxation of £
5,640,000.
5. Dividends
The directors have proposed a final dividend of 6.5p (1999: 5.9p) which
is subject to shareholder approval at the Annual General Meeting on 25
April, 2001, and if approved, will be payable on 27 April 2001 to
shareholders on the register on 23 March 2001.
6. Earnings per Share
The calculation of earnings per ordinary share is based on profit of £
14,452,000 (1999: £11,795,000) and on 56,422,000 (1999: 56,303,000)
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 £
14,452,000 (1999: £11,795,000), and on 56,800,000 (1999: 57,015,000)
ordinary shares, calculated as follows:
2000 1999
Thousands Thousands
Basic weighted average number of shares 56,422 56,303
Dilutive potential ordinary shares:
Employee share options 378 712
56,800 57,015
Reconciliation to adjusted earnings per share
2000 1999
Pence Pence
Basic earnings per share 25.6 20.9
Non-recurring exceptional costs (1.5) -
Non-recurring operating costs - 1.1
Goodwill amortisation 1.7 0.5
Adjusted earnings per share 25.8 22.5
7. The Annual Report and Accounts for the year ended 31 December 2000 which
were approved by the Board of directors on 15 March 2001 includes an
unqualified audit opinion and accounts will be despatched to shareholders
on 26 March 2001. 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.
8. 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 1999 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.
- ENDS -
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