Final Results

Roxboro Group PLC 18 March 2002 Date: Embargoed until 07:00am, Monday 18 March 2002 Contacts: Harry Tee - Group Chief Executive Alf Vaisey - Group Finance Director The Roxboro Group PLC Tel: 020 7796 4133 (18/03/02) 01223 424626 (thereafter) Alistair Mackinnon-Musson Philip Dennis Hudson Sandler Tel: 020 7796 4133 Email: roxboro@hspr.co.uk 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 The company news service from the London Stock Exchange

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