Final Results
Roxboro Group PLC
14 March 2005
Date: Embargoed until 07:00am
Monday 14 March 2005
Contacts: Harry Tee - Group Chief Executive
Alf Vaisey - Group Finance Director
The Roxboro Group PLC
Tel: 020 7796 4133 (14/03/05)
01223 424626 (thereafter)
Alistair Mackinnon-Musson
Philip Dennis
Hudson Sandler
Tel: 020 7796 4133
Email: roxboro@hspr.co.uk
Photographs: Available upon request from Hudson Sandler (see above)
THE ROXBORO GROUP PLC
PRELIMINARY RESULTS
The Roxboro Group PLC, the international specialist electronics group, announces
its Preliminary results for the year to 31 December 2004.
The Roxboro Group consists of two divisions: Solartron in electronic measurement
and Dialight in electronic lighting.
Highlights
• Operating profit on continuing operations up 87% to £10.2 million (2003:
£5.4 million)
• At constant currency, operating profit would have doubled to £10.8 million
• Adjusted EPS up 75% to 22p per share (2003: 12.6p per share)
• Excellent operating cash flow - 130% of operating profit and up 25% on the
previous year
• Proposed 10% increase in final dividend to 7.6p (2003: 6.9p) making 11.0p
for the year (2003: 10.0p)
• Outstanding operational progress at Dialight, with profits up five fold and
double digit margins achieved
• Steady result at Solartron, with substantially higher year-end order book
Harry Tee, Group Chief Executive, said:
'I am delighted to report Roxboro made excellent progress in 2004, as
demonstrated by the substantial improvement in Group profits'.
'The order book at the beginning of the current year was strong and we are
currently trading ahead of the same period last year.'
We are pleased to report Roxboro's continuing operations made excellent progress
in 2004, demonstrated by a substantial improvement in operating profit before
goodwill that showed an 87% increase to £10.2 million (2003: £5.4 million). On
a constant currency basis operating profit would have doubled to £10.8 million.
This success was achieved despite turnover being marginally lower than in the
previous year at £118.9 million (2003: £122.2 million) entirely due to currency
movements having the effect of reducing sales by over £6 million. On a constant
currency basis turnover would have shown a 2.5% increase.
Profit before goodwill and tax was up 100% to £10.2 million (2003: £5.1 million
continuing operations only) and adjusted EPS showed a 75% improvement to 22
pence per share (2003: 12.6 pence per share). Group operating cash flows were
strong at £13.2 million, up 25% on the prior year (2003: £10.6 million) which
represents 130% of operating profit. At the year end the Group had a cash
balance of £6.8 million (2003: £2.0 million).
Group operating profit in the second half showed a 22% advance over the first
half. In the main this was due to the significant advances made by the Signals
business unit of Dialight, which made a good profit contribution in the second
half as a result of the benefits derived from relocating production to Mexico in
2003. Our Mexico operation is now functioning efficiently with excellent local
management in place.
Dividend
The Board is recommending an increased final dividend of 7.6 pence (2003: 6.9
pence) to be paid on 13 May 2005 to shareholders on the register at 29 March
2005. As a result total dividends per share for 2004 will be 11 pence, an
increase of 10% on the 2003 level.
Operational Review
The Roxboro Group consists of two divisions: Dialight in electronic lighting and
Solartron in electronic measurement.
Dialight Division
2004 2003
£m £m
Sales 55.3 57.9
Operating Profit 5.9 1.1
Dialight made good operational progress in 2004. Operating profits increased
five fold to £5.9 million from £1.1 million the prior year, with operating
margins returning to double digits for the first time since the significant
downturn in the technology sector in 2001. Had exchange rates remained
constant, Dialight's turnover would have shown an increase of 5% to £60.6
million but with the weakness of the US Dollar in the year, the reported number
shows a marginal reduction to £55.3 million.
Opto-electronics
Dialight's unique surface mounted LED product, Prism, is becoming the accepted
industry standard, being designed into multiple applications by a wide range of
customers. The product line has a number of variants but a recently introduced
bi-level version is also now being designed into a wide range of equipment
particularly in the telecoms sector for channel indication. This product has
the further advantage of being RoHS compliant meeting the latest EU directive
requirements including lead-free solder.
Over the past five years Dialight has produced around 100 million Prism devices
and demand continues to grow, with 2004 sales increasing by over 30% from the
previous year. The fastest growing sector for Prism is mobile telephony,
although there is also growing demand across a wide range of other electronic
sectors.
Dialight saw demand strengthen early in the year from the general electronics
industry, particularly the telecoms sector, for its opto-electronic components.
Sales to US distributors, which account for 50% of these product sales, were
strong in the first half although this slowed somewhat in the third quarter as
industry demand weakened. Nevertheless, second half demand was ahead of the
second half of previous year.
Dialight exports approximately 50% of its opto-electronic components with the
majority of these being shipped to Asia where contract manufacturers produce
equipment for major OEM customers, such as Cisco and Lucent. Most OEM customers
design their equipment in the United States where Dialight is able to achieve
specified status. In many cases production is then transferred to contract
manufacturers in Asia, increasing Dialight's export percentage.
Success in this business area is achieved through continuous design activity.
To that end the company has enjoyed good success with both traditional customers
and in new areas such as networking and wireless but also in emerging
technologies such as Storage Area Networks and Voice Over Internet. The company
is also penetrating new areas such as gaming machines, where opportunities for
LED devices have been identified particularly for panel mounted indicators.
Signals
The major change at Dialight during 2004 was the performance of the Signals
business unit. Following the relocation of production from the United States to
Mexico in 2003, the cost benefits, including the elimination of duplicated
costs, showed through strongly in 2004. This business unit is again making a
positive contribution to profits.
At a time when concerns continue to grow about the dangers of global warming
through greenhouse gas emissions, it is interesting to note that 20% of the
world's electricity production is used in illumination, but of this total
lighting usage, over 30% is wasted in the generation of unwanted heat.
Dialight's solid state lighting solutions use typically 10% of the energy
consumed by conventional light sources for coloured applications and less than
half the energy of an incandescent source for white light, substantially
reducing the demand for electricity. 50% of traffic signals in the United
States have already been converted to solid state light, while in Europe the
figure is less than 5%.
Dialight continues to hold a market leadership position in solid state traffic
signals and has excellent relationships with both dealers and traffic systems
OEMs in the United States and increasingly in Europe. These OEMs incorporate
Dialight's solid state lighting modules into their signal heads for new traffic
installations or in the refurbishment of older systems, which is likely to
continue to be a growing part of Dialight's business. Pricing in the traffic
signals sector has stabilised somewhat and price-downs are anticipated to be at
manageable levels in the future.
In Europe the launch of the new Eclipse range of solid state traffic modules has
been well received and is expected to lead to increased volumes with OEMs such
as Siemens Traffic Systems. European OEMs have until now been reluctant to take
higher volumes because of the relatively high unit cost of the European
specified product, where sun phantom requirements (the reflection of sun on the
lens) are much more rigorous than in the United States. This requirement
eliminates the effect of sunlight causing a traffic signal to appear illuminated
when it is switched off.
The Eclipse range eliminates the sun phantom concern by applying the very latest
AllNGaP and InGaN LED technologies and lens design techniques, substantially
reducing unit costs, while still achieving the tougher European standards. As
Eclipse volumes increase the sub-assemblies that are highly labour intensive to
produce, will be built in Mexico and then shipped to Europe for final assembly.
Continuing strong growth in demand for solid state obstruction lights is very
encouraging, both in the United States and Europe, with Dialight shipping 15,000
lights to the Federal Aviation Authority for use at US airports during the year.
These products are particularly attractive because of their long life when
located in such places as on the tops of buildings, towers or masts where access
is difficult and expensive.
Dialight has also introduced a range of specially designed solid state lighting
products for use in hazardous environments such as oil refineries, where safety
is critical. The low voltage and low heat of solid state lights makes them
ideal for these types of applications.
In the rail sector Dialight has taken its first orders in Europe and China for
wayside signals. In the US the introduction of Dialight's unique 'light-out
detection' feature is expected to lead to additional business in 2005.
Dialight has opened up new opportunities for growth in the lighting industry
where solid state lighting is increasingly being seen as a disruptive technology
replacing traditional light sources. Dialight has developed a relationship with
Rosco Laboratories Inc., the leading producer of colour gels for theatre
lighting worldwide. Using SpectraMix, Dialight's proprietary colour mixing
technology, in association with its solid state lighting products, colours in
the Rosco palette of theatrical colour media can now be reproduced with
repeatable exact colour matching.
Associated with SpectraMix, Dialight has also developed a range of solid state
lighting products including a long-throw spotlight module again for theatrical
use. Incorporating a patented optical system, Dialight has produced a product
able to produce 1214 lumens per square inch, considerably higher than anything
else on the market. When coupled with frontal secondary optics, Dialight's
spotlights or floodlights will be capable of providing 6000 lumens in a 500 watt
solid state package with virtually infinite colour variation. The unique
optical solution also eliminates optical fringing, the separated coloured edges
often seen around shadows.
Dialight's solid state lighting solutions generate virtually no heat and
therefore are considerably more efficient than conventional light sources.
Incorporating RGBA (red, green, blue and amber) multi-channel LED arrays, the
colour control provided by SpectraMix allows complete control through more than
one billion colours or shades.
These are the first of a range of high-end solid state lighting products planned
to be introduced at Dialight into what is expected to be a very dynamic market
over the next several years.
BLP
Following the cost reduction exercise in 2003, BLP made a positive contribution
in the year. The continued development of the X-PulseTM pager network in the US
led to even further interest in this remote connect / disconnect product, which
bodes well for the growth in this market.
Solartron Division
2004 2003
£m £m
Sales 63.6 64.3
Operating Profit 6.7 6.6
Solartron, the Group's electronic measurement specialist, produced a steady
result in an unfavourable environment caused by the weakness of the US dollar.
This made it difficult for Solartron, whose manufacturing is in the UK and
France, to compete with indigenous USA suppliers, even though in many cases
Solartron's products are superior. Both the North and South American markets
were also affected by low investment in the domestic downstream oil & gas
sector. These conditions, however, were offset by strong growth in Asia, where
demand for fluid analysis systems for oil installations was strong in China and
in Japan good sales of analytical instruments was achieved.
Order intake improved strongly, but too late in the year in some cases to
benefit 2004. As a result, however, the order book at the year-end was
substantially higher than at the half year, placing us in a good position for
2005.
Some encouraging advances were made, in particular the introduction of the new
Pegasus 2-wire FMCW non-contacting Radar Level Transmitter. This advanced
technology product, which can be used in the level measurement of liquids or
slurries, brings performance normally associated with more expensive measurement
solutions, and addresses the fastest growing segment in the level measurement
market.
Solartron has also successfully continued its strategy of introducing and
producing 'best-of-breed' products, and this has led to agreements with
industry-leading global instrumentation suppliers.
The Analytical Instruments product line enjoyed strong demand in the second
half, particularly in Asia, primarily driven by greater investment in research
into advanced materials, electrochemistry and energy storage devices. Late in
the year a new modular battery and fuel cell tester was launched providing very
cost effective multi-channel impedance and charge / discharge testing. The core
of this product is a new modular Frequency Response Analyzer that will allow the
company to broaden its market by addressing an increasing range of measurement
applications in materials research.
In the oil and gas sector the business performed well, but again with a late
pick-up in orders received and contracts awarded, much of this was carried over
and will benefit the current year. In particular good business with China
Petroleum for fluid analysis and measurement systems was maintained and is
expected to continue to grow for several years as China continues to invest in
its oil distribution infrastructure. Solartron supplied three Dualstream 2 wet
gas meters for use in the Atlantic and Cromarty North Sea gas and condensate
fields, for Amerada Hess and BG International respectively. The products will
be used both for allocation gas metering and the detection of water
break-through from the reservoir. The meters are fully integrated into Wellhead
Production Trees and are located on the sea bed at a depth of over 100 metres
making reliability a key factor.
Solartron enjoyed a particularly good year in the metrology sector with
increasing demand for its unique range of analogue and digital gauging
transducers, used for quality control throughout the world. The introduction of
a range of new products, targeted to meet the specific needs of the industry for
use in difficult applications, has injected new growth into this area.
The new 'mini-probe' has been designed into the American Axle project by
Valenite to electronically measure internal bores in a difficult application.
Solartron supplies mainly to OEMs such as Valenite, Renishaw, Air Gage and
Etamic and commands a significant share of the world market for gauging
transducers, but has been progressively expanding its market base with the
introduction of new products.
Solartron's Orbit Network is increasingly becoming accepted as an industry
standard for digital gauging, providing the company with a material lead over
its competitors, as the gauging world increasingly moves to digital rather than
analogue measurement.
Staff
There has been a significant change in the distribution of our employees over
the past two years with over 460 now being employed in Mexico. We wish to
welcome all our new colleagues and to thank them, together with all of the
Group's other employees for their hard work and commitment over the past year.
Outlook
The order book at the year-end was strong, particularly at Solartron, and
trading in the early part of the current year is ahead of the same period last
year. Order intake rates at Dialight Opto-electronics picked up somewhat from
the lower rates in the second half of last year, and increasing demand for solid
state obstruction lighting products has continued.
Consequently the Board is confident that the Group will show further progress in
the current year.
Sir Alan Cockshaw Harry Tee
Chairman Group Chief
Executive
14 March 2005
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2004
Notes 2004 2003
£'000 £'000
Turnover 2(a)
Continuing operations 118,852 122,173
Discontinued operations - 14,606
118,852 136,779
Cost of sales (80,521) (96,342)
Gross profit 38,331 40,437
Distribution costs (15,777) (18,062)
Administrative expenses (13,501) (15,304)
Operating profit 2(b)
Continuing operations 9,053 4,235
Discontinued operations - 2,836
9,053 7,071
Operating profit before amortisation of intangible assets 10,170 8,273
Amortisation of intangible assets (1,117) (1,202)
Profit on disposal of discontinued operations - 15,585
Profit on ordinary activities before interest and taxation 9,053 22,656
Net interest payable 5 (326)
Profit on ordinary activities before taxation 9,058 22,330
Tax on profit on ordinary activities (3,462) (2,612)
Profit for the financial year 5,596 19,718
Dividends 4 (3,391) (3,042)
Retained profit for the financial year 2,205 16,676
Pence Pence
Earnings per share - basic 5 18.3 45.4
- adjusted 5 22.0 12.6
- diluted 5 18.2 45.4
GROUP BALANCE SHEETS
at 31 December 2004
2004 2003
£'000 £'000
Fixed assets
Intangible assets 14,347 15,464
Tangible assets 11,463 13,100
25,810 28,564
Current assets
Stocks 15,404 16,118
Debtors 26,314 25,879
Cash at bank and in hand 6,819 4,332
48,537 46,329
Creditors:
Amounts falling due within one year
Borrowings (51) (2,364)
Other creditors (20,144) (19,354)
(20,195) (21,718)
Net current assets 28,342 24,611
Total assets less current liabilities 54,152 53,175
Provisions for liabilities and charges (1,667) (1,507)
52,485 51,668
Capital and reserves
Called up share capital 2,849 3,115
Share premium account 6,049 5,976
Capital redemption reserve 40,372 40,104
Profit and loss account 3,215 2,473
Shareholders' funds - equity and non-equity interests 52,485 51,668
GROUP STATEMENT OF CASH FLOWS
for the year ended 31 December 2004
Notes 2004 2003
£'000 £'000
Cash flow from operating activities 3 13,201 10,562
Returns on investments and servicing of finance
Interest paid (90) (529)
Interest received 95 216
Net cash inflow/(outflow) from returns on investment 5 (313)
and servicing of finance
Taxation (3,583) (1,867)
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,299) (1,726)
Sale of tangible fixed assets 13 101
Net cash outflow from investing activities (1,286) (1,625)
Acquisitions and disposals
Disposal of subsidiary undertakings - 52,654
Purchase of intangible assets - (50)
- 52,604
Dividends paid (3,135) (4,883)
Cash inflow before use of liquid resources and financing 5,202 54,478
Financing
Issue of ordinary share capital 74 97
Share issue expenses - (459)
Redemption of B shares (267) (40,053)
Net loan (repayments)/advances - (17,065)
Capital element of finance lease rental payments (7) (20)
(200) (57,500)
Increase/(decrease) in cash in the year 5,002 (3,022)
Reconciliation of net cash flow to movements in net funds
Increase/(Decrease) in cash in the year 5,002 (3,022)
Cash outflow from change in debt and lease financing 7 17,085
Change in net funds resulting from cash flows 5,009 14,063
Translation difference (209) (393)
Movement in net funds in the year 4,800 13,670
Net funds at beginning of year 1,968 (11,702)
Net funds at end of year 6,768 1,968
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2004
2004 2003
£'000 £'000
Profit for the financial year 5,596 19,718
Currency translation differences on foreign currency net investments (1,195) (2,281)
Total gains recognised in the year 4,401 17,437
RECONCILIATION OF MOVEMENTS IN GROUP'S SHAREHOLDERS' FUNDS
2004 2003
£'000 £'000
The movements in group's shareholders' funds are:
Total recognised gains and losses 4,401 17,437
Dividends (3,391) (3,042)
Goodwill previously taken to profit and loss account - 21,664
New share capital subscribed 74 97
Share Issue expenses - (459)
Redemption of B Shares (267) (40,053)
Net change to shareholders' funds 817 (4,356)
Balance brought forward 51,668 56,024
Balance carried forward 52,485 51,668
NOTES TO THE ACCOUNTS
1. The financial information has been prepared on the basis of the accounting
policies set out in the Group's statutory accounts for the year ended 31
December 2003.
2. Segmental information
Turnover, profit before interest and taxation and net assets are
analysed below:
2004 2003
£'000 £'000
a) Turnover
By geographical destination:
UK 23,007 28,562
USA 45,961 56,005
Other European countries 29,450 31,367
Rest of the world 20,434 20,845
118,852 136,779
By geographical origin:
UK 62,353 71,397
USA 49,759 58,882
Other European countries 15,626 15,698
127,738 145,977
Inter-segment sales (8,886) (9,198)
118,852 136,779
By business operation:
Continuing operations
Dialight 55,268 57,916
Solartron 63,584 64,257
118,852 122,173
Discontinued operations
Weston - 14,606
118,852 136,779
b) Profit before interest and taxation 2004 2003
By geographical origin: £'000 £'000
UK 7,381 9,004
USA 5,846 1,944
Other European countries (637) (445)
Operating profit before central costs and intangible assets amortisation 12,590 10,503
Central costs (2,420) (2,230)
Amortisation of intangible assets (1,117) (1,202)
Operating profit on ordinary activities 9,053 7,071
Profit on sale of discontinued operations - 15,585
Profit before interest and taxation 9,053 22,656
By business operation:
Continuing operations
Dialight 5,879 1,071
Solartron 6,711 6,596
12,590 7,667
Discontinued operation
Weston - 2,836
Operating profit before central costs and intangible assets amortisation 12,590 10,503
Central costs (2,420) (2,230)
Amortisation of intangible assets (1,117) (1,202)
Operating profit on ordinary activities 9,053 7,071
Profit on sale of discontinued operations - 15,585
Profit before interest and taxation 9,053 22,656
In 2004, £766,000 of the amortisation of intangible assets related to the
Solartron business, and £351,000 related to the Dialight business.
In 2003, £766,000 of the goodwill amortisation of intangible assets related
to the Solartron business, £84,000 related to the Weston business and
£352,000 related to the Dialight business.
Net assets 2004 2003
c) £'000 £'000
By geographical origin:
UK 19,383 21,099
USA 12,474 14,770
Other European countries 1,823 1,693
33,680 37,562
Unallocated central net assets 18,805 14,106
52,485 51,668
By business operation:
Continuing operations
Dialight 17,705 20,406
Solartron 15,975 17,156
33,680 37,562
Unallocated central net assets 18,805 14,106
52,485 51,668
Unallocated central net assets include intangible assets of £14,347,000 of
which £11,399,000 relates to the Solartron business and £2,948,000 relates
to the Dialight business. In 2003 the unallocated central net assets
included intangible assets of £15,464,000 of which £12,165,000 related to
the Solartron business and £3,299,000 related to the Dialight business.
3. Reconciliation of operating profit to cash inflow from operating activities
2004 2003
£'000 £'000
Operating profit 9,053 7,071
Depreciation charges 2,606 3,390
Amortisation of intangible assets 1,117 1,202
Loss/(profit) on sale of tangible fixed assets 54 (59)
Decrease in stocks 238 2,462
Increase in debtors (1,076) (1,988)
Increase/(decrease) in creditors 1,009 (1,713)
Increase in provisions 200 197
Net cash inflow from operating activities 13,201 10,562
4. Dividends
The directors have proposed a final dividend of 7.6p (2003: 6.9p) which is
subject to shareholder approval at the Annual General Meeting on 10 May
2005, and if approved, will be payable on 13 May 2005 to shareholders on
the register on 29 March 2005.
5. Earnings per Share
The calculation of earnings per ordinary share is based on profit after tax
of £5,596,000 (2003:£19,718,000) and after non-equity dividends of £80,000
(2003: £35,000) and on 30,091,000 (2003:43,324,000) ordinary shares, being
the average number of ordinary shares in issue during the year.
The diluted earnings per share is based on profit after tax for the year of
£5,596,000 (2003:£19,718,000) and non-equity dividends of £80,000 (2003:
£35,000) and 30,339,000 (2003: 43,339,000) ordinary shares, calculated as
follows:
2004 2003
Thousands Thousands
Basic weighted average number of shares 30,091 43,324
Dilutive potential ordinary shares:
Employee and Executive share options 248 15
30,339 43,339
Reconciliation to adjusted earnings per share
2004 2003
Pence Pence
Basic earnings per share 18.3 45.4
Amortisation of intangible assets of £1,117,000 (2003:
£ 1,202,000) 3.7 2.8
Profit on sale of discontinued operations - (35.6)
Adjusted earnings per share 22.0 12.6
6. Pensions
FRS 17 'Retirement Benefits' was issued in November 2000 to replace SSAP 24
by 2005. Although it is not required to be fully implemented until 2005
there is a phased approach with regards to disclosures which the Group has
complied with. If the Group had fully adopted FRS17 in 2004 then the profit
and loss account in respect of defined benefit schemes would have reflected
a charge of £0.9m, a reduction of £0.5m from the actual 2004 SSAP 24 based
charge. In addition, the net deficit arising on FRS17 applied principals
which is effectively a snapshot of the assets of the year end date would
have led to the Group's net assets being reduced by £7.9 m (2003: £7.5m)
7. The Annual Report and Accounts for the year ended 31 December 2004 which
was approved by the Board of directors on 14 March 2005 includes an
unqualified audit opinion and did not contain a statement under Section
237(2) or (3) of the Companies Act 1985. Accounts will be despatched to
shareholders on 8 April 2005. 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 2003 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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