Interim Results
Ricardo PLC
24 February 2003
24 February 2003
Ricardo plc
Interim Results for the six months ended 31 December 2002
HIGHLIGHTS
Ricardo plc is the UK's leading independent automotive consultancy, employing
over 1,500 people with technical centres in the UK, USA, Germany and the Czech
Republic. The company's client list includes the world's major OEMs. Ricardo
is a constituent of the FTSE techMark 100.
• Order book of £61.5m up 7% (2001: £57m)
• Underlying profitability improved
• Profit before tax and goodwill of £7.1m (2001: £7.6m) reflects impact of
one-off costs and increased cost base
• Basic earnings per share before goodwill of 10.5p (2001: 11.1p)
• Strong balance sheet with net cash of £14.3m (2001: £9.4m)
• Interim dividend of 2.7p (2001: 2.6p)
• Tarragon acquisition builds on Ricardo's fast growing electronics
capability
• Link up with Horiba in important Japanese market
• High value-added technology and new strategic consulting activities
creating further growth opportunities
Commenting on the results, Rodney Westhead, Chief Executive said:
'This is a satisfactory first half result. Underlying trading has been good and
Ricardo's balance sheet remains strong with net cash of £14.3m. Our strong order
book for 2003, the opportunities created by recent acquisitions and our focus
on developing our higher added-value technology and new strategic consulting
business, give us confidence of growth despite the difficult economic climate.'
Further enquiries:
Ricardo plc
Rodney Westhead, Chief Executive (today) 020 7554 1400
Andrew Goodburn, Finance Director (thereafter) 01273 455611
Gavin Anderson & Company
Laura Hickman/Charlotte Stone 020 7554 1400
Website: www.ricardo.com
CHAIRMAN'S STATEMENT
Overview
Trading for the six months to 31 December 2002, gave rise to total turnover of
£64.6m (2001: £69.1m). The reduction in turnover was due to a combination of a
further decrease in the material content and a small volume fall in North
America. Profit before tax and goodwill reduced to £7.1m (2001: £7.6m), after
absorbing the start up costs for Strategic Consulting, the costs of integration
of the Gemini acquisition (estimated to cost £500k) and the absorption of the
proportion of the increased pension charge and additional insurance costs
(estimated at £814k for the half year). The underlying profitability improved.
Earnings per share before goodwill is 10.5p (2001: 11.1p) and our balance sheet
remains strong with net cash of £14.3m (2001: £9.4m)
This satisfactory first half result has been achieved against continuing
uncertainty in the global automotive industry and, we believe, reflects
Ricardo's strengths in its market place and the benefits of our strategy of
focusing on the provision of consultancy services to the international
automotive industry. We expect our performance to be further improved by the
development of our Strategic Consulting activities and the acquisition of
Gemini, in the second half of the current year. Factors that have driven the
performance of Ricardo over the past five years continue to underpin the growth
of our business. In a competitive market place the OEM's continue to need to use
Ricardo's specialised capabilities to enable them to deliver new models to the
market faster. In addition, emissions legislation continues to play an
important part of our business, as OEM's focus on fuel-efficient vehicles, where
our particular expertise on diesel engines is proving to be a valuable asset, as
the European market for diesel vehicles continues to grow.
Dividend
An interim dividend of 2.7p per share (2001: 2.6p) will be paid on 25 April 2003
to all shareholders on the register at the close of business on 4 April 2003.
Operations
I am pleased to report that our December order book increased to £61.5m, up 7%
on the comparable period last year, and is strong across all our businesses and
markets. Our new Strategic Consulting activity has made a good start, already
securing one major OEM client and one major tier 1 supplier as significant
customers. We see further opportunities to develop this higher value-added
offering in the second half.
i-MoGen, our research vehicle, has been demonstrated in Europe, USA, Japan and
Korea and has been driven by over 950 automotive company executives, including a
number of CEO's. The response has been excellent, enhancing our reputation and
visibility with existing and potential automotive clients around the world. The
number of enquiries and new orders has already justified this investment. We
are extremely pleased to have been awarded the Royal Automobile Club's
prestigious Dewar Trophy for the development of i-MoGen, which was seen to be '
the most outstanding British technical achievement in the automotive field' in
2002.
On 4 February 2003, we completed the purchase of Tarragon Limited, a
specialised automotive electronics software business, which will greatly add to
Ricardo Consulting Engineers capability in the area of controls and electronics.
Tarragon employs 52 people with a turnover and profits before tax in its last
full year of £3.24m and £350k respectively. Following the acquisition, Ricardo
has 150 people dedicated to expanding this fast growing area of our business.
Our UK based Engine, Transmission and Vehicle businesses all continue to grow
and expand their range of capabilities and, despite fierce price pressure,
improve their margins and profitability. The European engine test and
development market continues to have excess capacity but with tight cost control
and the use of innovative techniques we have been able to regain some of the
ground we lost last year.
Our position regarding the claim that was received in November 2002, relating to
work performed seven years ago for a non-automotive client, remains the same.
There have been no further developments. As we stated previously, having
reviewed the particulars of the claim, the Directors are confident that the
claim will be successfully defended.
Our Transmission and Motorsport businesses continue to prosper and we are
considering further expansion at our Leamington Spa site. In January 2003,
Ricardo Transmissions helped Mitsubishi win the gruelling Paris Dakar Rally; and
Bugatti, now part of VW, has nominated Ricardo as their design partner in the
development of an all new seven speed dual clutch automated manual transmission
for the Bugatti Supercar. Less high profile, but nonetheless valuable business
continues to grow from our OEM customers. With the Gemini acquisition now
integrated, prospects for this division are promising.
Our Vehicle Engineering business continues to grow and is now involved in
several major programmes. Key to our success in the area of Vehicle Engineering
is both our innovative technology and our programme delivery skills.
In the USA we have had a difficult albeit profitable first half. Our order book
intake in the last three months has been at a very high level and despite the
concerns for the US economy and the international automotive industry, we see no
slow down in order intake and customer interest.
In Germany, we continue to build our local presence and to develop our local
clients. Strategic Consulting is also creating opportunities for Ricardo in
this market.
As part of our strategy of developing our presence in the Asia Pacific region,
Ricardo has been looking for a partner to best develop the growing market for
automotive consulting in Japan. We have recently signed an agreement with Horiba
of Japan to work together to grow the company's share of this market. This will
give Ricardo a Japanese base with a highly respected Japanese supplier to the
automotive industry. We gain domestic presence and resource whilst Horiba gains
access to our consultancy know-how. This should lead to further development of
this important market place for Ricardo.
Board
I am delighted to welcome Gerald Andrews, Managing Director of Ricardo Driveline
and Transmission Systems and Clive Hickman, Managing Director of Ricardo Vehicle
Engineering, to the Board. I look forward to their contribution to your Board
and wish them well in this new role.
The Future
Despite the challenges facing the global economies in general and those of the
automotive industry in particular, we remain confident that the underlying
growth of the company will continue as we exploit and develop the strategy which
has been successful over the last five years.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Interim Statement for the six months ended 31 December 2002
Six Months Six Months Year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
£'000 £'000 £'000
Turnover
Continuing operations 64,645 69,131 143,178
64,645 69,131 143,178
Operating profit
Continuing operations 6,697 7,619 16,495
Profit on ordinary activities before interest 6,697 7,619 16,495
Net interest 307 (18) 164
Profit on ordinary activities before taxation 7,004 7,601 16,659
Taxation (1,891) (2,167) (4,506)
Profit on ordinary activities after taxation 5,113 5,434 12,153
Equity minority interest (67) (46) (92)
Profit for the financial year 5,046 5,388 12,061
Equity ordinary dividends (1,346) (1,278) (4,207)
Amount transferred to reserves 3,700 4,110 7,854
Dividend per ordinary share 2.7p 2.6p 8.6p
Earnings per ordinary share
- basic 10.3p 11.1p 24.9p
- diluted 10.2p 10.9p 24.5p
Earnings per ordinary share before goodwill
amortisation
- basic 10.5p 11.1p 25.0p
- diluted 10.4p 10.9p 24.6p
Notes:
1.This Interim Statement should be read in conjunction with the Report and Accounts for the
year ended 30 June 2002.
The accounts for the six months ended 31 December 2002 and 31 December 2001 respectively are
neither audited nor reviewed. The abridged accounts for the year ended 30 June 2002 do not
constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 and
are an extract from the latest published accounts which have been delivered to the Registrar
of Companies and on which the auditors gave an unqualified audit report.
2.Taxation
The tax charge for the period has been calculated as 27% (2001 - 28.5%).
3. Earnings per share
The calculations of basic earnings per ordinary share and diluted earnings per ordinary
share have been made in accordance with FRS14.
The basic earnings per ordinary share has been calculated by dividing the profit
attributable to ordinary shareholders of £5,046,000 (2001 - £5,388,000) by the weighted
average number of shares in issue of 48,871,789 (2001 - 48,461,816). The calculation of
the average number of shares in issue has been made having deducted the shares held by the
Employee Share Ownership Trust and the Long Term Incentive Plan Trustee. The same basis
has been used to calculate the basic earnings per ordinary share before goodwill
amortisation except that the profit attributable to ordinary shareholders has been
increased by goodwill amortisation of £87,000 to £5,133,000.
The diluted earnings per ordinary share has been calculated by dividing the profit
attributable to ordinary shareholders of £5,046,000 (2001 - £5,388,000) by the adjusted
weighted average number of shares in issue. This latter figure has been calculated by
adjusting the shares in issue of 48,871,789 as described above, to take account of the
effect of the diluted securities of share options and the Long Term Incentive Plan, to
give an adjusted total of 49,257,993 shares in issue (2001 - 49,424,391). The diluted
earnings per ordinary share before goodwill amortisation has been calculated on the same
basis except that the profit attributable to ordinary shareholders is £5,133,000.
4. Acquisitions
On 9 July 2002 the business and assets of Gemini Transmissions Limited were purchased.
The acquisition cost was £3,412,000, of which £1,413,000 was deferred, and the fair
value of the assets acquired of £1,768,000 gave rise to goodwill of £1,644,000, which
will be amortised over its useful economic life.
On 4 February 2003 the whole of the issued share capital of Tarragon Embedded
Technology Limited was purchased at a cost of £5,500,000 of which £2,400,000 becomes
payable on the achievement of earn-out targets. The fair value of the assets acquired
of c.£500,000 gave rise to goodwill of c.£5,000,000 which will be amortised over its
useful economic life.
SUMMARISED BALANCE SHEET
Interim Statement for the six months ended 31 December 2002
As at As at As at
31 December 31 December 30 June
2002 2001 2002
£'000 £'000 £'000
Fixed assets 46,717 48,621 45,526
Intangible assets 1,590 42 35
48,307 48,663 45,561
Stock and debtors 49,999 43,008 47,989
Creditors falling due within one year (47,780) (42,370) (51,854)
2,219 638 (3,865)
Cash deposit 340 340 340
Net bank balance 21,255 17,478 26,778
Net current assets 23,814 18,456 23,253
Total assets less current liabilities 72,121 67,119 68,814
Creditors falling due after more than one year
Bank borrowings (6,234) (8,120) (6,840)
Finance lease obligations (385) - -
Provisions for liabilities and charges (5,677) (6,104) (5,783)
(12,296) (14,224) (12,623)
Net assets 59,825 52,895 56,191
Called up share capital and share premium
Account 22,395 21,500 22,014
Capital redemption reserve 40 40 40
Long term incentive plan reserve 872 891 594
Reserves 36,185 30,137 33,260
Total shareholders' funds
(including non - equity interests) 59,492 52,568 55,908
Equity minority interest 333 327 283
Capital employed 59,825 52,895 56,191
These accounts were approved by the Board of Directors on 24 February 2003.
This announcement is being circulated to all shareholders of the Company, and copies will be
available to the public at the Company's Registered Office at Bridge Works, Shoreham - by - Sea,
West Sussex, BN43 5FG
CONSOLIDATED CASH FLOW STATEMENT
Interim Statement for the six months ended 31 December 2002
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
£'000 £'000 £'000 £'000 £'000 £'000
Net cash inflow from operating activities 5,274 14,758 30,242
Net interest received/ (paid) 284 (17) 186
Dividend paid to minority shareholder - (63) (141)
Net cash inflow/(outflow) from returns on
investment and servicing of finance 284 (80) 45
Taxation (1,999) (1,169) (3,204)
Capital expenditure and financial
investment
Sale of own shares - 49 -
Acquisition of the business and assets of
Gemini Transmissions Limited (1,999) - -
Purchase of tangible fixed assets (3,914) (3,486) (5,967)
Sale of tangible fixed assets 47 119 332
Net cash outflow from capital expenditure
and financial investment (5,866) (3,318) (5,635)
Equity dividends paid (2,934) (2,565) (3,829)
Cash flow before use of financing (5,241) 7,626 17,619
Financing
Issue of ordinary share capital 321 320 345
Amount received in respect of ESOP shares - - 49
Capital elements of finance lease rental
payments (223) (1) (1)
Loans repaid (251) (420) (1,209)
Net cash outflow from financing (153) (101) (816)
(Decrease)/increase in cash (5,394) 7,525 16,803
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
£'000 £'000 £'000
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash (5,394) 7,525 16,803
Movement in debt and lease financing 474 421 1,210
New finance leases acquired on acquisition of the business and
assets of Gemini Transmissions Limited (940) - -
Change in net funds from cash flows (5,860) 7,946 18,013
Translation difference 226 124 637
Movement in net funds in period (5,634) 8,070 18,650
Net funds at beginning of period 19,938 1,288 1,288
Net funds at end of period 14,304 9,358 19,938
Reconciliation of operating profit to net cash inflow from
operating activities
Operating profit 6,697 7,619 16,495
Depreciation charges 4,727 4,583 9,117
Goodwill amortization 87 6 13
Profit on sale of tangible fixed assets and investment
properties
(1) (6) (14)
Long term incentive plan charge 278 281 455
(Increase)/decrease in working capital (6,514) 2,275 4,176
5,274 14,758 30,242
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 1 hour ago Molten Ventures
- 1 hour ago Touchstone Exploration Inc NPV (DI)
- 1 hour ago Team Internet Group plc
- 1 hour ago Ondo Insurtech
- 1 hour ago Wilmington