Interim Results

ROTORK PLC
29 July 1999
 

Contacts: Bill Whiteley, Chief Executive
          Bob Slater, Finance Director
          Rotork p.l.c.                      Tel: [phone]
     
          Tom Baldock
          Financial Dynamics                 Tel: [phone]
                                      
                                      
                                      
                                Rotork p.l.c.
                                      
                            INTERIM RESULTS 1999
 
Rotork plc, the international specialist engineering group, announces results
for the six months ended 30 June 1999.
 
Highlights include:
 
*    Turnover ahead 11.7% to £60.1m (1998: £53.8m)
 
*    Profit before tax and goodwill amortisation up 13.3% to £14.0m (1998:
£12.4m)
 
*    Basic earnings per share before goodwill amortisation up 15.0% to 10.7p
(1998:    9.3p)
 
*    Interim dividend raised by 12.8% to 4.4p per share (1998: 3.9p)
 
 
Commenting on the results, Chief Executive Bill Whiteley said:
 
'We  are pleased to have achieved good growth in the first half, despite  the
constraints  imposed by the strength of sterling, a low oil  price  and  weak
market conditions in some important developing countries.
 
Customer  expenditure  is expected to rise over the next  12  months  and  we
continue to have confidence in Rotork's prospects.'
 
Review of Operations
 
As  Rotork entered the current year, trading conditions in many markets  were
unpromising and indeed project business has been subdued compared with levels
experienced in recent years.  It is therefore with some pleasure that we  are
able  to  report  further progress.  Sales are ahead by  11.7%,  net  profits
before  tax and goodwill amortisation by 13.3% and basic earnings  per  share
before goodwill amortisation by 15.0%.
 
Sales  from  the Bath plant were down slightly from the previous  year.   The
European  sales companies' performances were mixed with Spain continuing  its
impressive  expansion  and France showing considerable improvement  over  the
prior period.  However, Italy and the Netherlands found trading difficult.
 
As  anticipated,  Venezuela's results were significantly below  that  of  the
exceptional  first  half 1998 performance.  Canada on the other  hand  traded
very  successfully and the US made further progress.  The  US  operation  has
outgrown  its  existing  plant in Rochester, New York and  construction  will
commence on a new expanded facility later in the year.
 
Other   territories  traded  well  in  a  difficult  environment  with   some
subsidiaries  such  as  Malaysia, Hong Kong and South Africa  exceeding  both
targets  and prior year performances.  The acquisition of ASI and its  change
of  name  to  Rotork Japan was completed in early July.  This  is  the  first
wholly owned subsidiary Rotork has operated in this important market.
 
Rotork  Gears has been set up to manage and promote the products  of  Exeeco,
Alecto  and  Valvekits.   Exeeco  and Alecto are  ahead  of  their  excellent
previous  year performances whilst Valvekits has exceeded expectations  since
its  acquisition.   Plans  are  in place to expand  the  marketing  of  these
companies. We continue to seek acquisition opportunities in this area.
 
Following  the acquisition of Fluid System Srl in March a priority  has  been
placed  on  integrating our fluid power operations.  Rotork Fluid System  has
now  been  formed  and its key marketing and product strategies  established.
Rotork's  sales  and  marketing  structure  has  been  modified  to   provide
appropriate  focus on this activity.  We are confident that the  creation  of
Rotork Fluid System will add value to the group.
 
New product development plans are on course and an enhanced IQ product is  to
be  launched  in  the  second  half of the year.   Research  and  development
expenditure has increased and a separate marketing function has been  set  up
to promote the electric failsafe actuator and related products.
 
Cash balances at the half-year amounted to £19.2m after the cost of acquiring
Valvekits  Group Ltd, and Fluid System Srl, amounting to £14m.   The  balance
sheet reflects assets of these companies for the first time.
 
 
Ordinary Dividend
 
On  1st October 1999 the directors intend to pay an interim dividend of  4.4p
per share.  This represents a 12.8% increase year on year.
 
Outlook
 
The  order book at the half-year is down slightly year on year reflecting the
strength of sterling, a low oil price and market conditions in some important
developing economies.   However, it is believed that the negative  impact  of
these  factors  is  lifting with the exception of the sterling/euro  exchange
rate.   This encourages the view that customer expenditure in some of our key
markets  will  rise  over  the next 12 months.  The continued  investment  by
Rotork in new products, expanded world-wide marketing and more cost effective
procurement and manufacturing continue to give us confidence in the company's
prospects.
 
 
Rotork Group Interim Results 1999
Unaudited
 
                                       First half  First half   Full year
                                             1999        1998        1998
                                                                         
                                               £m          £m          £m
Turnover                                                                 
Continuing operations                       57.09       53.82      101.44
Acquisitions                                 3.04           -           -
                                                                         
Total turnover                              60.13       53.82      101.44
                                                                         
Operating profit                                                         
Continuing operations                       12.40       11.32       23.56
Acquisitions                                 0.70           -           -
                                                                         
Total operating profit                      13.10       11.32       23.56
Net interest and similar income              0.61        0.94        1.84
                                                                         
Profit before taxation                      13.71       12.26       25.40
                                                                         
Taxation                                                                 
                                                                         
UK                                         (2.24)      (1.83)      (4.74)
Overseas                                   (2.62)      (2.53)      (4.32)
                                                                         
Earnings                                     8.85        7.90       16.34
                                                                         
                                            Pence       Pence       Pence
Earnings per share - basic                  10.25        9.09       18.89
Earnings per share - diluted                10.24        9.08       18.86
Earnings per share - basic before                                        
 goodwill amortisation                      10.67        9.28       19.26
 
Dividend
An  interim  dividend increased by 12.8% to 4.40p per ordinary  share  (1998:
3.90p) will be paid on 1 October 1999 to shareholders on the register at  the
close  of  business  on 13 August 1999.  The interim will  absorb  £3,798,392
(1998: £3,358,615).
 
Year 2000
Since  1997  there  has been a senior management team reviewing  the  various
electronic  systems  in  use  in all areas of Rotork  group's  operations  to
determine  the risk of any problem arising when the date recorded within  the
software  changes  to  2000  at the end of the  year  1999.   Critical  group
operating  system  software  has been upgraded where  necessary.   A  similar
review  is underway at the two businesses acquired during 1999 and any action
required to achieve compliance is scheduled to be completed before the end of
October  1999.   Organisations  with whom the  group  have  a  major  trading
relationship  have, where appropriate, been requested to confirm  that  their
relevant  systems  are Year 2000 compliant.  This issue  is  complex  and  no
business  can guarantee that there will be no problems.  However,  the  board
believes  that appropriate resources have been directed to this  issue.   The
cost  of  compliance is not expected to be material in the context  of  other
normal operating costs.
 
 
Rotork Group Balance Sheet
Unaudited
 
                                          30 June     30 June      31 Dec
                                             1999        1998        1998
                                                                         
                                               £m          £m          £m
Fixed assets                                                             
                                                                         
Intangibles                                  19.0         5.5         5.3
                                                                         
Tangibles                                    13.8        10.9        11.4
                                                                         
                                             32.8        16.4        16.7
Current assets                                                           
                                                                         
Stock                                        13.6        12.5        13.4
                                                                         
Debtors                                      33.3        24.5        27.3
                                                                         
Net cash                                     19.2        30.3        33.0
                                                                         
                                             66.1        67.3        73.7
                                                                         
Creditors and provisions                   (36.6)      (29.4)      (38.0)
                                                                         
                                             29.5        37.9        35.7
                                                                         
Net assets                                   62.3        54.3        52.4
                                                                         
Share capital                                 4.4         5.0         4.4
                                                                         
Reserves                                     57.9        49.3        48.0
                                                                         
Shareholders' funds                          62.3        54.3        52.4
 
The  financial information for the year ended 31 December 1998 is an abridged
version  of  the  full accounts for that year, which received an  unqualified
report  from  the  auditors and which have been filed with the  Registrar  of
Companies.
 
 
Rotork Group Cash Flow
Unaudited
                                          30 June     30 June      31 Dec
                                             1999        1998        1998
                                                                         
                                               £m          £m          £m
                                                                         
Operating profit                             13.1        11.3        23.6
                                                                         
Depreciation and amortisation                 1.2         0.7         1.8
                                                                         
Decrease in stock                             1.7         2.0         1.1
                                                                         
(Increase) in debtors                       (4.4)       (2.3)       (4.4)
                                                                         
(Decrease) in creditors                     (2.8)       (0.8)       (0.2)
                                                                         
Net    cash   flow   from   operating         8.8        10.9        21.9
activities
                                                                         
Returns  on investments and servicing                                    
of  finance                                   0.6         0.9         1.8
                                                                         
Taxation                                    (2.9)       (4.2)       (8.4)
                                                                         
Capital expenditure                         (0.7)       (1.0)       (2.3)
                                                                         
Acquisitions and disposals                 (13.9)       (4.1)       (3.5)
                                                                         
Dividends paid                              (6.0)       (5.1)       (8.4)
                                                                         
Issue of ordinary share capital               0.3         0.2         0.2
                                                                         
Purchase of own preference shares               -       (1.3)       (2.5)
                                                                         
(Decrease) in cash and term deposits       (13.8)       (3.7)       (1.2)