Final Results

Ricardo PLC 17 September 2007 17th September 2007 Ricardo plc Preliminary results for the Full Year ended 30 June 2007 Ricardo plc is the leading UK independent automotive consultancy, employing over 1,600 people worldwide. The company has centres in the UK, USA, Germany, Czech Republic and Asia, and has a client list that includes the world's leading automotive OEMs. Highlights • Continued improvement in business mix and operational efficiency resulting in increased underlying operating margin • Revenue level at £171.5m (June 2006: £171.9m) - strong growth in the UK business driven by increased Technical Consulting content from Asia and Germany, offset by expected reduction in Strategic Consulting and the slow start in the US in the first half • Underlying profit before tax up 13% to £12.2m after US management change costs of £0.4m (June 2006: £10.8m, excluding a £3.7m pensions credit) • Profit before tax £12.2m (June 2006: £14.5m) • Order book up 28% to £92m (June 2006: £72m) • Basic earnings per share up 23% to 29.6p (June 2006: 24.0p, underlying 18.8p) significantly benefiting from retrospective R&D tax allowances resulting in an overall tax credit • Full year dividend (paid and proposed) increased by 6.4% to 10.0p (June 2006: 9.4p) • The broader geographical, sector and client base combined with additions to the senior management team, positions the business for further growth in the current year Commenting on the results, Dave Shemmans, Chief Executive Officer said: 'This year Ricardo finished with a strong order book, increased management strength and an exciting pipeline of technology. Trading performance was in line with expectations despite restructuring costs in the US and weaker performance in our US and Strategic Consulting operations overall. Our strategy to broaden the business mix and concentrate on margins, for the work that we undertake has resulted in continued development of the profitability of the business. 'The global automotive industry is active with new product offensives driven by stringent emissions legislation, desire to improve fuel economy and the need to reduce CO2 emissions. Ricardo is benefiting by having the strategy, technology and presence to exploit these growing demands and global industry drivers. 'We have had a satisfactory start to the new financial year, benefiting from the strong order book and continued good order intake. The continuing delivery of our strategy to increase geographic, customer and sector spread, together with the implementation of a US business improvement plan, gives us confidence for continued progress in the new financial year.' Further enquiries: Ricardo plc Dave Shemmans, Chief Executive Tel: 01273 455611 Paula Bell, Group Finance Director Website: www.ricardo.com Gavin Anderson & Company Tel: 020 7554 1400 Fergus Wylie Michael Turner Review of the Year Trading Performance Delivering against our strategic objectives which include broadening our customer and geographic reach has resulted in continued profit growth, improved margins and a strong closing order book at £92m, which was up 28% on last year. The content of the order book now includes orders spanning more than 12 months underpinning longer term business growth. Revenue for the financial year to 30 June 2007 was level at £171.5m (2006: £171.9m). Strong business growth in the UK was offset by an expected revenue reduction for Strategic Consulting as a result of the completion of three major contracts in the previous year, and a slower start to the year in the US business. Underlying operating profit increased to £13.2m (2006: £12.1m excluding the pensions credit of £3.7m), representing a 7.7% operating margin on revenue (2006: 7.0%). This increase was underpinned by a trend of improved business mix and efficiency in the UK. Underlying Group profit before tax was £12.2m, which was 13% up on last year (2006: £10.8m). Tax Ricardo has been claiming UK R&D tax credits since they were introduced in 2002. As we highlighted at the half year, we have examined the basis for calculating the UK R&D claim resulting in increased claims for 2004 to 2006. In addition, we undertook a major project to prepare an R&D tax claim in respect of our US business. This claim covers the period 2000 to 2006. This has resulted in an overall tax credit for the financial year. Excluding these significant benefits of £5.2m from our tax charge this year, and a related small impact last year of £0.7m, the tax charge is normalised at 19%, compared to 18% for the prior year. Earnings per share The basic earnings per share has significantly benefited from the overall tax credit this financial year and has increased to 29.6p (2006: 24.0p, 18.8p excluding the pensions credit). However, we do not expect to benefit to the same extent in future periods from significant retrospective R&D tax allowances, which will therefore impact on the future earnings per share comparisons. Dividend We are proposing to increase the total dividend (paid and proposed) to 10.0p per ordinary share (2006: 9.4p) following a year of further earnings growth. The dividend cover will be almost three times. The proposed final dividend of 7.1p, (2006: 6.7p) will be paid on 23 November 2007 to all shareholders on the register at the close of business on 26 October 2007, subject to approval at the Annual General Meeting on 9 November 2007. Net Assets Net assets at 30 June 2007 were £61.7m, compared with £50.1m a year earlier. This increase is primarily driven by ordinary trading, the reduction in our pension deficit and reduction in our tax liabilities resulting from R&D allowances. Capital expenditure in the year was £9.5m, which included £4.1m to upgrade test cells to satisfy the increasing demand to meet new emissions legislation. As a lease expired at one of our German properties we chose to acquire the building for £1.2m as a more cost effective option. The balance of the capital expenditure was necessary to maintain our facilities and keep our information technology systems up to date. At the year end our capital commitments totalled £0.5m. Work is under way to upgrade our office buildings at Shoreham-by-Sea some of which have become rather dated. Our capital expenditure is likely to increase marginally as a result, as we continue to invest in our test and IT software systems to support our growth agenda. Working Capital We continuously manage and monitor the level and quality of debts and work in progress as we deliver our customer diversification strategy. In the full year, working capital grew by £3.9m reflecting our growing order book which has increasing content from Asia where client's payments tend to be slower. The net debt balance has more than halved since the half year, to £7.2m, which represents only a small increase since June 2006 of £1.4m. Pensions The deficit in our defined benefit pension scheme as measured in accordance with IAS 19 Employee Benefits, reduced from £23.6m to £16.7m due mainly to a better than anticipated return from the equity investments in the fund, an improved bond yield and additional cash payments into the fund. The reduction was despite the adverse impact of assuming current mortality factors. We continue with our 9 year plan to substantially eliminate the deficit by making additional cash payments. Technical Consulting UK Our UK business, which includes engine, transmission, electronic and vehicle engineering, increased its order intake, order book, revenue and profits against the prior year. The area showing the strongest growth was the engines and transmission businesses, driven by activity from European and Asian clients. In response, we have increased the size and capacity of our engineering teams in the UK and the Czech Republic engineering centre which supports it. The engines business benefited from an increase in demand for advanced diesel technology in both the commercial and passenger car sectors, driven heavily by three principal factors: pending emissions legislation, the global drive for fuel economy and the emergence of the US as a new market for diesel passenger cars. The commercial vehicle sector was also strong in our Asian markets, particularly India, driven by legislation and fuel economy improvements. We have also entered the Russian market and secured two good size programmes in the diesel engineering sector and see more opportunities in this developing market. The gasoline engine business continued to benefit from our reputation and track record for on-time, production-ready, high quality delivery capability, with business in passenger car, motorcycle and power generation markets. The controls & electronics business has continued to grow and is underpinned by interest in hybrid vehicles and pending global legislation in the areas of on-board diagnostics and emissions. Control and Electronics is central to the delivery of low-emissions, fuel-economic engine and transmission technology aimed at meeting worldwide legislative and consumer demands. We continue to see growth in this area with sustained recruitment of skilled control and electronics engineers in the UK and the Czech Republic remaining a key priority. The transmissions business continues to enjoy success on a global basis, with sustained growth in the demand for advanced, fuel-efficient and performance-enhancing technologies. The portfolio of projects continues to expand across a wider range of sectors and now includes off-highway, military and commercial vehicle applications in addition to the traditional automotive products. Research investment remains focused on advanced dual clutch technology and advanced safety performance utilising torque vectoring, a technique which increases driving performance and safety by sharing torque between the four wheels in real time. The motorsport transmissions business has grown its customer base with successful programmes in Formula 1 and World Rally Car, and has made a significant impact in the Japanese motorsport market. The business continues to build and supply Bugatti transmissions. The vehicle engineering business has benefited from growth in the military sector, with the traditional mainstream activities enjoying the growing and rapidly expanding Asian market. During the year the vehicle engineering business has increased its emphasis on providing military vehicle system solutions in response to the significant growth in this sector. Following a very successful 20-month period from start-up to the successful market introduction of vehicle and engine product in China under the Roewe brand, the planned sale of Ricardo 2010 was successfully completed on 10 May 2007. With Ricardo support Shanghai Automotive Industry Corporation (SAIC) has, in a remarkably short period of time, established a UK technical centre of some 250 engineers, situated at our Midlands facility. In parallel, it has developed and introduced high quality products into the Chinese market. Ricardo's relationship with SAIC is still flourishing, with continued outsourced business and strategic advice. US (including Ricardo Software) Our US operation was profitable but underperformed in relation to our aspirations. This was mainly due to a slow start to the year as a result of a poor opening order book. However, major efforts were put into place to reorganise the business to make it more customer focused, more entrepreneurial and better aligned with the organisational structure of the rest of the Group. This has led to an improved second half of the year and a stronger year-end order book. Towards the end of the year, we implemented a key part of the restructuring - the recruitment of Dean Harlow as the new President of our US business, with a clear focus on innovation-led, value-added growth. Further business improvements are currently being implemented. Dean Harlow is an experienced, entrepreneurial business leader with a proven track record of international business development in the automotive sector. Energy security and climate change have now taken centre stage in the US debate, providing opportunities for Ricardo to leverage its core competencies. President Bush's '20 in 10' initiative, a 20 per cent reduction in gasoline consumption over 10 years, is providing a new impetus for growth and diversification. We have seen a significant growth in our US diesel business for US automotive passenger car markets. In addition, we are seeing good opportunities in the small engine sector and in new markets such as alternative fuels and the electrification of the vehicle - including hybrids, plug-in hybrids and electric vehicles. The controls & electronics business is rapidly expanding in the US with order intake doubling in the year and we continue to recruit aggressively. This development is due to increased electronics content in vehicles, more complex and more efficient powertrains and the expansion into vehicle safety improvements. Military spending in the US market remains at record levels, with key initiatives to advance the technology and fuel economy of tactical and support vehicles. We continue to align our operations with military initiatives in an effort to increase Ricardo's presence and ultimately our market share. Ricardo Software, one of our smaller operations, which develops and commercialises leading-edge engineering software for the automotive industry, had a very good year, delivering higher levels of revenue and profit growth than previously. These software products reduce time to market while improving design robustness through accurate and validated simulation. Germany Our operation in Germany continues its turnaround into profitability while maintaining its investment in growth through increasing engineering facility capability and the recruitment of further high quality engineers. Our order book, prospects list and client base continue to grow and develop, with opportunities increasing in size and breadth to match our growing capabilities and high value-added services. We continue to invest in people, facilities and the latest tools and techniques to increase the pace of growth, especially in some key product areas such as controls & electronics, light duty diesel, vehicle engineering and transmissions development. Our more established product areas of commercial vehicle diesel, production/prototyping, gasoline engineering and testing all continued to perform well in the year as we cement our reputation in the German market and start to capture market share. The engineering organisation is now aligned with the group structure and we are achieving good levels of programme sharing and joint delivery with other divisions, which improves efficiency and delivery to the demanding German client base. During the year we have significantly broadened our penetration into the German motor industry, with a growing client base within the premium OEMs and Tier 1 players in all automotive industry sectors (motorcycle, off-highway, commercial vehicle, marine and passenger car). We are now a well recognised and accepted part of the high-end engineering services sector, increasingly bidding for, and winning, complete turnkey multi-million Euro projects. Asia Japan: Business for Technical Consulting from the globally important and successful Japanese client base continues to grow as a result of our increased presence through our Japanese office. In the year we have secured sizeable turnkey outsourced programmes from highly demanding clients as they move to a model of increased outsourcing. In a market which is led by relationship, innovation and delivery, it is pleasing to see that investments over many years in terms of technology and local presence have built us a good platform from which to exploit this significant move. Transmissions, diesel and electronics were particularly successful areas this year, with order intake tripling compared to the orders we saw last fiscal year. To further increase our support to the clients we have relocated our Japanese office to gain better access to our customers' R&D facilities and to improve our service levels. The core of the work was conducted in the UK and US. China: In the year we have transitioned from a sales to an engineering office and have moved into larger premises as we recruit local engineering talent. The technical centre in Shanghai has been well received by clients and we are now delivering engineering services from this WOFE (Wholly Owned Foreign Enterprise). In addition to the Chinese domestic brand companies we are now demonstrating the benefit of our presence to our established Western customers as they look to engineer systems either for China or with their Chinese partners. Several new companies have joined the Ricardo client base this year, yet we are also seeing high levels of follow on business from existing customers, seeking to become truly world class by accessing leading-edge technology and realise the value that Ricardo offers. Gasoline engineering and hybrid technology remain key activities in China; however, we have also added vehicle and transmissions programmes to the portfolio. India: We have increased our business levels and presence on the ground and will be formally opening an office in November 2007. Strategic Consulting Following two years of very rapid growth, as anticipated, the year started slowly as we successfully completed and ramped down major projects from the prior year and focused on building more diversified business streams. As a result, a number of new high quality clients were added to our customer portfolio whilst our work in support of our existing clients continued. Our services for business strategy, acquisition support, business turnaround and business performance improvement continue to be valued and in demand by investors, vehicle manufacturers and suppliers. We have extended our client base in both diversity and geographic reach, adding major commercial vehicle manufacturers in Europe and Asia as well as off-highway manufacturers and suppliers in North America. In the year we have undertaken our first strategic projects for clients in China and Korea whilst adding additional clients to our customer portfolio in the expanding market in India. As the ownership structure of the automotive industry changes particularly in the supply base, our strategy consultants have become very active in providing consulting services to companies and institutional investors in Europe and North America both pre and post acquisition. Our deep knowledge of the industry makes us an ideal partner for evaluation of companies and improving their businesses post acquisition. In addition our activity in support of Asian investors looking towards growth in more mature markets continues to increase. We continue to invest in our service offerings to ensure that we remain at the forefront of thought leadership in the industry and have the solutions to address some of the industry's most critical issues. As a result, our service offerings have now been extended to fuels and oils companies together with established companies as well as new investors looking at the impacts of new energy on the industry. We see this interest as a growing driver of new activity in the sector. The offering of deep-content management consultancy focused upon delivering tangible results is well received and valued by our clients and remains unique. We continue to take business from the more traditional management consulting firms and this, together with the diversification of our clients and service offerings, will generate growing demand. Research and Development Research planning is a key element in Ricardo business strategy. A sophisticated process is used to guide and analyse internal investments to create added-value technologies with clear benefits. This process has proved popular with our customers, creating a premium service that can support research and product roadmap planning. The key global driver for the majority of Ricardo research has been the demand for lower carbon emissions; a demand which directly translates into improved fuel efficiency. The European Commission has recently announced plans to mandate lower fleet average fuel consumption from passenger cars sold in member states. A similar pattern is emerging in the United States, where the government is also now proposing a more regulated approach to lower fuel consumption in road transport. Japan, too, has set targets for improved fuel economy by 2010 and has also been the first to introduce fuel economy legislation for heavy-duty vehicles. Another key driver that has been growing in priority for a number of years has been safety and security. Around 30-40,000 people are killed in road traffic accidents in both Europe and the US every year. Even more fatalities occur in developing countries such as China and India. There is no simple solution to improved safety: however, an integrated approach to driver training, road design and vehicle technology is emerging as the most likely approach to deliver real improvements. This has driven a need for so-called smart vehicles that can interact more intelligently with the driver and surrounding infrastructure and traffic, reducing travel times caused by congestion and also reducing the risk of collisions. Most internally funded research at Ricardo now attracts collaborative support from automotive customers and sometimes involves additional government grant funding from the United States, Europe or the UK. The combined R&D programme at Ricardo is organised into a portfolio of Technology Platforms. These platforms align with key product areas and allow a more integrated approach. They have delivered some excellent results during the past year: • Following on from initial single-cylinder tests, our low-NOx heavy duty diesel engine programme has now delivered emissions from a prototype multi-cylinder engine consistent with the Euro 6 requirements scheduled for 2013, using a very advanced, flexible fuel injection system. • Our programme to develop an advanced light duty diesel combustion system compatible with the Tier 2 emissions requirements in the US has also made very good progress and has now been implemented in a driveable vehicle. This combines an innovative gas exchange system and advanced combustion and after treatment systems to deliver the minimum-cost solution for US Tier 2 standards. This programme has proved to be a key factor in developing customer programmes in this field. • Our fuel-efficient gasoline programme includes a switching 2-stroke to 4-stroke boosted gasoline engine targeting a 25 per cent improvement in vehicle fuel consumption. This has been implemented in a 2-litre V6 configuration with a camless, Ricardo-designed electro-hydraulic valve actuation system and specially modified engine management hardware. A collaborative programme with Robert Bosch in the United States has also delivered a downsized boosted twin-turbocharged direct injection V6 engine installed in a Cadillac CTS. This has delivered a 10 per cent improvement in fuel economy compared with a conventional powertrain. • Our process to production platform includes a programme to create a virtual engineering tool set for low-emissions diesel vehicles. This collaborative programme has enabled the release of the first version of software that links analysis process together into a more seamless system. The first release of our engine simulation model that can run in real time as an engine controller has also been completed. • The first year of our collaborative European-funded programme to support planning of future hydrogen communities has also been completed. This has included analysis of hydrogen and fuel cell research drivers and funding sources in collaboration with the European Investment Bank. • Our integrated safety platform has delivered a new active torque vectoring unit, varying the torque from left to right rear wheels under electronic control in an Audi A6 demonstration vehicle. This patented technology has been very successfully demonstrated to customers and has created very good opportunities for Ricardo in this market. People With the prime purpose of supporting Ricardo's strategic goals over the next few years, a number of senior management changes occurred in the last year. Decisions are taken on the basis of continually reviewing the quality of existing management and making changes where improvement is necessary, where new skills are required or when increasing resource is necessary through growth. Internal development is the preferred route to appointments: external appointments are only made where there is a lack of suitable internal candidates. Paula Bell joined Ricardo in October 2006, took up her appointment as Group Finance Director in November 2006 and has strengthened the finance function with a number of external Finance Director appointments to support UK divisions, Germany and Asia. In the USA it was felt necessary to make a change in leadership to further enhance its business development focus. Dean Harlow was appointed externally in May 2007 to replace Jeremy Holt, who left the company at the same time. To reinforce the significance of IT to Ricardo's strategy, a new Group IT Director, Manvinder Singh, was appointed externally in May. Malcolm Greenslade, Group HR Director, will be retiring in September 2007 and Sarah Murphy joined in August as his replacement. To provide greater co-ordination of Ricardo's Global Product Groups, Mark Garrett was appointed Group Engineering and Products Director after successfully managing the Ricardo 2010 project. In Germany, Detlev Baudach, who had been Managing Director for seven years, resigned for personal reasons and to take up another appointment; he has been replaced by Dr Peter Heuser, who has successfully grown our Heavy Duty Diesel business and has been a catalyst for growth in Germany. Conclusion/Outlook This year Ricardo finished with a strong order book, increased management strength and an exciting pipeline of technology. Trading performance was in line with expectations despite restructuring costs in the US and weaker performance in our US and Strategic Consulting operations overall. Our strategy to broaden the business mix and concentrate on margins, not just revenue, for the work that we undertake has resulted in continued development of the profitability of the business. The global automotive industry is active with new product offensives driven by stringent emissions legislation, desire to improve fuel economy and the need to reduce CO2 emissions. Ricardo is benefiting by having the strategy, technology and presence to exploit these regions' growing demands and global industry drivers. We have had a satisfactory start to the new financial year, benefiting from the strong order book and continued good order intake. The continuing delivery of our strategy to increase geographic, customer and sector spread, together with the implementation of a US business improvement plan, gives us confidence for continued progress in the new financial year. Dave Shemmans Chief Executive Officer 17 September 2007 Consolidated Income Statement for the year ended 30 June 2007 2007 2006 Continuing operations Notes £m £m -------------------------------------------------------------------- Revenue 2 171.5 171.9 Operating profit 2 13.2 15.8 -------------------------------------------------------------------- Operating profit excluding pensions credit (underlying) 13.2 12.1 Pensions credit - 3.7 -------------------------------------------------------------------- Finance income 2.0 1.4 Finance costs (3.0) (2.7) -------------------------------------------------------------------- Profit before taxation 12.2 14.5 --------------------------------------------------------------------- Profit before tax excluding pensions credit (underlying) 12.2 10.8 Pensions credit - 3.7 --------------------------------------------------------------------- Taxation 2.9 (2.3) --------------------------------------------------------------------- Profit for the year 15.1 12.2 --------------------------------------------------------------------- Profit for the year excluding pensions credit (underlying) 15.1 9.6 Pensions credit - 2.6 --------------------------------------------------------------------- Profit attributable to minority interest 0.1 0.1 Profit attributable to equity shareholders 15.0 12.1 --------------------------------------------------------------------- Earnings per ordinary share Basic 3 29.6p 24.0p Diluted 29.5p 23.9p --------------------------------------------------------------------- Consolidated Statement of Recognised Income and Expense for the year ended 30 June 2007 2007 2006 £m £m -------------------------------------------------------------------- Currency translation differences on net investment in foreign operations (1.5) (0.2) Fair value gain/(loss) on net investment hedge 0.4 (0.4) Actuarial gains on the defined benefit pension scheme 4.2 6.7 Tax on actuarial gains on the defined benefit pension scheme (1.7) (2.0) -------------------------------------------------------------------- Net income and expense recognised directly in equity 1.4 4.1 Profit for the financial year 15.1 12.2 -------------------------------------------------------------------- Total recognised income and expense for the year 16.5 16.3 -------------------------------------------------------------------- Attributable to minority interest 0.1 0.1 Attributable to equity shareholders 16.4 16.2 -------------------------------------------------------------------- Consolidated Balance Sheet as at 30 June 2007 2007 2006 £m £m ------------------------------------------------------------------ Assets Non current assets Goodwill 15.6 15.9 Other intangible assets 1.9 1.5 Property, plant and equipment 44.5 45.2 Deferred tax assets 9.9 8.7 ------------------------------------------------------------------ 71.9 71.3 ------------------------------------------------------------------ Current assets Inventories 7.5 7.0 Trade and other receivables 55.6 47.3 Current taxation 0.5 0.2 Deferred tax assets 1.7 0.6 Cash and cash equivalents 15.4 49.8 Assets classified as held for sale -- 7.5 ------------------------------------------------------------------ 80.7 112.4 ------------------------------------------------------------------ Total assets 152.6 183.7 ------------------------------------------------------------------ Liabilities Current liabilities Bank loans and overdrafts (9.1) (45.0) Trade and other payables (43.9) (38.9) Current tax liabilities (2.1) (2.5) Deferred tax liabilities (0.4) (0.6) Provisions (0.5) (0.5) Liabilities directly associated with assets classified as held for sale - (7.5) ------------------------------------------------------------------ (56.0) (95.0) ------------------------------------------------------------------ Net current assets 24.7 17.4 ------------------------------------------------------------------ Non current liabilities Bank loans (13.5) (10.6) Retirement benefit obligations (16.7) (23.6) Deferred tax liabilities (4.7) (4.4) ------------------------------------------------------------------ (34.9) (38.6) ------------------------------------------------------------------ Total liabilities (90.9) (133.6) Net assets 61.7 50.1 ------------------------------------------------------------------ Shareholders' equity Share capital 12.7 12.7 Share premium 13.3 13.3 Other reserves (0.5) 0.6 Retained earnings 35.7 22.9 ------------------------------------------------------------------ Total shareholders' equity 61.2 49.5 Minority interest in equity 0.5 0.6 ------------------------------------------------------------------ Total equity 61.7 50.1 ------------------------------------------------------------------ Consolidated Cash Flow Statement for the year ended 30 June 2007 2007 2006 Notes £m £m -------------------------------------------------------------------- Cash flows from operating activities Cash generated from/(used by) operations 4 15.6 20.0 Interest received 2.0 1.4 Interest paid (3.0) (2.7) Tax (paid)/refunded (1.6) (1.4) -------------------------------------------------------------------- Net cash from operating activities 13.0 17.3 -------------------------------------------------------------------- Cash flows from investing activities Proceeds of sale of property, plant and equipment - 0.3 Purchase of intangible assets (1.0) (1.1) Purchase of property, plant and equipment (8.5) (7.3) Intra group transfers of fixed assets - - -------------------------------------------------------------------- Net cash (used)/received in investing activities (9.5) (8.1) -------------------------------------------------------------------- Cash flows from financing activities Net proceeds from issue of ordinary share capital - 1.3 Net proceeds from issue of new bank loan 3.9 - Repayment of borrowings (2.1) (0.5) Dividends paid to shareholders (4.9) (4.6) Dividends paid to minority interests (0.1) - -------------------------------------------------------------------- Net cash (used)/received in financing activities (3.2) (3.8) -------------------------------------------------------------------- Effects of exchange rate changes (0.3) (0.5) -------------------------------------------------------------------- Net increase/(decrease) in cash and cash equivalents - 4.9 Cash and cash equivalents at 1 July 12.7 7.8 -------------------------------------------------------------------- Cash and cash equivalents at 30 June 12.7 12.7 -------------------------------------------------------------------- At 1 July Cash and cash equivalents 49.8 28.8 Bank overdrafts (37.1) (21.0) -------------------------------------------------------------------- 12.7 7.8 -------------------------------------------------------------------- At 30 June Cash and cash equivalents 15.4 49.8 Bank overdrafts (2.7) (37.1) -------------------------------------------------------------------- 12.7 12.7 -------------------------------------------------------------------- Notes to the financial statements for the year ended 30 June 2007 1 Basis of preparation This preliminary announcement has been prepared on the basis of the accounting policies as set out in the financial statements for the year ended 30 June 2007, which have been prepared in accordance with International Financial Reporting Standards ('IFRS') and International Financial Reporting Interpretations Committee ('IFRIC') interpretations endorsed by the European Union ('EU') and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The financial information herein does not amount to full statutory accounts within the meaning of section 240 of the Companies Act 1985 (as amended). 2 Segmental reporting a) By business segment, with revenue reflecting sales to external customers All from continuing Technical Strategic Total operations Consulting Consulting 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m ------------------------------------------------------------------------------- Revenue earned 163.6 158.0 7.9 13.9 171.5 171.9 Adjustment for inter-segmental revenue (0.6) (3.8) 0.6 3.8 - - ------------------------------------------------------------------------------- Revenue from third parties 163.0 154.2 8.5 17.7 171.5 171.9 ------------------------------------------------------------------------------- Segment result (before pensions credit) 11.9 9.5 1.3 2.6 13.2 12.1 Pensions credit - 3.7 ------------------------------------------------------------------------------- Operating profit 13.2 15.8 Finance income 2.0 1.4 Finance costs (3.0) (2.7) ------------------------------------------------------------------------------- Profit before tax 12.2 14.5 Tax 2.9 (2.3) ------------------------------------------------------------------------------- Profit for the year 15.1 12.2 ------------------------------------------------------------------------------- b) By division, reflecting the revenue and profit generated by the staff in those businesses Revenue earned Operating profit (1) 2007 2006 2007 2006 £m £m £m £m ------------------------------------------------------------------------------- Technical Consulting UK (2) 102.0 95.0 9.8 7.8 US (2) 37.4 38.9 1.2 2.2 Germany 24.2 24.1 0.9 (0.5) ------------------------------------------------------------------------------- 163.6 158.0 11.9 9.5 Strategic Consulting 7.9 13.9 1.3 2.6 ------------------------------------------------------------------------------- 171.5 171.9 13.2 12.1 ------------------------------------------------------------------------------- (1) Excluding a pensions credit of £3.7m in the year ended 30 June 2006 (2) Restated to include within the UK the overseas offices serving the UK, and for the re-classification of an immaterial subsidiary 3 Earnings per share Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares outstanding during the year, excluding those held by an employee benefit trust for the LTIP which are treated as cancelled for the purposes of the calculation. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Company has one class of dilutive potential ordinary shares: those options granted to employees where the exercise price is less than the market price of the Company's ordinary shares during the year. Where it is not possible to determine whether or not the performance criteria for the award to vest have been met until the end of the performance period, the shares are excluded from the calculation. Reconciliations of the earnings and the weighted average number of shares used in the calculations are set out below. 2007 2006 £m £m Earnings 15.0 12.1 Pensions credit - (2.6) ----------------------------------------------------------------- Underlying earnings 15.0 9.5 ----------------------------------------------------------------- Average number of shares in issue Number of Number of shares shares millions millions 50.7 50.4 Effect of dilutive options 0.1 0.1 ----------------------------------------------------------------- Diluted average number of shares in issue 50.8 50.5 ----------------------------------------------------------------- Per Share Per Share amount amount pence pence Earnings per share Basic 29.6 24.0 Diluted 29.5 23.9 Underlying earnings per share Basic 29.6 18.8 Diluted 29.5 18.8 ----------------------------------------------------------------- 4 Cash flow from operating activities 2007 2006 £m £m ---------------------------------------------------------------------- Continuing operations Profit from operations before pensions credit 13.2 12.1 Adjustments for: Share based payments adjustment 0.2 0.3 Depreciation and amortisation 8.8 9.0 ---------------------------------------------------------------------- Operating cash flows before movements in working capital 22.2 21.4 Increase in inventory (0.5) - Increase in trade and other receivables (9.3) (4.3) Increase in payables 5.9 3.5 Increase in provisions - 0.1 Pension payments in excess of pension costs (2.7) (0.7) ---------------------------------------------------------------------- Cash generated by operations 15.6 20.0 ---------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock Exchange

Companies

Ricardo (RCDO)
UK 100

Latest directors dealings