Interim Results
Smiths Group PLC
21 March 2007
Smiths reports a 7% increase in first half headline EPS for continuing
activities
Interim Results 2007
£m 2007 2006
Continuing activities Headline* Statutory Headline* Statutory
Sales 1,021 1,007
Operating profit 148 149 139 136
Pre-tax profit 134 136 125 124
Basic EPS (p) 17.4p 18.6p 16.3p 16.5p
EPS from discontinued activities (p) 7.6p 7.1p
Interim dividend (pps) 10.5p 9.85p
* In addition to statutory reporting, Smiths Group reports its continuing
operations on a headline basis, which shows underlying performance. Headline
profit is before exceptional items (incl. impairment of assets), amortisation of
acquired intangible assets, profit/loss on disposal and financing gains/losses
from currency hedging.
Summary
In the first six months of the 2007 financial year, Smiths Group recorded a 7%
increase in the headline earnings per share of its continuing activities, from
which the aerospace businesses being sold to General Electric Company (GE) have
been excluded. On the same basis, operating profit also increased by 7%, and
the net margin improved from 13.8% to 14.5%, with margins in all three
continuing businesses moving ahead. This performance was achieved despite the
significant impact of a weaker dollar on translation of US earnings into
sterling. On a statutory basis, earnings per share of the continuing activities
were 18.6p. The operating cash-flow, after capex, was at 84% of operating
profit. The Board has declared an interim dividend of 10.5p, an increase of
6.6%. In January, the company announced it would sell Smiths Aerospace to GE
for $4.8 billion and would return £2.1 billion to shareholders, together with a
share consolidation. It also announced the intention to take a 64% stake in a
joint venture which would combine Smiths Detection with GE's Homeland Protection
business.
Commenting on the results, Keith Butler-Wheelhouse, Chief Executive said: 'This
is a strong start to the year for Smiths, with the continuing businesses
performing well despite the currency headwind. Additionally, we have made good
progress on completing the sale of Aerospace and establishing the new Smiths GE
Detection business. The outlook for the current financial year and beyond
remains encouraging and is in line with management expectations.'
-o-
Investor Relations Media
russell.plumley@smiths.com chris.fox@smiths.com
+44 (0)20 8457 8203 +44 (0)20 8457 8403
A meeting with analysts will be webcast at 9:00am UK time today on
www.smiths.com/ir and archived there soon after the event.
Highlights of the period:
• Growth in continuing activities
- Headline EPS and operating profit up by 7%
- Margins improved in all three businesses
- Growth achieved despite significant currency impact
- Cash conversion from profit at 84%, after capex
- Interim dividend increased by 6.6%
• Announcements of 15 January
- Sale of Smiths Aerospace agreed with GE for US$4.8billion, including
TMS unit
- Intention to return £2.1billion to shareholders, with an equivalent
share consolidation
- Letter of Intent to form Smiths GE Detection, in which Smiths will
hold a 64% share
• Good progress on transactions
- Shareholder approval secured for Aerospace sale
- Regulatory approval process underway
- Good progress towards reaching definitive agreement on Detection JV
Following the decision to sell Smiths Aerospace, these results distinguish
between continuing and discontinued activities and, to assist comparison with
the prior period, the results for the comparative periods have been re-presented
on a consistent basis.
Commentary on performance of continuing activities:
Sales
In the first six months of 2007, sales from continuing activities were £1,021m,
compared with £1,007m on the same basis for the first half of 2006. Reported
sales growth was held back by a 15 cent weakening of the dollar between the two
periods, which had an impact on US sales translated into sterling. On an
underlying* basis, sales in the period improved by 7%. Sales by Detection and
Specialty Engineering were ahead of management expectations, with Medical
slightly behind.
* Underlying performance excludes the year-on-year impact of currency
translation, acquisitions and disposals.
Headline profit
Headline operating profit from continuing activities increased by 7% to £148m
(H1 2006: £139m). This was after the significant currency translation impact
already mentioned, and on an underlying basis, the growth rate was 14%. The net
operating margin on sales improved from 13.8% to 14.5%.
The net interest charge for the period was £30m (£26m), partially offset by a
pensions financing gain of £16m (£12m), which reflected the strong funding
position of the company's retirement benefit schemes.
Headline pre-tax profit increased by 8% to £134m (£125m) and headline earnings
per share by 7% to 17.4p (16.3p). The company's effective tax rate for this
period was unchanged at 26%. The Board has declared an interim dividend of
10.5p, an increase of 6.6%. It will be paid on 27 April to shareholders
registered at the close of business on 30 March. The ex-dividend date is 28
March.
Statutory reporting
On a statutory basis, operating profit on the continuing activities was £149m
(£136m) and earnings per share were 18.6p (16.5p). The company recorded
amortisation of acquired intangible assets of £7m (£6m), profit on disposal of
businesses of £14m (£7m), acquisition integration costs for Medex of £5m (£3m),
income from commuted insurance policies of £43m (nil) and a provision for legal
fees of £44m (nil) (see below) and financing gains of £1m (£2m). In total,
these items amounted to a £2m contribution to profit on the continuing
activities. Including the discontinued activities, statutory earnings per share
were 26.2p (23.6p).
Legal matters
Following the commutation of the insurance policies referred to above, the legal
costs of resisting claims against John Crane Inc (JCI) will fall initially on
that company. Consequently, a provision has been established to meet these
costs which equates to approximately four years' expected expenditure.
Substantial insurance cover remains in place (see also notes 12 and 15 of the
Accounts).
Cash and debt
The company generated a strong headline operating cash-flow on its continuing
activities in the first half of 2007. At £124m, it represents an 84% conversion
ratio from headline operating profit, after capital expenditure on property,
plant, and equipment, and development costs. Free cash-flow, after interest and
tax, was £85m. Net acquisition and disposal expenditure in the period was £9m,
and the payment of the 2006 final dividend cost £122m. Net debt for the total
Group, at the end of the period, was £938m.
Investment for growth:
• Acquisitions and disposals
In addition to the announcements about the sale of the aerospace businesses and
about the new detection business, Smiths has made a number of smaller
acquisitions and disposals which will help refine the business mix of its
continuing activities. In August, John Crane's bearing lubrication business in
Finland was sold for £15m. In the same month, Comet, an Italian manufacturer of
pressure sealing systems, was acquired for £3m. In December, Tecnicas Medicas,
the Spanish distributor of Smiths Medical products, was acquired for £12m.
Today, Smiths announced the acquisition of CDI Energy Services for £19m. CDI is
a US business providing services to the oil & gas industry which will complement
the John Crane Performance Plus logistics management programme. It has a strong
position in the upstream sector through the equipment and support it supplies
for oil & gas production.
• Research & development
Investment in technologies to enhance Smiths competitive position by helping
customers succeed is an essential part of the company's Full Potential
programme. Company-funded R&D in this period was £34m, representing an average
across the three divisions of 3% of sales, with Medical and Detection above that
level and Specialty Engineering below it. Of the total, £26m was charged
against profit and the balance capitalised. The company is currently carrying
£33m of capitalised development costs relating to the continuing activities,
which are being amortised over timescales of typically 3-5 years.
• Productivity
The company made further efficiency gains in this period, with higher input
costs, including raw materials and payroll costs, more than offset by
restructuring, pricing and the benefits of establishing production by a growing
number of Smiths businesses in low-cost countries, including Mexico, India and
China. Average employment in the continuing activities was 22,000 (21,000)
during the half year. North America (US, Canada, Mexico) remains the company's
largest market, accounting for 52% of sales by origin and 69% of headline
operating profit.
Smiths Detection
£m 2007 2006
Sales 182 171
Headline operating profit 27 24
Smiths Detection sales increased by 6% and headline operating profit by 16%,
driving margins from 13.7% to 15.0%. The growth was even more marked on an
underlying basis, with sales 10% and profit 22% ahead.
There was strong growth in deliveries of airport security equipment in Europe,
the Middle and Far East, including X-ray and trace detection systems for Dubai,
Singapore and Shanghai airports. Now, more than five years after the events of
9/11, many units installed as a consequence are approaching the point where they
need replacing with more advanced technology. In the US itself, however, the
Transportation Security Administration (TSA) deferred some purchases in this
period while it assessed how to implement new systems more effectively. At the
same time, a maintenance agreement for Smiths to provide in-service support for
its equipment now out of warranty was renewed.
The Ports & Borders business also grew strongly, and will continue to increase
its proportion of Detection sales. Border protection has become a major focus
for governments around the world, both to prevent terrorism and to collect taxes
on imports. The US authorities have taken delivery of the first batch of mobile
HGV systems, but still only 5-8% of containers arriving by sea are being
scanned. The government has stepped up its Container Security Initiative in
which inspection is carried out at the port of origin. This initiative now
covers 70 locations, and has encouraged the governments in those countries to
buy additional X-ray systems for their own inspection purposes.
In October, the US Department of Homeland Security awarded Smiths a contract to
develop portable radiation detectors for border patrols, customs and
coastguards, with potential sales of $222m. Russia is among the countries
taking a lead in container screening, and has already begun installation of
Smiths scanners in major ports on the eastern seaboard. The Smiths plant in St
Petersburg is now fully operational, with a range of products certified as made
in-country.
Military business was lower in this period compared to a year ago, when there
were substantial deliveries under the ACADA programme in the US. The next major
programme for protecting defence forces against chemical agent threats, JCAD, is
expected to commence initial low-rate production at the end of 2007. Today,
Smiths announced it had been awarded three contracts by the US Air Force and
Department of Defense with a total value of $38m. The largest was a follow-on
order for 4,100 Improved Chemical Agent Monitor (ICAM) hand-held units to
protect US military forces against nerve and blister agent attacks. Sales of
military equipment to other countries included biological protection systems for
Japan and lightweight chemical detectors for the Norwegian armed forces.
Contract negotiation for future military business is particularly active at
present.
Demand is strong for equipment used in the protection of federal buildings in
the US, and for first responder equipment employed by civil authorities in many
countries.
Smiths Detection is investing to increase capacity, in particular expanding its
plants in the US ahead of production for which orders have already been
received. Company-funded R&D is currently in the range of 5-6% of sales, and
the products are being continually upgraded to provide greater levels of threat
detection, working closely with customers to meet their most demanding
requirements.
In January, Smiths announced that it had agreed with GE to combine Smiths
Detection and GE's Homeland Protection business. Smiths will own 64% of the
enlarged business, to be called Smiths GE Detection, and will consolidate its
performance as a subsidiary, with GE holding the balancing minority interest.
Smiths will nominate four of the six directors, including the chairman and
president, while GE will nominate the other two.
Good progress has been made towards reaching a definitive agreement with GE on
the terms on which the new enterprise will be established.
The combination of the two businesses will create a strong competitor in the
Detection sector. It will have a comprehensive range of products, in particular
the complete suite of equipment needed for checked baggage inspection at
airports, including the Computed Tomography units required by the TSA. The
combined technical resources of Smiths and GE will be available to the business,
including GE's know-how in medical imaging.
The outlook for Smiths in the detection sector is positive. Smiths Detection
will continue to perform well in the remainder of the year and, beyond that, the
proposed new business is well-positioned to be
among the industry leaders.
Smiths Medical
£m 2007 2006
Sales 347 355
Headline operating profit 60 59
Smiths Medical sales were slightly lower than a year ago and profit was slightly
ahead, both considerably impacted by currency translation. The margin on sales
improved from 16.7% to 17.4% and, on an underlying basis, sales grew by 3% and
profit by 9%.
The modest underlying sales growth reflected a number of factors particular to
this reporting period: there were production constraints while manufacture of
critical devices was consolidated from Hythe in the UK and Kirchseeon in Germany
into other Smiths Medical facilities; and there were capacity limitations on the
automated production lines making safety catheters in the US.
By contrast, the strong underlying profit growth benefited from: the ongoing
plant rationalisation programme and the continued move to low-cost manufacturing
countries; the incremental gain from the continued integration of Medex; and
tight control of costs as volume increased.
In the US, Smiths Medical is benefiting from the move towards treatment of
illnesses in their chronic, rather than acute stages. A number of airway
management products and ambulatory pumps already address this trend and it is
becoming a focus for critical care products. While the advantages of using
safety devices are well understood in the US healthcare system, there is now
also greater recognition of the contribution they make to improving healthcare
employees' safety and productivity. Group purchasing organisations are
important customers and, in this period, a number of sizeable agreements were
reached for a wide range of products, including those with Premier, Novation and
Broadlane.
Internationally, Smiths Medical is performing strongly. It has acquired
distributors in many of its key territories, most recently in Spain, and this
provides effective routes to market when countries adopt clinical best
practices, many of which, like the use of safety devices, have originated in
America. The Japanese business is one of the few not showing real growth, held
back by pricing pressure from the government reimbursement programme.
Recent new product introductions which helped to drive growth include a revised
range of epidural catheter fixation devices, in vitro fertilisation devices, as
well as consumables and software upgrades for insulin delivery pumps.
Development continues of next-generation ambulatory pumps, featuring error
detection software and data connectivity to hospital IT systems.
The industry in which Smiths Medical participates remains relatively
unconsolidated, with opportunities to add adjacent product lines.
The outlook for Medical is for further progress in generally positive market
conditions.
Specialty Engineering
£m 2007 2006
Sales 492 481
- of which, John Crane 252 245
Headline operating profit 61 56
- of which, John Crane 31 27
Sales in Specialty Engineering improved by 2% and profit by 9%, raising the
margin from 11.6% to 12.3%. On an underlying basis, sales improved by 8% and
profit by 16%.
The largest business, John Crane, increased its underlying profit by 27%,
benefiting from strong demand for its products and services, particularly in the
oil, gas and petrochemical sector. At this stage of the capital investment
cycle, the growth is in the sale of original equipment for new production
facilities. While margins are satisfactory, the subsequent aftermarket
opportunities which result from these new installations are highly attractive.
Among the projects John Crane has been involved with during this period are new
ethylene cracker plants in China, gas extraction and processing in the UAE,
ethane cracker and petrochemical plants in Saudi Arabia, lube oil plants in
Taiwan and ethanol production for biofuels in the US.
As it approaches production constraints, and with no sign of demand reducing,
John Crane has been adding capacity in low-cost manufacturing locations,
particularly in India and China, while succeeding in keeping fixed costs under
tight control. Locating in these countries has led to the generation of
incremental sales from local customers. Raw material prices, particularly for
stainless steel and tungsten carbide, have been rising, but John Crane has
passed the majority of these through.
In the aftermarket, John Crane is well placed around the world to respond
quickly to operators' urgent demands for maintenance and repair. Local service
centres with test rigs in Brazil, China, Dubai, India, Norway, Singapore, the UK
and US have significantly reduced downtime for customers who previously had to
wait while seals were shipped over long distances for repair.
The Interconnect business is also seeing strong growth. Its military business
has benefited from increased spending on network-centric systems to provide
effective battlefield communications, where Interconnect provides a range of
microwave components which are developed specifically for each project. Smiths
equipment is vital to the operation of Eurofighter Typhoon, for example,
generating healthy sales in this period. TMS, being sold to GE, is a discrete
unit, the departure of which will not affect the performance of the remaining
Interconnect business.
Of equal importance to Interconnect are the commercial networks providing
wireless communications to the consumer market. This sector is growing
strongly, driven by the demand for increased capacity on the existing networks
and for new infrastructure in the developing world.
Other applications for Interconnect products include medical equipment such as
MRI scanners and railway signalling systems, both of which are seeing good
growth at present.
Flex-Tek is the Smiths company supplying ducting and hosing for construction and
consumer products. Around 50% of sales relate to house-building in the US, a
market currently experiencing a downturn. At the same time, the business is
experiencing raw material price increases which are proving difficult to pass on
to customers. Sales not related to construction remain robust. Already a very
lean enterprise, Flex-Tek is working hard to reduce overhead costs, and
continues to be highly cash-generative.
Across its range of activities, Specialty Engineering is experiencing well-above
GDP growth in John Crane and Interconnect, forming the major proportion of its
activities, and this is enabling the division to achieve a strong performance,
with margins continuing to improve.
Changes to the Board
Stuart Chambers joined as a non-executive director in November. He is the Chief
Executive of Pilkington Group Ltd and a main Board member of its parent company,
Nippon Sheet Glass. Sir Nigel Broomfield, also non-executive, will retire at
the end of March. He was appointed in December 2000, and has made a valuable
contribution to Board's deliberations. The company is pleased to announce that
he will remain an advisor to the Detection business.
Prospects
Looking ahead, Smiths is now focused on technology leadership and competitive
market positions in sectors with attractive long-term prospects. In its new
shape, the company will have higher margins, better cash performance, an
improved capital structure, resources for further development and a progressive
dividend policy. The outlook for the current financial year and beyond remains
encouraging and is in line with management expectations.
Tables attached
- Income statement
- Statement of recognised income & expense
- Summarised balance sheet
- Cash-flow statement
- Notes to the accounts
Copies of the interim report will be sent to shareholders shortly, and will be
available at the company's registered office, 765 Finchley Road, London NW11
8DS.
-o-
Consolidated Income Statement (unaudited)
Period Period Period
Ended Ended Ended
3 February 31 January 5 August
2007 2006 2006
(restated)
Note £m £m £m
Continuing operations:
Revenue 2 1,021.2 1,007.1 2,180.3
Cost of sales (544.0) (532.4) (1,165.2)
Gross profit 477.2 474.7 1,015.1
Sales and distribution costs (155.7) (146.9) (316.9)
Administrative expenses
- normal activities (186.6) (198.0) (399.2)
- impairment of financial asset (325.0)
Profit on disposal of businesses 14.5 6.5 18.2
Operating profit (loss) 2 149.4 136.3 (7.8)
Interest receivable 3.3 2.5 4.2
Interest payable (32.8) (29.0) (57.3)
Other financing gains (losses) 1.1 1.9 (0.5)
Other finance income - retirement benefits 16.0 12.4 25.2
Net finance costs (12.4) (12.2) (28.4)
Share of post-tax (loss) profit of associates (0.7) 0.1 (1.1)
Profit (loss) before taxation 136.3 124.2 (37.3)
Comprising:
- headline profit before taxation 3 134.0 124.6 315.8
- exceptional operating items 4 8.1 3.8 (12.8)
- amortisation of acquired intangible assets 9 (7.0) (6.1) (13.0)
- financing gains (losses) 1.2 1.9 (2.3)
- impairment of financial asset (325.0)
136.3 124.2 (37.3)
Taxation on continuing operations (30.4) (31.3) (65.4)
Profit (loss) after taxation - continuing operations 105.9 92.9 (102.7)
Profit after taxation - discontinuing operations 8 43.1 40.6 126.9
Profit for the period 149.0 133.5 24.2
Profit for the period attributable to equity shareholders of the 149.0 133.5 24.2
parent company
Earnings per share: 5
- Basic 26.2p 23.6p 4.3p
- Basic - continuing operations 18.6p 16.5p (18.2)p
- Diluted 26.1p 23.5p 4.2p
- Diluted - continuing operations 18.5p 16.4p (18.0)p
Dividends per share (declared):
Interim 10.5p 9.85p 9.85p
Final 21.50p
10.5p 9.85p 31.35p
Consolidated statement of recognised income and expenditure (unaudited)
Period Period Period
ended ended ended
3 February 31 January 5 August
2007 2006 2006
£m £m £m
Exchange loss (51.1) (1.7) (113.1)
Taxation recognised on exchange losses - deferred (7.4)
Taxation recognised on share based payment 2.7 0.5 (2.6)
Actuarial gains (losses) on retirement benefit schemes 17.5 (73.4) 94.5
Taxation recognised on actuarial losses - deferred (5.8) 22.0 (24.0)
Fair value gains (losses):
- on cash-flow hedges 7.2 2.6 12.7
- on net investment hedges 13.4 (0.1) 17.1
Net cost recognised directly in equity (16.1) (50.1) (22.8)
Profit for the period 149.0 133.5 24.2
Total recognised income and expense for the period attributable to equity
shareholders
of Smiths Group plc 132.9 83.4 1.4
Consolidated balance sheet (unaudited)
3 February 31 January 5 August
2007 2006 2006
(restated)
Note £m £m £m
Non-current assets
Intangible assets 9 1,018.9 1,578.4 1,530.6
Property, plant and equipment 289.2 504.5 497.8
Investment accounted for using the equity method 12.8 13.7 14.0
Financial assets - other investments 10 0.7 328.6 0.8
Retirement benefit assets 179.2 106.6 183.7
Deferred tax assets 94.8 251.2 92.3
Trade and other receivables 10.1 17.8 16.8
Financial derivatives 0.1 1.7 6.2
1,605.8 2,802.5 2,342.2
Current assets
Inventories 319.8 600.4 558.4
Trade and other receivables 465.4 645.2 724.4
Financial derivatives 16.4 7.5 26.1
Cash and cash equivalents 11 274.1 359.9 120.6
1,075.7 1,613.0 1,429.5
Assets classified as held for sale and included in 8 1,316.6 4.4
disposal groups
Total assets 3,998.1 4,419.9 3,771.7
Non-current liabilities
Financial liabilities:
- borrowings 11 (897.6) (962.2) (862.3)
- financial derivatives (3.3) (1.4) (4.4)
Provisions for liabilities and charges (57.2) (26.4) (26.5)
Retirement benefit obligations (173.1) (343.0) (235.8)
Deferred tax liabilities (48.7) (130.4) (49.7)
Trade and other payables (34.1) (133.6) (114.8)
(1,214.0) (1,597.0) (1,293.5)
Current liabilities
Financial liabilities:
- borrowings 11 (328.3) (388.2) (185.0)
- financial derivatives (12.3) (5.8) (4.9)
Provisions for liabilities and charges (60.1) (59.4) (81.8)
Trade and other payables (385.5) (747.2) (699.5)
Current tax payable (130.9) (145.4) (144.1)
(917.1) (1,346.0) (1,115.3)
Liabilities included within disposal groups 8 (449.3)
Total liabilities (2,580.4) (2,943.0) (2,408.8)
Net assets 1,417.7 1,476.9 1,362.9
Shareholders' equity
Share capital 143.3 141.4 141.8
Share premium account 265.6 211.6 224.1
Own shares (7.0)
Revaluation reserve 1.7 1.7 1.7
Merger reserve 234.8 234.8 234.8
Retained earnings 732.2 884.5 734.0
Hedge reserve 47.1 2.9 26.5
Total shareholders' equity 13 1,417.7 1,476.9 1,362.9
Cash-flow statement (unaudited)
Period Period Period
ended ended ended
3 February 31 January 5 August
2007 2006 2006
(restated)
Note £m £m £m
Net cash inflow from operating activities 14 190.5 193.2 389.1
Cash-flows from investing activities
Expenditure on capitalised development (52.8) (48.8) (102.0)
Expenditure on other intangible assets (16.6) (16.5) (25.1)
Purchases of property, plant and equipment (51.1) (49.3) (111.2)
Disposal of property, plant and equipment 1.4 3.2 12.2
Additions to financial assets (0.3)
Acquisition of businesses (14.7) (32.8) (54.2)
Disposals of businesses 11.2 5.0 8.3
Net cash-flow used in investing activities (122.9) (139.2) (272.0)
Cash-flows from financing activities
Proceeds from issue of ordinary share capital 22.3 14.6 27.3
Dividends paid to equity shareholders (122.3) (111.3) (167.0)
Increase (decrease) in other borrowings 56.8 32.5 (42.4)
Net cash-flow used in financing activities (43.2) (64.2) (182.1)
Net increase (decrease) in cash and cash equivalents 24.4 (10.2) (65.0)
Cash and cash equivalents at beginning of period (51.1) 11.9 11.9
Exchange differences 2.6 0.1 2.0
Cash and cash equivalents at end of period (24.1) 1.8 (51.1)
Cash and cash equivalents at end of period comprise:
- cash at bank and in hand 276.4 344.6 102.3
- deposits 15.3 18.3
- bank overdrafts (300.5) (358.1) (171.7)
(24.1) 1.8 (51.1)
Included in cash and cash equivalents per the balance (25.6) 1.8 (51.1)
sheet
Included in the assets of the disposal group 8 1.5
(24.1) 1.8 (51.1)
Notes to the accounts (unaudited)
1 Basis of preparation
The interim financial statements have been prepared in accordance with the
Companies Act 1985 applicable to companies reporting under International
Financial Reporting Standards (IFRSs) and International Financial Reporting
Interpretations Committee (IFRIC) interpretations, as adopted by the European
Union in response to the IAS regulation (EC 1606/2002), under the historic cost
convention modified to include revaluation of certain financial instruments.
For Smiths Group plc there are no differences between IFRS as adopted for use in
the European Union and full IFRS as published by the International Accounting
Standards Board.
The financial information presented in these financial statements has been
prepared in accordance with accounting policies used in the most recent
financial statements, which are also expected to be followed in preparing the
annual financial statements for the period ending 31 July 2007, and the Listing
Rules of the FSA, except as noted below. These financial statements do not
comply with the requirements of IAS 34.
Restatement
The 31 January 2006 consolidated income statement, consolidated balance sheet,
changes in shareholders' equity and cash flow statements have been restated to
reflect the final accounting policies which were adopted in the 2006 year end
financial statements, the effect of which was to increase financial derivative
assets by £1.3m, decrease financial derivative liabilities by £8.4m, and
increase shareholders' equity by £9.7m.
The consolidated income statement and cash flow statement for the six months to
31January 2006 have been restated to reflect a £2.5m reclassification from
financing to operating profit, in respect of the treatment of administration
costs for the pension schemes.
In addition, in accordance with IFRS, the Group has now included in the
statement of recognized income and expense, for all periods presented, the
deferred tax credit in respect of share-based payments.
Recent accounting developments
The Company has adopted the following developments and interpretations with
effect from 6 August 2006.
IAS 39 - 'Financial Instruments : Recognition and measurement'
An amendment to IAS 39 requires financial guarantees to be initially recognised
at fair value and remeasured at each balance sheet date. The effect on the
interim financial statements is not material.
IFRIC 4 - 'Determining whether an Arrangement contains a lease'
This interpretation requires arrangements which may have the nature, but not the
legal form, of a lease to be accounted for in accordance with 'IAS 17 Leases'.
The effect on the interim financial statements is not material.
IFRIC 8 - 'Scope of IFRS 2'
This interpretation clarifies that the accounting standard IFRS 2 'Share-based
payment' applies to arrangements where an entity makes share-based payments for
apparently nil or inadequate consideration. IFRIC 8 explains that, if the
identifiable consideration given appears to be less than the fair value of the
equity instruments granted or liability incurred, this situation typically
indicates that other consideration has been or will be received. The effect on
the interim financial statements is not material.
IFRIC 9 - 'Re-assessment of embedded derivatives'
This interpretation clarifies certain aspects of the treatment of embedded
derivatives under IAS 39 'Financial instruments: Recognition and measurement'
and concludes that reassessment of an embedded derivative is prohibited unless
there is a change in the terms of the contract that significantly modifies the
cash flows that otherwise would be required under the contract, in which case
reassessment is required. The effect on the interim financial statements is not
material.
IFRIC 10 - 'Interim financial reporting and impairment'. This interpretation
addresses the apparent conflict between the requirements of IAS 34 'Interim
financial reporting', and those in other standards on the recognition and
reversal in financial statements of impairment losses on goodwill and certain
financial assets. It states that any such impairment losses recognised in an
interim financial statement may not be reversed in subsequent interim or annual
financial statements. There was no effect on the interim financial statements.
Proposed disposal of Aerospace Division
Following the announcement, on 15 January 2007, of the proposed disposal of the
Aerospace division and Times Microwave Systems, Inc., their activities have been
designated a 'discontinued operation' within the terms of IFRS 5 'Non-current
assets held for sale and discontinued operations' ('IFRS 5'). The results of
the discontinued operations are shown on the face of the Consolidated Income
Statement and the comparative figures have been restated to reflect the results
of discontinued operations in those periods and to reallocate certain continuing
costs previously allocated to the Aerospace division. The assets and
liabilities of the discontinued operations are separately identified on the
Consolidated Balance Sheet, although as prescribed by IFRS 5, no adjustment has
been made to comparatives.
The interim financial statements were approved by the directors on 21 March
2007.
2 Analyses of revenue and operating profit by business segment
For management purposes, the ongoing Group is organised into three business
segments - Detection, Medical and Specialty
Engineering. These business segments are the basis on which the Group reports
its primary segment information.
For reporting purposes, Specialty Engineering is analysed into two segments:
John Crane and Specialty - Other.
Period ended 3 February 2007
Specialty Engineering
Specialty Total
Detection Medical John Crane - Other
£m £m £m £m £m
Revenue 182.0 347.0 251.9 240.3 1,021.2
Headline operating profit 27.3 60.4 31.2 29.3 148.2
Exceptional operating items 0.2 (5.1) 12.3 0.7 8.1
Amortisation of acquired intangible assets (0.2) (5.4) (0.2) (1.2) (7.0)
Financing losses (0.3) 0.4 0.1 (0.1) 0.1
Operating profit 27.0 50.3 43.4 28.7 149.4
Net finance costs (12.4)
Share of post-tax (losses) profits of associated (1.0) 0.3 (0.7)
companies
Profit before taxation 136.3
Taxation (30.4)
Profit for the period 105.9
Period ended 31 January 2006
Specialty Engineering
Specialty Total
Detection Medical John Crane - Other
£m £m £m £m £m
Revenue 171.2 355.0 244.9 236.0 1,007.1
Headline operating profit 23.5 59.4 26.7 29.0 138.6
Exceptional operating items 5.3 (1.1) (0.4) 3.8
Amortisation of acquired intangible assets (0.1) (5.5) (0.5) (6.1)
Financing losses
Operating profit 28.7 52.8 26.7 28.1 136.3
Net finance costs (12.2)
Share of post-tax profits (losses) of associated (0.3) 0.4 0.1
companies
Profit before taxation 124.2
Taxation (31.3)
Profit for the period 92.9
Period ended 5 August 2006
Specialty Engineering
Specialty Total
Detection Medical John Crane - Other
£m £m £m £m £m
Revenue 411.8 737.0 518.4 513.1 2,180.3
Headline operating profit 74.3 133.3 66.4 70.8 344.8
Exceptional operating items 5.4 (17.2) 5.6 (6.6) (12.8)
Amortisation of acquired intangible assets (0.4) (11.2) (0.3) (1.1) (13.0)
Financing losses (0.3) (0.6) (0.4) (0.5) (1.8)
79.0 104.3 71.3 62.6 317.2
Impairment of financial assets (325.0)
Operating profit (7.8)
Net finance costs (28.4)
Share of post-tax (losses) profits of associated (1.5) 0.4 (1.1)
companies
Profit before taxation (37.3)
Taxation (65.4)
Profit for the period (102.7)
3 Headline profit measures
The Company seeks to present a measure of underlying performance which is not
impacted by exceptional items or items considered non-operational in nature.
This measure of profit is described as 'headline', and is used by management to
measure and monitor performance. Normal restructuring costs are charged against
headline profits.
The following items have been excluded from the headline measure:
• exceptional operating items - see note 4;
• amortisation of intangible assets acquired in a business combination - the
amortisation charge is a non-cash item, and the directors believe that it should
be added back to give a clearer picture of underlying performance; and
• other financing gains and losses - these represent the results of derivatives
and other financial instruments which do not fall to be hedge accounted under
IAS 39 and do not form part of the group's financing strategy. These items are
included either within operating profit or profit before taxation depending on
the nature of the transaction. The application of IFRS accounting principles
makes this item potentially volatile, and it is therefore excluded to give a
clearer picture of the underlying performance.
4 Exceptional operating items
Items which are material either because of their size or their nature, and which
are non-recurring, are presented within their relevant consolidated income
statement category, but highlighted separately within the line 'exceptional
operating items'. The separate reporting of exceptional items helps provide a
better picture of the Company's underlying performance. Items which may be
included within the exceptional category include:
• profits/(losses) on disposal of businesses;
• spend on the integration of significant acquisitions; and
• significant goodwill or other asset impairments.
An analysis of the items presented as exceptional in these financial statements
is given below:
Period Period Period
ended ended ended
3 February 31 January 5 August
2007 2006 2006
£m £m £m
Integration of acquisitions (5.0) (2.7) (18.7)
Class action settlement (12.2)
Profit on disposal of businesses (note 7) 14.5 6.5 18.1
Commutation of insurance policies (note 15) 42.9
Provision for litigation (note 12) (44.3)
8.1 3.8 (12.8)
Restructuring costs in connection with the integration of Medex amounting to
£5.0m (2006:£2.7m) have been incurred in the period.
John Crane, Inc. has commuted certain insurance policies and received £42.9m in
cash for the period. At the same time, it has established a litigation
provision in the sum of £44.3m (see note 15).
5 Earnings per share
Basic earnings per share are calculated by dividing the profit for the period
attributable to equity shareholders of the parent company by the average number
of ordinary shares in issue during the period.
Period Period Period
ended ended ended
3 February 31 January 5 August
2007 2006 2006
£m £m £m
Profit (loss) for the period
- Continuing 105.9 92.9 (102.7)
- Total 149.0 133.5 24.2
Average number of shares in issue during the 569,049,918 564,601,013 565,359,484
period
Diluted earnings per share are calculated by dividing the profit attributable to
equity shareholders by 571,928,823 (period ended 31 January 2006: 567,972,202;
period ended 5 August 2006: 569,733,560) ordinary shares, being the average
number of ordinary shares in issue during the period, adjusted by the dilutive
effect of share options.
A reconciliation of basic earnings per share - continuing and headline earnings
per share - continuing is as follows:
Period Period Period
ended ended ended
3 February 2007 31 January 2006 5 August 2006
Continuing Continuing Continuing
operations operations operations
£m EPS (p) £m EPS (p) £m EPS (p)
Attributable to equity
shareholders
of the parent company 105.9 18.6 92.9 16.5 (102.7) (18.2)
Exclude:
- integration of acquisitions 5.0 2.7 18.7
- disposal of businesses (14.5) (6.5) (18.2)
- insurance commutation (42.9)
- asbestos litigation provision 44.3
- class action settlement 12.2
- impairment of financial asset 325.0
- amortisation of acquired
intangible assets 7.0 6.1 13.0
- financing gains
charged to administrative (0.1) 2.8
expenses
charged to financing (1.1) (1.9) (0.5)
(2.3) 0.4 353.0
- less tax (4.4) (1.1) (15.5)
(6.7) (1.2) (0.7) (0.2) 337.5 59.7
Headline 99.2 17.4 92.2 16.3 234.8 41.5
Headline EPS - diluted (p) 17.3 16.2 41.2
6 Acquisitions
During the period, the Company made a number of acquisitions, including the
issued share capital of Tecnicas Medicas MAB, SA, on behalf of Medical.
The values set out below are provisional pending finalisation of the fair values
attributable, and will be finalised in subsequent periods.
All acquisitions are wholly owned. Goodwill and net assets in respect of prior
year acquisitions have been adjusted by £0.8m as a result of finalising their
attributable fair values.
Date of Consideration Goodwill Net assets
acquisition £m £m £m
Businesses acquired
Tecnicas Medicas 1 December, 2006 11.7 8.6 3.1
Other 3.6 2.9 0.7
15.3 11.5 3.8
Consideration:
- paid during the period 15.3
7 Disposals
The most significant disposal transaction during the period was the sale of the
Group's bearing lubrication business to AB SKF. Additional costs and provision
releases relating to prior year disposals amounted to £1.2m.
Consideration Profit on
(net of Net disposal
costs) assets
£m £m £m
Businesses sold 15.2 1.9 13.3
8 Discontinuing operations and assets held for sale
On 15 January, 2007, the Company announced its intention to sell its Aerospace
operations to General Electric Company for consideration of $4.8bn. The
disposal is expected to complete in the second half of 2007 and, as a
consequence, the assets and liabilities being sold have been disclosed as held
for sale in the Consolidated Balance Sheet. The post-tax result of the Aerospace
operations have been separately disclosed as a discontinuing operation in the
consolidated income statement. In the cash flow statement, the operating cash
flows of the Aerospace group have been aggregated with those of the continuing
operations, but are disclosed separately in the note below.
Financial information for the Aerospace operations after group eliminations is
presented below.
Profit after taxation of discontinuing operations
Period Period Period
ended ended ended
3 February 31 January 5 August
2007 2006 2006
£m £m £m
Revenue 614.1 582.4 1,342.6
Cost of sales (428.7) (418.1) (946.0)
Gross profit 185.4 164.3 396.6
Sales and distribution (19.4) (17.9) (37.8)
costs
Administrative (88.1) (92.1) (190.4)
expenses
Operating profit 77.9 54.3 168.4
Finance costs (18.5) 0.5 1.3
Profit before taxation 59.4 54.8 169.7
Taxation (16.3) (14.2) (42.8)
Profit for the period 43.1 40.6 126.9
Earnings per share from discontinuing operations -
pence
Basic 7.6p 7.1p 22.5p
Diluted 7.6p 7.1p 22.2p
Cash flows of discontinuing operations
Period Period Period
ended ended ended
3 February 31 January 5 August
2007 2006 2006
£m £m £m
Operating activities 54.5 109.9 250.1
Investing activities (77.0) (74.5) (148.1)
Financing activities 1.1 0.2 3.0
(21.4) 35.6 105.0
8 Discontinuing operations and assets held for sale (continued)
Assets classified as held for sale and disposal groups
3 February 31 January 5 August
2007 2006 2006
£m £m £m
Disposal group
Intangible assets 531.6
Property, plant and equipment 216.5
Financial 13.4
derivatives
Inventories 296.8
Trade and other 256.0
receivables
Cash and cash 2.3
equivalents
Non-current assets held for sale 1,316.6 4.4
Total assets classified as held for sale and 1,316.6 4.4
assets of disposal groups
Disposal group
Financial
liabilities:
- borrowings (5.4)
- financial (3.2)
derivatives
Provisions for liabilities and (20.5)
charges
Retirement benefit obligations (22.4)
Deferred tax (5.8)
liabilities
Trade and other (379.4)
payables
Current tax payable (12.6)
(449.3)
The assets and liabilities of the disposal group as at 3 February 2007 are
required to be separately disclosed as per the note above.
However, there is no requirement to restate prior year assets and liabilities.
The non-current assets held for sale at 31 January 2006
comprise the assets of a subsidiary company disposed of in the second half of
the period ended 5 August 2006. In addition to the £22.4m of retirement benefit
obligations shown above, which relates to US employees, the arrangements for the
disposal allow for UK employees to opt for transfer from the UK funded pension
schemes. The above assets and liabilities reflect an estimated £156m of
liability to be transferred in this respect, matched by equivalent assets.
9 Intangible assets
Acquired
Development intangibles
Goodwill costs (see below) Other Total
£m £m £m £m £m
Cost
At 6 August 2006 1,241.6 293.7 139.1 112.5 1,786.9
Exchange adjustments (26.6) (2.0) (3.6) (1.7) (33.9)
Reclassification from property, plant and equipment 1.9 1.9
Transfers to assets held for sale (note 1) (299.5) (282.8) (10.4) (50.0) (642.7)
Business combinations 11.5 0.3 11.8
Adjustments to prior year acquisitions 0.8 (0.9) (0.1)
Additions at cost 34.3 8.0 42.3
At 3 February 2007 927.8 43.2 124.5 70.7 1,166.2
Amortisation
At 6 August 2006 133.7 39.5 20.2 62.9 256.3
Exchange adjustments (2.3) (0.6) (0.6) (1.1) (4.6)
Reclassification from property, plant and equipment 1.6 1.6
Transfers to assets held for sale (note 1) (55.8) (33.9) (4.7) (27.2) (121.6)
Charged (note 2) 5.4 7.2 3.0 15.6
At 3 February 2007 75.6 10.4 22.1 39.2 147.3
Net book value
At 3 February 2007 852.2 32.8 102.4 31.5 1,018.9
At 5 August 2006 1,107.9 254.2 118.9 49.6 1,530.6
In addition to goodwill, the acquired intangible assets comprise:
Patents,
licences and Customer
trade marks Technology relationships Total
£m £m £m £m
Cost
At 6 August 2006 38.9 58.6 41.6 139.1
Exchange adjustments (1.1) (1.6) (0.9) (3.6)
Transfers to assets held for sale (note 1) (10.4) (10.4)
Business combinations 0.3 0.3
Adjustments to prior year acquisitions 0.5 0.2 (1.6) (0.9)
At 3 February 2007 38.6 57.2 28.7 124.5
Amortisation
At 6 August 2006 3.4 6.9 9.9 20.2
Exchange adjustments (0.1) (0.3) (0.2) (0.6)
Transfers to assets held for sale (note 1) (4.7) (4.7)
Charged (note 2) 1.0 2.8 3.4 7.2
At 3 February 2007 4.3 9.4 8.4 22.1
Net book value
At 3 February 2007 34.3 47.8 20.3 102.4
At 5 August 2006 35.5 51.7 31.7 118.9
Note 1
The transfer to 'assets held for sale' was made prior to 3 February 2007 and,
hence, the amounts shown do not reflect the net book value of intangible assets
at 3 February (see note 8 to the accounts).
Note 2
The amortisation charge represents the charge for continuing operations, and
discontinuing operations for the period prior to becoming a disposal group.
10 Non-current financial assets
3 February 31 January 5 August
2007 2006 2006
£m £m £m
TI Automotive Limited preference shares 325.0
Other trade investments 0.7 3.6 0.8
0.7 328.6 0.8
11 Cash and borrowings
This note sets out the calculation of net debt, a measure considered important
in explaining our financing position. As shown below, IAS 39 requires that the
carrying value of borrowing includes accrued interest, and the fair value of any
interest rate or currency swaps held to hedge the borrowings. The Company's
measure of 'net debt' is a non-GAAP measure and is stated before these valuation
adjustments.
3 February 31 January 5 August
2007 2006 2006
Continuing operations £m £m £m
Cash and cash equivalents
Net cash and deposits (note 1) 274.1 359.9 120.6
Short-term borrowings
Bank overdrafts (note 1) (299.7) (365.2) (177.7)
Bank loans (5.9)
Other loans (3.1)
(308.7) (365.2) (177.7)
Long-term borrowings
One to two years (0.3) (0.4) (0.5)
Two to five years (614.2) (663.6) (575.6)
After five years (285.9) (300.5) (290.0)
(900.4) (964.5) (866.1)
Borrowings (1,209.1) (1,329.7) (1,043.8)
Net debt (935.0) (969.8) (923.2)
Borrowings - valuation adjustments
Interest accrual (19.6) (23.0) (7.3)
Fair value of swapped debt 2.8 2.3 3.8
Total borrowings per balance sheet (1,225.9) (1,350.4) (1,047.3)
Total cash and borrowings, including that disclosed as part of the disposal
group, as at 3 February 2007 is as follows:
Cash and cash Net debt Total borrowings
equivalents
£m £m £m
Continuing operations 274.1 (935.0) (1,225.9)
Disposal group (note 8) 2.3 (3.1) (5.4)
276.4 (938.1) (1,231.3)
Note 1
IAS 32 requires that cash and overdraft balances within cash pooling systems be
reported gross on the balance sheet. The gross up included above amounted at 3
February 2007 to £243.5m (31 January 2006: £316.1m; 5 August 2006: £83.6m).
12 Provision for liabilities and charges
As stated in note 15, John Crane, Inc ('John Crane') is one of many defendants
in litigation relating to products previously manufactured which contained
asbestos. Until recently, the awards, the related interest and all material
defence costs were met directly by insurers. During the period, John Crane has
secured the commutation of certain insurance policies in respect of product
liability and, as explained in note 4, has accounted for the proceeds as other
operating income. While substantial insurance remains in place, John Crane has
begun to meet defence costs directly, seeking appropriate contribution from
insurers thereafter. This year, John Crane has established a provision to meet
such costs amounting to £44m.
The provision is based on assessment of the probable costs of defending known
and expected future cases to the extent that such costs can be reliably
estimated. At present, the provision equates to approximately four years of
gross spend in respect of defence costs, assuming an annual level of spend of
some £12m. Although it is anticipated that asbestos-related claims may need to
be defended for a longer period, the Directors have concluded at this point that
no reliable estimate of the future exposure can be quantified beyond a four year
period.
The provision established is a discounted pre-tax provision and is equivalent to
an expected expenditure of £50m in future cash flows; the discount rate used is
5.1%, being the risk free rate faced on US debt instruments. The discount of
£6m will unwind through the income statement in future years.
No account has yet been taken of recoveries from insurers as these recoveries
are not, at present, sufficiently certain. Any such recoveries will be credited
to the income statement in the period in which they are received.
The recognition of the above provision is part of an ongoing assessment of John
Crane's asbestos exposures, and the methodologies and calculations set out above
will be reconsidered regularly to ensure that they remain appropriate. There
may, therefore, be changes in the level of provision recognised as more
information about the exposures is received, or as future events occur.
13 Changes in shareholders' equity
Period Period Period
ended ended ended
3 February 31 January 5 August
2007 2006 2006
(restated)
£m £m £m
Changes in shareholders' equity
At beginning of period 1,362.9 1,486.7 1,486.7
Profit for the period 149.0 133.5 24.2
Share-based payment 8.2 3.5 14.5
Deferred tax benefit thereon 2.7 0.5 (2.6)
Dividends paid to equity shareholders (122.3) (111.3) (167.0)
New share capital subscribed 43.0 14.6 27.3
Purchase of own shares (7.0)
Exchange losses (51.1) (1.7) (113.1)
Taxation recognised on exchange losses (7.4)
Fair value gains (losses)
- on cash-flow hedges 7.2 2.6 12.7
- on net investment hedges 13.4 (0.1) 17.1
Actuarial gains and losses on retirement benefit schemes 17.5 (73.4) 94.5
Deferred taxation benefit thereon (5.8) 22.0 (24.0)
At end of period 1,417.7 1,476.9 1,362.9
14 Cash-flows from operating activities
Period Period Period
ended ended ended
3 February 31 January 5 August
Note 2007 2006 2006
£m £m £m
Profit (loss) before taxation - continuing 136.3 124.2 (37.3)
operations
Profit before taxation - discontinued operations 59.4 54.8 169.7
195.7 179.0 132.4
Net interest payable 30.3 27.0 54.2
Financing (gains) losses
- charged to administrative expenses (0.1) 2.8
- charged to financing 18.2 (1.7) 0.5
Share of post-tax profit (loss) from associate 0.7 (0.1) 1.1
Other finance income - retirement benefits (17.7) (13.6) (27.6)
Impairment of financial asset 325.0
227.1 190.6 488.4
Amortisation of intangible assets 9 15.6 16.4 39.6
Provision against non-current investment 0.3
Profit on disposal of property, plant and equipment (0.7) (4.4)
Profit on disposal of business (8.5) (4.8) (16.4)
Depreciation of property, plant and equipment 31.9 40.4 81.0
Share-based payment expense 9.5 5.0 16.3
Retirement benefits 3.5 3.8 (61.5)
(Increase) in inventories (71.4) (49.6) (34.8)
Decrease (increase) in trade and other receivables 20.1 76.5 (35.6)
Increase (decrease) in trade and other payables 24.2 (9.8) 70.7
Cash generated from operations 251.6 268.5 543.3
Interest (15.5) (12.0) (49.5)
Tax paid (45.6) (63.3) (104.7)
Net cash inflow from operating activities 190.5 193.2 389.1
15 Contingent liabilities
In common with many other enterprises of similar size, the Company and its
subsidiaries are from time to time engaged in litigation in respect of a variety
of commercial issues.
As previously reported, John Crane, Inc ('John Crane'), a subsidiary of the
Company, is one of many co-defendants in numerous law suits pending in the
United States in which plaintiffs are claiming damages arising from exposure to,
or use of, products containing asbestos. The John Crane products generally
referred to in these cases are ones in which the asbestos fibres were
encapsulated in such a manner that, according to tests conducted on behalf of
John Crane, the products were safe. John Crane ceased manufacturing products
containing asbestos in 1985.
John Crane has resisted every case in which it has been named and will continue
its robust defence of all asbestos-related claims based upon this 'safe product'
defence. As a result of its defence policy, John Crane has been dismissed
before trial from cases involving approximately 136,000 claims over the last 28
years. John Crane is currently a defendant in cases involving approximately
154,500 claims. Despite these large numbers of claims, John Crane has had final
judgments against it, after appeals, in only 63 cases, amounting to awards of
some US$55.4m over the 28 year period.
Whilst this represents a very low proportion of claims that has historically
resulted in final judgment against John Crane, the incidence of such judgments
in the future cannot be meaningfully estimated and the scale of future awards is
accordingly unquantifiable. As explained in note 12, a provision for the legal
costs of defending asbestos claims has, however, been established in the period
and charged in the Income Statement.
16 Dividends
An interim dividend of 10.5p per share (2006: 9.85p) has been declared and will
be paid on 27 April 2007 to holders of all ordinary shares whose names are
registered at close of business on 30 March 2007. The dividend has not been
accrued at 3 February 2007 in accordance with IFRS.
17 Comparative figures
This financial information does not comprise full financial statements within
the meaning of Section 240 of the Companies Act 1985.
Figures relating to the period ended 5 August 2006 are abridged. Full accounts
of Smiths Group plc for that period, prepared under IFRS, have been reported on
by the auditors and delivered to the Registrar of Companies. The report of the
auditors was not qualified and did not contain statements under Section 237(2)
or 237(3) of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 7 hours ago The Gym Group
- 8 hours ago Manchester & London Investment Trust
- 8 hours ago Carr's Group
- 8 hours ago Carr's Group
- 9 hours ago Playtech