InterimResults2003 010410073256

The Roxboro Group PLC
Interim Results
6 Months to 30th June 2003
interim results
2003
the roxboro group plc
H1 2003 k e y p o i n t s
y Weston sold to Esterline for £55 million
y £39.8 million returned to shareholders
y First half results in line with expectations
y Solartron steady
y Dialight suffered supplier disruption
y Order book stronger
y Worst is behind us
y Difficult six months following a difficult year
y We believe operationally we are on the turn
interim results
2003
Financial Review
interim results
2003
the roxboro group plc
group profit and loss account
2003
£m
y Turnover
73.3
Continuing Operations
Discontinued operations
2002
79.2
58.7
14.6
62.8
16.4
4.8
4.9
2.0
2.8
2.8
2.1
(0.3)
(0.5)
y Profit before goodwill & exceptionals
4.5
4.4
– Goodwill
– Profit on disposal of Weston
(0.6)
15.6
(0.5)
-
19.5
3.9
y Operating Profit
Continuing operations
Discontinued operations
y Interest
y Profit before tax
interim results
2003
the roxboro group plc
group profit and loss account-continued
£m
y Profit before taxation
Tax
Dividends
y Retained Profit
2003
2002
19.5
3.9
(1.6)
(1.4)
17.9
2.5
(0.9)
(1.8)
17.0
0.7
y Operating Margin*
6.5%
6.2%
y Trading Margin **
6.1%
5.6%
*
before profit on disposal,
goodwill, amortisation and interest
** before profit on disposal,
goodwill amortisation and after interest
interim results
2003
the roxboro group plc
taxation
2003
2002
y Actual rate including disposal
8.0%
36.5%
y Actual rate excluding disposal
35.7%
36.5%
y Underlying rate excluding goodwill
30.7%
32.1%
y Continuing operations rate
excluding goodwill
30.9%
-
interim results
2003
the roxboro group plc
dividends and earnings per share
y Dividends per share
2003
2002
3.1p
3.1p
31.6p
5.5p
4.4p
5.3p
19.0x
2.7x
3.4x
1.4x
1.4x
1.7x
y EPS
Basic
Adjusted
y Dividend Cover half year
Basic
Adjusted for profit on disposal
Adjusted for profit on disposal and goodwill
y Continuing Operations
0.8x
-
y Cash Cover - continuing operations
2.9x
-
interim results
2003
the roxboro group plc
summarised cashflows
£m
2003
2002
4.2
4.3
– Depreciation / Goodwill
2.8
3.1
– Working capital
0.1
(2.6)
– Other non-cash items
-
(0.1)
y Operating Profit (after goodwill)
y Operating Cash Flow
7.1
4.7
– Capital Expenditure
(1.0)
(1.3)
– Interest
(0.3)
(0.5)
– Taxation
(1.2)
(0.9)
y Free Cash Flow
4.6
2.0
interim results
2003
the roxboro group plc
movement in debt
£m
2003
2002
y Free Cash Flow
– Dividends
– Acquisitions
– Disposals
– Issue of shares
4.6
(3.9)
(0.1)
53.6
0.1
2.0
(3.9)
(4.4)
-
y Net Cash Inflow / (Outflow)
54.3
(6.3)
(11.7)
(0.6)
(8.6)
(0.1)
y Closing Net Cash / (Debt)
42.0
(15.0)
Return of Capital July 2003
(39.8)
-
2.2
(15.0)
– Opening Net Debt
– Translation
y ‘Proforma’ Net Cash / (Debt)
interim results
2003
the roxboro group plc
continuing operations proforma cashflow
£m
2003
2002
1.4
2.4
– Depreciation and amortisation
2.1
2.2
– Working capital
1.1
(3.5)
4. 6
1.1
– Capital Expenditure
(0.7)
(1.0)
– Interest
(0.3)
(0.5)
– Taxation
(0.9)
(0.5)
y Free Cash Flow
2.7
(0.9)
y Operating Profit (after goodwill)
interim results
2003
the roxboro group plc
continuing operations proforma cash flow
£m
2003
y Free Cash Flow
– Dividends
– Acquisitions
– Disposals
– Issue of Shares
– Cash drawn from Weston
Net Cash Inflow / (Outflow)
– Opening Net Debt
– Translation
Closing Net Cash / (Debt)
– Return of Capital July 2003
y Proforma Net Cash / (Debt)
2002
2.7
(0.9)
(3.9)
(0.1)
53.6
0.1
1.9
54.3
(3.9)
(4.4)
2.9
(6.3)
(11.7)
(0.6)
(8.6)
(0.1)
42.0
(15.0)
(39.8)
-
2.2
(15.0)
interim results
2003
the roxboro group plc
profit on disposal of Weston
£m
Initial Sales Proceeds
55.0
Cash adjustment net of assumed tax
0.7
55.7
Expenses
(2.4)
53.3
Less cost of investment
– net assets
(16.0)
– goodwill previously written off
(21.7)
(37.7)
Profit on disposal
15.6
Tax due on disposal
(0.2)
Exit P/E (2002 actuals)
Exit EBITDA (2002 actuals)
25x
11x
interim results
2003
the roxboro group plc
capital reorganisation
Ordinary shares split 30 June 2003
– 1 new ordinary share for every 1.89 old ordinary share
– 1 new B redeemable share for every old ordinary share
Old share capital :
56,800,170
New share capital :
30,053,000 ordinary shares of 1.89p
56,800,170 B 75p redeemable preference shares
Weighted average number of shares first half
56.65m
Weighted average number of shares full year
43.35m
interim results
2003
the roxboro group plc
capital reorganisation
Redeemable B shares
Redeemed on 7th July
51,612,199
Redeemed on 23rd July 1,492,366
Future redemption dates:
31st December and 30th June each year up to 31st December 2008
Dividend equal to 70% LIBOR based on 6 month LIBOR (Period to 31.12.03 :
B shares still issued:
3.696m
Capital reserves utilised for B shares:
£56.8m
2.48%)
Revenue reserves utilised for redemption:
Shares redeemed
Shares redeemable
£39.8m
£2.8m
interim results
2003
the roxboro group plc
proforma balance sheet-post 30June 2003
£m
half year
Fixed assets (incl goodwill)
Current assets less creditors
Cash less borrowings
Provisions
Capital and Reserves
Share capital
Share premium
Capital redemption reserve
Profit and loss account
adjustments
proforma
30.1
23.1
42.0
(1.6)
93.6
(39.8)*
(39.8)
30.1
23.1
2.2
(1.6)
53.8
43.2
5.9
0.1
44.4
93.6
(39.8)*
39.8**
(39.8)**
(39.8)
3.4
5.9
39.9
4.6
53.8
* redemption of B shares in July ‘03
** creation of capital redemption reserve fund from revenue reserves
interim results
2003
Operational Review
interim results
2003
Operational Review
Group now reduced to 2 divisions
sensors & instruments for
oil & gas industries
applied LED technology in
lighting and indication
interim results
2003
Operational Review
markets
● Oil & Gas
: early uncertainty but signs of improvement
● Process
: generally weak particularly in USA
● Telecoms
: steady but no immediate sign of recovery
● Signals
: USA – slower activity in H1
Europe – developing well
● Transportation : slow with bus manufacturers in USA on short time
interim results
2003
Solartron Group
First Half Highlights
y Market uncertainty marked first half
y Signs of market improvement
y Underlying performance flat
y Good progress in Asia/E. Europe offset by
USA/Europe weakness
y Business growth in China checked temporarily
A Roxboro Group Company
Solartron Group
First Half Highlights
y Market uncertainty marked first half
y Signs of market improvement
y Underlying performance flat
y Good progress in Asia/E. Europe offset by
USA/Europe weakness
y Business growth in China checked temporarily
A Roxboro Group Company
Solartron Metrology
First Half Highlights
y Very slow US market - better in Asia
y Excellent progress with digital gauging
y Very steady result
y Continuing good cash generation
A Roxboro Group Company
Solartron Mobrey (including ISA and Analytical)
First Half Highlights
y US/Europe weak - Asia/E. Europe stronger
y Good contract secured in Iran
y ISA wins Sakalin project with Dualstream II
y Analytical business in China temporarily slowed
y H1 underlying performance flat
A Roxboro Group Company
Solartron Mobrey/ISA
Product Segmentation
Other
8%
Viscosity
3%
Density
9%
Level
48%
Flow
26%
Pressure
6%
A Roxboro Group Company
Solartron Mobrey/ISA
Market Segmentation
Other
8%
Oil & Gas
36%
Marine
8%
Water & Waste
12%
Power
16%
Process
20%
A Roxboro Group Company
Solartron Mobrey/ISA
Geographic Segmentation
Europe &
Middle East
33%
UK
45%
Asia Pacific
9%
Americas
13%
A Roxboro Group Company
Solartron Group Strategy
Š Objective:
º To become a leading global supplier of specialised level, flow and
fluid analysis measurement solutions
Š By supplying:
º Best-of-breed products
º Exceptional service and delivery
º Application knowledge
Š In the following markets:
º General process
º Power generation and boilers
º Water
º Oil and gas production and transmission
A Roxboro Group Company
interim results
2003
interim results
2003
interim results
2003
Solartron Group
Key Points
y Name is a byword for Quality and Performance
y Emerging products such as Dualstream II gaining
ground
y International presence
y Leveraged to a recovery in process market
A Roxboro Group Company
interim results
2003
First Half Highlights
‹ Losses at BLP impacted result
‹ Profit better but still poor
‹ Sales limited by production transfer to Mexico
‹ Supplier base slow to ramp up volumes
‹ Signals showed improved result
‹ Some Opto OEMs showing signs of life but no recovery yet
‹ New VP Operations appointed
A Roxboro Group C ompany
interim results
2003
Employee Analysis
Farmingdale, NJ
Wang, Germany
Admin
23
Admin
5
Engineering
23
Engineering
8
Marketing & Sales
24
Marketing & Sales
10
Field Sales
13
Ops Direct
27
Ops Indirect
14
Ops Indirect
Total
5
Total
97
Roxboro, NC
55
Ensenada, Mx
Direct:
65
Direct:
333
Admin
15
Admin
43
Ops Indirect
18
Ops Indirect
54
Total
98
Total
430
A Roxboro Group C ompany
interim results
2003
First Half Highlights
‹ All key metrics up on H2’02
‹ Some OEMs showing increased demand
‹ Distribution channels remain flat
‹ Luxeon design centre shows good promise
‹ Dell design Dialight into range of new products
‹ Division has begun to recover
A Roxboro Group Company
interim results
2003
First Half Highlights
‹ Orders secured exceeded sales by over 10%
‹ US traffic demand constrained by lower tax income
‹ Output limited by supplier ramp-up in Mexico
‹ All assembly now in Ensenada, Mexico
‹ Changes to FAA requirements slow aviation demand
‹ Vehicle OEM market slower
‹ Excellent European growth in traffic
‹ Losses halved
A Roxboro Group Company
Market Position on LED Signals
Traffic
Lights
1
2
Rail Signals
1
2
Heavy Duty
Vehicle
2
Air Field
Lighting
1
2
Dialight
Product
Obstruction
Lighting
1
2
Dialight
Product
3
4
5
3
1
3
Dialight
Product
3
4
3
A Roxboro Group Company
interim results
2003
Solid State Lighting
The Vision
The LED is to florescent lamps what transistors were to
vacuum tubes, or what the automobile was to the horse and
bug gy.
It is a revolutionary technological innovation that promises to
change the way we light our homes and businesses.
Remarks by the US Secretary of Energy
Spencer Abraham, 6/12/2002
A Roxboro Group C ompany
Solid State Lighting
The Vision
z
Cut the Global Lighting Energy by 50% by 2025
z
Cumulative Energy Savings of $115 billion
z
Elimination of more than $50 billion in new power
plants
Source: US DOE, NGL (Next Generation Lighting Initiative)
A Roxboro Group Company
High Bright LED is the fastest growth
Semiconductor Market
250
High Bright
Opto
200
Relative Scale
Laser: Non Telecom
150
100
Semiconductors
50
Laser: Telecom
0
1999
2000
2001
2002
Source: Strategies Unlimited
A Roxboro Group Company
Hi-Bright CAGR 2002 to 2007
Mobile: 15%
Automotive: 14%
Illumination: 58%
Signals: 18%
Signage: 20%
Other: 15%
A Roxboro Group Company
interim results
2003
Our Strategy
Establish Dialight as the global
leader of value added solutions
for specialty applications of
Light Emitting Diodes (LEDs).
Capitalizing on…
z The market opportunity presented by the rapid
advances in LED technology
z The value proposition that LEDs offer over traditional
light sources.
z Our core strength as an application enabler between
the LED manufacturer and the OEM user or systems
integrator.
A Roxboro Group Com pany
Our Position in the Supply Chain
Dialight
LED Component
Suppliers
z
z
Develop & Produce
Semiconductor
First level
encapsulation
z
Applications Expertise
z
Optics Design
z
Thermal Ma nagement
z
LED array Assembly (Binning Menus)
z
Driver Design
z
Fixture Packaging
Lighting Fixture
OEMs
Specialty Lighting
OEMs
Traffic Controller
OEMs
Architects & Lighting
End Users
Others
????
A Roxboro Group Company
THE SCHINDLER ELEVATOR EXAMPLE
A Roxboro Group C om pa ny
interim results
2003
interim results
2003
interim results
2003
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2003
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2003
Luxeon Design Centre
‹ Dialight is global leader in applied LED technology
‹ Dialight has a unique skills set
‹ Dialight does not compete with OEM customers
‹ Dialight well positioned to grow sector strongly
A Roxboro Group C om pa ny
Summary
‹ Well positioned to grow through the Luxeon Design Centre
‹ Investment being maintained to retain No. 1 spot at Signals
‹ The worst is behind us
‹ Highly leveraged to a telecom recovery
A Roxboro Group C om pa ny
the roxboro group plc
summary
y Weston deal completed - capital returned to shareholders
y Central costs reduced
y Group now more focussed
y Lower cost base in place at Dialight
y Strong balance sheet and cash position
y Significant leverage to industrial recovery
interim results
2003
The Roxboro Group PLC
Interim Results
6 Months to 30th June 2003
interim results
2003