Interim Results
August 15 2003 - 2:00AM
UK Regulatory
RNS Number:7119O
Hydro International PLC
15 August 2003
15 August 2003
HYDRO INTERNATIONAL plc ("Hydro" or the "Group")
Interim results for the six months to 30 June 2003
Highlights
* Turnover increased by 61 per cent. to #5.5 million
* Underlying profit before tax (excluding exceptional net licence
income) more than doubled
* Order book up 22 per cent. since year end
* Cash and short term deposits increased to #1.75 million
Roger Lockwood, Chairman of Hydro, said: "Hydro has produced very strong results
for the six months to 30 June 2003. Whilst a degree of caution is appropriate,
we anticipate that underlying trading performance in the remainder of 2003 will
continue at a level similar to that recorded in the first half of the year"
Enquiries:
Keith Marshall, (01275) 878371
Finance Director
Hydro International plc
CHAIRMAN'S STATEMENT
Performance
I am pleased to report further substantial increases in turnover and earnings
for the six months ended 30 June 2003. Sales for the period increased by 61 per
cent. to #5.5 million (2002 - #3.4 million) and the underlying profit before tax
more than doubled to #554,000 (2002 - #230,000). After the inclusion of net
licence income from DI Corporation of Korea pre-tax profits amounted to
#655,000. A small decrease in gross margin was due to a combination of
sterling's weakness against the euro and a shift in product sales mix. Cash flow
was strong and cash and short term deposit balances had increased by #436,000
since the year end to #1.75 million.
Trading
The Group's UK operation has seen a very strong performance. Growth has been
generated both from the buoyant construction industry, into which we sell
stormwater control and storage products, and from the anticipated increase in
expenditure from the water industry. Hydro supplies screening products to this
sector which are required to meet the regulatory requirements set out in Asset
Management Plan 3 to improve the quality of intermittent discharges from
combined sewer overflows (CSOs). Increasing levels of activity have been seen
across Hydro's CSO screen offerings and it is particularly pleasing to report
the success in this area of Hydro's new powered CSO screen - the Heliscreen(R).
Substantial increases in enquiries and sales have required additional resources
to service the elevated levels of business.
As in past years and in line with budget, the Group's US operation has
experienced a relatively slow six months trading, albeit at increased levels
compared to previous years. We have taken steps to allocate additional resources
to strengthen our direct sales coverage, which is responsible for the selling of
stormwater products. A notable success has been the first two installations in
the US of Stormcell(R) - a geo-plastic stormwater storage media. The municipal
wastewater market, driven by refurbishment and extension of wastewater treatment
plants continues to provide regular levels of business for the Grit King(R)
product. The US CSO market is entering a stage of increasing activity with the
enactment of the CSO Policy as an amendment to the Water Quality Act and as
projects enter design phases with consultants. Bob Andoh, Technical Director,
has relocated to the US to increase our market presence, to provide support and
to spearhead our activities in this strategically important sector.
Hydro's overseas licence activity has concentrated on completing the technology
transfer and associated training of DI Corporation of Korea and assisting with
their marketing demands as they exploit the technology in South Korea. The final
portion of the initial licence fee is recognised in this six month period.
Prospects
Hydro has produced very strong results for the six months to 30 June 2003 at
which date the order book of #2.8 million was 22 per cent. ahead of that at 31
December 2002. Whilst a degree of caution is appropriate, in view of prevailing
global economic uncertainties, we anticipate that underlying trading performance
in the second six months of 2003 will continue at a level similar to that
recorded in the first half of the year.
Roger Lockwood
Chairman 15 August 2003
Hydro International plc
Group Profit and Loss Account
for the six months ended 30 June 2003
6 months ended 6 months ended Year ended
30 June 2003 30 June 2002 31 December 2002
(Unaudited) (Unaudited) (Audited)
#000 #000 #000
------------ ----------- -------------
Turnover - continuing 5,459 3,394 7,760
operations
------------ ----------- -------------
Gross profit 2,397 1,566 3,702
------------ ----------- -------------
Administrative expenses (1,855) (1,345) (3,067)
------------ ----------- -------------
Exceptional other
operating income
- net licence income 101 - 247
Operating profit - 643 221 882
continuing operations
Net interest receivable 12 9 19
------------ ----------- -------------
Profit on ordinary
activities before 655 230 901
taxation
Taxation (194) (60) (190)
------------ ----------- -------------
Profit on ordinary
activities after taxation 461 170 711
Dividend - - (135)
------------ ----------- -------------
Retained profit for 461 170 576
period
------------ ----------- -------------
Earnings per ordinary 3.40p 1.27p 5.29p
share
Diluted earnings per 3.33p 1.24p 5.18p
ordinary share ------------ ----------- -------------
Statement of Total Recognised Gains and Losses
for the six months ended 30 June 2003
6 months ended 6 months ended Year ended
30 June 2003 30 June 2002 31 December 2002
(Unaudited) (Unaudited) (Audited)
#000 #000 #000
------------ ----------- -------------
Profit for the period 461 170 711
Currency translation
differences on foreign
currency net investments (5) (3) (15)
------------ ----------- -------------
Total recognised gains 456 167 696
and losses
------------ ----------- -------------
Reconciliation of Movements in Group Shareholders' Funds
for the six months ended 30 June 2003
6 months ended 6 months ended Year ended
30 June 2003 30 June 2002 31 December 2002
(Unaudited) (Unaudited) (Audited)
#000 #000 #000
------------ ----------- -------------
Total recognised gains 456 167 696
and losses
Dividend - - (135)
Proceeds from issue of 15 - 24
new shares
------------ ----------- -------------
Net increase in 471 167 585
shareholders' funds
------------ ----------- -------------
Opening shareholders' 2,471 1,886 1,886
funds
------------ ----------- -------------
Closing shareholders' 2,942 2,053 2,471
funds
------------ ----------- -------------
Group Balance Sheet
30 June 2003
30 June 2003 30 June 2002 31 December 2002
(Unaudited) (Unaudited) (Audited)
#000 #000 #000
----------- ----------- -------------
Fixed assets
Intangible assets 104 - 116
Tangible assets 690 620 645
----------- ----------- -------------
794 620 761
Current assets
Stocks and work in progress 80 25 77
Debtors 3,227 1,889 2,747
Cash and short term 1,754 1,244 1,318
deposits ----------- ----------- ------------
5,061 3,158 4,142
----------- ----------- ------------
Creditors: amounts falling
due within one year (2,890) (1,526) (2,411)
----------- ----------- ------------
Net current assets 2,171 1,632 1,731
Total assets less current 2,965 2,252 2,492
liabilities
Creditors: amounts falling
due after more than one
year (23) (199) (21)
----------- ----------- -------------
Net assets 2,942 2,053 2,471
---------- ----------- -------------
Capital and reserves
Share capital 680 671 677
Share premium account 804 774 792
Profit and loss account 1,458 608 1,002
----------- ----------- -------------
Total equity shareholders' 2,942 2,053 2,471
funds
----------- ----------- -------------
Consolidated Cash Flow Statement
for the six months ended 30 June 2003
6 months ended 6 months ended Year ended
30 June 2003 30 June 2002 31 December 2002
(Unaudited) (Unaudited) (Audited)
Note #000 #000 #000
Net cash inflow from
operating activities (1) 641 251 763
Return on investment and
servicing of finance 12 6 18
Taxation - tax paid (87) (1) (128)
Capital expenditure and
financial investment (135) (10) (140)
Cash inflow before
management of liquid
resources and financing 431 246 513
Management of liquid
resources - cash placed
on shortterm deposits (439) (60) (11)
Net debt financing cash
outflow (2) (6) (116) (321)
Proceeds from issue of
new shares 15 - 24
------------- ----------- -------------
Increase in cash in
period 1 70 205
------------- ----------- -------------
Notes to the Consolidated Cash Flow Statement
(1) Reconciliation of the operating profit to net cash inflow
from operating activities
6 months ended 6 months ended Year ended
30 June 2003 30 June 2002 31 December 2002
(Unaudited) (Unaudited) (Audited)
#000 #000 #000
------------ ----------- -------------
Operating profit 643 221 882
Depreciation charges 58 43 98
Amortisation charges 12 - 4
(Increase)/decrease in (3) 51 (1)
stocks
Increase in debtors (481) (6) (815)
Increase/(decrease) in 412 (57) 596
creditors
Profit on sale of fixed - (1) (1)
assets
------------ ----------- -------------
Net cash inflow from 641 251 763
operating activities
------------ ----------- -------------
(2) Reconciliation of net cash flow to movement in net funds
6 months ended 6 months ended Year ended
30 June 2003 30 June 2002 31 December 2002
(Unaudited) (Unaudited) (Audited)
#000 #000 #000
------------ ----------- -------------
Increase in cash for the 1 70 205
period
Cash outflow from 6 116 321
reduction in debt
------------ ----------- -------------
Change in net funds
resulting from cash flows 7 186 526
New finance leases (9) (22) (32)
Translation (5) (3) (15)
differences
------------ ----------- -------------
Movement in net funds in (7) 161 479
the period
Net funds at start of 476 (3) (3)
period ------------ ----------- -------------
Net funds at end of 469 158 476
period
------------ ----------- -------------
Notes to the Interim Announcement
1) Basis of preparation
The Interim Report has been drawn up using the same accounting policies as for
the year ended 31 December 2002. The information for the year ended 31 December
2002 is an abridged version of the Company's accounts which received an
unqualified auditors' report and have been filed with the Registrar of
Companies.
2) Earnings per share
Earnings per ordinary share are based on profit on ordinary activities after
taxation, divided by a weighted average of 13,565,410 shares in issue during the
period. The diluted earnings per share is calculated after the inclusion of
share options and the weighted average of ordinary shares used in the
calculation is 13,861,966.
3) Copies of the interim results will be distributed to shareholders and
made available to the general public at the Company's registered office.
INDEPENDENT REVIEW REPORT TO HYDRO INTERNATIONAL PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2003 which comprises the group profit and loss
account, the group balance sheet, the statement of total recognised gains and
losses, the consolidated cash flow statement and notes 1 to 3 together with the
reconciliation of movements in group shareholders' funds and the notes to the
consolidated cash flow statement. We have read the other information contained
in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
polices and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
Deloitte & Touche LLP
Chartered Accountants
15 August 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
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