RNS Number:8476P
Robotic Technology Systems PLC
17 September 2003
ROBOTIC TECHNOLOGY SYSTEMS PLC
("RTS", "the Company" or "the Group")
Interim results for the six months ended 30 June 2003
RTS is a high technology business specialising in providing automation systems
and software for a range of sophisticated scientific and industrial processes,
including laboratory automation, nuclear industry operations and clean up, and
automated systems for product assembly. RTS today announces its interim results
for the six months ended 30 June 2003.
2003 2002
#m #m
Turnover 28.5 38.2
Gross margin 27.4% 25.8%
EBITDA before exceptional items* (0.5) (2.5)
Adjusted loss after tax* (2.0) (4.3)
Adjusted earnings per share* (3.23)p (7.38)p
*See note 4 and 5 on page 12
KEY POINTS
* Trading in the US, which has been extremely difficult since the second
quarter of 2001, has improved progressively throughout this year. The
ongoing financial performance is, to a large extent, dependent on the US
industrial markets - there are some encouraging signs
* Restructuring in US operations is substantially complete and cost savings on
an annualised basis of #8 million are being realised to expectations with
continuing impact on the second half.
* Life Science is trading in line with budget and has a current order book of
#14 million
* Nuclear Solutions is performing well
- UK: engaged by BNFL as a Multi-Disciplined Design House
- US: first major order received at Hanford
* Debt reduction
- Heads of terms signed for #2.75 million sale and lease back of Manchester
facility
- Acceptance of $2.4 million offer to sell surplus US freehold property
* Order book of #40 million
Chris Brown, Chairman of RTS, said today:
"Our Life Science and Nuclear Solutions businesses continue to perform well. The
improving economic climate in the US will benefit the Group more in the second
half of the year than in the first. We have implemented radical change in our
US business so that it can take advantage of any upturn. Overall, the key to
our continuing improvement lies with the US industrial market."
17 September 2003
Enquiries:
Robotic Technology Systems PLC Tel: 020 7457 2020 (today)
Phil Johnson, Chief Executive Officer Tel: 0161 777 2000 (thereafter)
David Timmins, Group Finance Director
College Hill Tel: 020 7457 2020
Matthew Smallwood E-mail: matthew.smallwood@collegehill.com
ROBOTIC TECHNOLOGY SYSTEMS PLC
Interim results for the six months ended 30 June 2003
Chairman's Statement
OVERVIEW
As reported at the Company's AGM in June 2003, the monthly order input in our
US-based business, which has experienced extremely difficult market conditions
since the second quarter of 2001, has improved progressively this year. This
will benefit the financial performance of the Group more in the second half of
the year than in the first half due to the book-to-build period of an average
6-9 months. The US operation's order book at 30 June 2003 was some $6 million
higher than at the beginning of March 2003. The two UK-based businesses, Life
Science and Nuclear Solutions, have continued to progress in line with
expectations in the first half. I am very pleased to report that a consortium
led by Nuclear Solutions has recently been appointed as one of three
Multi-Disciplined Design Houses ("MDDH") to BNFL for the provision of
engineering solutions at its Sellafield plant.
EBITDA before exceptional items was a negative #0.5 million, reduced from a
negative #2.5million in the comparative period. The loss after tax before
goodwill amortisation and restructuring costs for the period was #2 million,
some #2.9 million better than the comparative period. The savings in
distribution and administrative expense resulting from the substantial
restructuring programme in the US during 2002 and the first quarter of 2003,
which included the closure of the Phoenix plant in March 2003, are being
realized to expectations and should amount to some #8 million on an annualized
basis. Whilst US headcount has been reduced by 300 during that time, core
capabilities remain across all functions and business groups.
I am pleased to welcome John Mowinckel who joins the Board today as a
non-executive director. Since 1992, John has been a director of various
Investindustrial Group companies and is based in London. Prior to that, John
worked for Bankers Trust Company and then First National Bank of Chicago where
he was Managing Director with responsibility for corporate finance activity
primarily between Europe and the US. John will bring a tremendous amount of
commercial and corporate finance experience to the Board particularly in the
geographic markets which we principally serve.
FINANCIAL REVIEW
Turnover for the six months ended 30 June 2003 decreased by 25% to #28.5 million
from #38.2 million in the comparative period due to the very difficult trading
conditions in the US industrial market place over the last two years which
resulted in a lower opening backlog this year compared to 2002. There was also
a foreign currency impact on translation amounting to some #1.8 million. The
fall in turnover came mainly from decreases in Assembly Systems and Process
Systems of #2.9 million and #4.3 million respectively. The UK-based businesses
in Life Science and Nuclear Solutions each increased turnover versus the
comparative period by #0.5 million to #8.2 million and #6.8million respectively.
As a result of the higher proportion of Group turnover against the comparative
period originating from the UK-based businesses, together with the improved
operating efficiencies and quality of the order book in the US operation, gross
margin increased to 27.4% from 25.8% in the comparative period.
The considerable downsizing of the main US operation during 2002 and the first
quarter of 2003, and rigorous management of costs generally, has resulted in a
substantial reduction of #5.1 million in distribution and administrative
expenses to #10.3 million (2002 : #15.4 million). For the year as a whole, this
should result in a reduction in underlying distribution and administrative
expense, on a like-for-like basis, of some #8 million when compared to the year
ended 31 December 2002.
EBITDA before exceptional items in the period was a negative of #0.5 million
compared to a negative #2.5 million in the comparative period. The second
quarter of 2003 produced a breakeven position at the EBITDA level. The loss
before and after tax was #2.9 million compared to a loss before and after tax of
#6.3 million and #6.6 million respectively. The basic loss per share was 4.79p
(2002: loss 11.19p). The loss before and after tax, excluding acquisition
goodwill amortisation and restructuring costs, was #2 million compared to loss
before and after tax of #4.6 million and #4.9 million respectively. The adjusted
basic loss per share was 3.23p (2002: loss 7.38p).
Despite the continuing difficult market conditions in the period, the balance
sheet and liquidity of the Company remain sound. The net tangible worth of the
Group amounted to #32.7 million at the period end and the current ratio
increased in the period to 1.82 : 1. The increase in net debt during the period
to #1.2 million mainly due to tight working capital management. At the end of
the period, the Group had undrawn borrowing facilities of #4.5 million and
liquid investments of nearly #2 million.
The Company has signed Heads of Terms to sell and lease back its freehold
facility in Manchester, (which has a book value of approximately #2.9 million),
for net proceeds of some #2.75 million. This transaction is expected to complete
in the next few weeks. It is the Board's intention to use the proceeds to prepay
#2.1 million of term debt and retain #650,000 for additional working capital.
The downsizing of our US operations in Nashville has rendered two freehold
properties surplus to requirements. The Company has accepted an offer, subject
to contract, to sell one of these properties for $2.4 million.
OPERATIONAL REVIEW
The Group's Life Science and UK-based business in Nuclear Solutions, which both
operate in niche markets, continued to perform well during the period. Those
business groups which are central to the US industrial market have generally
shown improvement in order input during the first half of the year although
market conditions in that territory continue to remain challenging.
Life Science's order input in the first half was in line with budget and
included the first order for an Ultra High Throughput Screening Factory
amounting to #2 million. As part of a strategic programme to develop Life
Science's product offer, the Sample Store was launched towards the end of the
period targeted at bio-techs and major pharmaceutical companies operating
satellite screening centres. The current order book of Life Science, the Group's
highest margin business, stands at #14 million.
An RTS Nuclear Solutions-led consortium of four companies, following a rigorous
selection process, has recently been engaged by BNFL under its MDDH initiative
as one of three consortia to provide multi-discipline engineering solutions at
its Sellafield plant. Trial packages of work are due to be placed later this
month. This initiative is part of BNFL's ongoing strategy aimed at increasing
the level of outsourcing whilst reducing the number of supplier interfaces. The
MDDH initiative is seen by BNFL as being key to the success of their business
re-alignment strategy.
Following the initial trial period, this should present a major business growth
opportunity. In addition, Nuclear Solutions in the UK has been successful in
winning its first contract to provide design services for BNFL Environmental
Services at the Berkley Magnox power station as part of its site clean-up
programme. This further develops RTS' standing within the UK nuclear industry
as a premier supplier of engineering solutions for dealing with the nuclear
waste legacy.
The Nuclear Solutions business unit based in the US has won its first
significant order at the Hanford nuclear site. We are quoting for a number of
other packages of work at Hanford and other nuclear sites in the US and consider
that we are well placed to win a good share of orders as they are awarded.
On a like-for-like basis, Flexible Systems, which has operated solely from the
UK since February 2003 following the closure of the Phoenix plant, grew sales in
the first half to #719,000. Its order book has increased during the period by
40% to #900,000. The business pipeline is building in targeted markets such as
technology-based packaging and product handling applications for the UK food
industry.
The main US operation, based in Nashville, improved its order input in every
month during the first half of the year except February. Assembly Systems,
Build-to-Print, Process Systems and Tooling Systems business groups are led from
Nashville. Assembly Systems, which has borne the brunt of the severe recession
over the last two years, is showing a trend of higher order input this year
which should translate through into an increased level of turnover in the second
half of 2003. Good orders have been won in the growing medical devices market,
in which we are well positioned, including participation in a multi-million
dollar programme with a Fortune 500 company. Both Build-to-Print and Process
Systems' turnover has been depressed by low opening order backlogs and weak
order input in the first quarter, although better order input has been achieved
since. Both of these business groups have relatively low overhead structures and
in the lower activity periods skilled resources have been used in the busier
areas such as Assembly Systems.
OUTLOOK
The Group's order book currently stands at nearly #40 million which is a similar
level to that at the start of the year. The UK-based businesses in Life Science
and Nuclear Solutions have strong order books and good prospects. The MDDH
selection is a major win for Nuclear Solutions and has the potential to expand
very significantly over the next few years.
The key to a continuing and sustainable improvement in financial performance for
RTS is, to a large extent, dependent upon the US industrial markets. So far
there are some encouraging signs. Our US operations order book has risen by $6
million since February, which facilitates better resource and operational
planning than at lower activity levels. On a macro-economic basis, the US
industrial marketplace appears to be improving based on recently reported US
manufacturing indices. Additionally the inventories index dropped to 42.5 in
August from 45.9 in July from which it would not be unreasonable to expect that
manufacturers will restock at some stage. We continue, however, to be extremely
cautious in our view of what may be early signs of a slow recovery in capital
spend. If this possible recovery in manufacturing is sustained, it is reasonable
to expect that this will increase demand for automation systems over a period of
time. The considerably lower cost base in our US operations, coupled with the
benefit stemming from its programme of change which is now well-advanced, has
made it more competitive and better positioned to enjoy an increasing share of
any recovering market.
Chris Brown, Chairman 17 September 2003
ROBOTIC TECHNOLOGY SYSTEMS PLC
Interim results for six months ended 30 June 2003
Group Profit and Loss Account
6 month 6 month 12 month
period period period
ended ended ended
30/06/03 30/06/02 31/12/02
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Notes
Turnover 2, 3 28,478 38,242 70,559
Cost of sales (20,681) (28,357) (52,363)
Gross profit 7,797 9,885 18,196
Distribution and administrative expenses before (10,256) (15,401) (29,502)
exceptional items
Exceptional items
Acquisition goodwill impairment - - (16,400)
Impairment of intangible fixed assets - - (308)
Legal and professional fees - - (816)
Restructuring costs (290) (397) (648)
Total distribution and administrative expenses (10,546) (15,798) (47,674)
Other operating income 70 46 54
Operating loss 3, 4 (2,679) (5,867) (29,424)
Loss on termination of business segments - (417) (4,972)
Loss on ordinary activities before interest and (2,679) (6,284) (34,396)
taxation
Net interest payable (248) (38) (215)
Loss on ordinary activities before taxation (2,927) (6,322) (34,611)
Taxation - (255) (839)
Loss on ordinary activities (2,927) (6,577) (35,450)
Minority interests (3) (4) (7)
Loss on ordinary activities after taxation transferred 4,6 (2,930) (6,581) (35,457)
to reserves
Loss per share
Basic loss per share 5 (4.79)p (11.19)p (59.20)p
Fully diluted loss per share 5 (4.79)p (11.19)p (59.20)p
Adjusted basic loss per share before amortisation of
acquisition goodwill and before exceptional items 5 (3.23)p (7.38)p (17.01)p
ROBOTIC TECHNOLOGY SYSTEMS PLC
Interim results for six months ended 30 June 2003
Group Balance Sheet At 30 June 2003
At At At
30/06/03 30/06/02 31/12/02
(Unaudited) (Unaudited) (Audited)
Notes #'000 #'000 #'000
Fixed Assets
Intangibles 20,535 42,511 21,245
Tangibles 26,594 29,123 28,522
Investments 35 36 35
47,164 71,670 49,802
Current assets
Stocks 13,605 16,278 15,107
Debtors 10,567 11,585 12,036
Investments 2,214 1,748 2,184
Cash at bank and in hand 876 6,621 3,645
27,262 36,232 32,972
Creditors: amounts falling due within one year (14,968) (13,228) (18,472)
Net current assets 12,294 23,004 14,500
Total assets less current liabilities 59,458 94,674 64,302
Creditors: amounts falling due after more than one (5,443) (7,215) (6,268)
year
Provisions for liabilities and charges (748) (225) (1,357)
Net assets 53,267 87,234 56,677
Capital and reserves
Called up share capital 6 611 610 611
Share premium account 6 74,497 74,468 74,490
Shares to be issued 6 120 167 120
Merger reserve 6 - 13,228 -
Other reserve 6 637 527 571
Profit and loss account 6 (22,637) (1,803) (19,155)
Equity shareholders' funds 53,228 87,197 56,637
Equity minority interest 39 37 40
53,267 87,234 56,677
ROBOTIC TECHNOLOGY SYSTEMS PLC
Interim results for six months ended 30 June 2003
Consolidated Cash Flow Statement for the six months ended 30 June 2003
6 month 6 month 12 month
period period period
ended ended ended
30/06/03 30/06/02 31/12/02
(Unaudited) (Unaudited) (Audited)
Notes #'000 #'000 #'000
Net cash outflow from operating activities 7 (399) (5,119) (6,023)
Returns on investments and servicing of finance (221) (54) (232)
Taxation (246) (311) (880)
Capital expenditure and financial investment 8 (325) (1,752) (5,752)
Acquisitions and disposals - (1,142) (1,142)
Cash outflow before management of liquid resources (1,191) (8,378) (14,029)
Financing 8 (1,564) 6,860 9,496
Management of liquid resources - (1,650) 3,100
Decrease in cash in the period (2,755) (3,168) (1,433)
Reconciliation of net cash flow to movement in net funds
Decrease in cash in the period (2,755) (3,168) (1,433)
Cash inflow/(outflow) from increase in liquid resources - 1,650 (3,100)
Cash inflow/(outflow) from increase in debt 1,555 (6,841) (9,426)
Movement in net funds resulting from cashflows in the
period (1,200) (8,359) (13,959)
Finance lease payments 16 17 -
(1,184) (8,342) (13,959)
Net (debt)/funds at 1 January 2003 (5,890) 8,069 8,069
Net debt at 30 June 2003 (7,074) (273) (5,890)
ROBOTIC TECHNOLOGY SYSTEMS PLC
Interim results for six months ended 30 June 2003
Group Statement of Total Recognised Gains and Losses
6 month 6 month 12 month
Period period Period
Ended ended Ended
30/06/03 30/06/02 31/12/02
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Loss for the financial period/year (2,930) (6,581) (35,457)
Currency translation differences on foreign currency (552) (2,222) (4,028)
net investments
Total recognised losses for the period/year (3,482) (8,803) (39,485)
ROBOTIC TECHNOLOGY SYSTEMS PLC
Interim results for six months ended 30 June 2003
Notes to the financial information
1. Basis of preparation
The interim results have been prepared using the accounting policies set out in
the Group's Annual Report and Financial Statements. The figures for the period
ended 31 December 2002 are abridged and have been extracted from the Annual
Report and Financial Statements which have been filed with the Registrar of
Companies. The auditors' report on those Financial Statements was unqualified
and did not contain any statements under Section 237(2) or (3) of the Companies
Act 1985. The financial information set out in this document does not constitute
statutory financial statements within the meaning of Section 240 of the
Companies Act 1985.
2. Turnover
6 month 6 month 12 month
Period ended Period ended Period ended
30/06/03 30/06/02 31/12/02
(Unaudited) (Unaudited) (Audited)
Geographical destination: #'000 #'000 #'000
United Kingdom 8,722 9,398 19,389
Other European Countries 1,337 3,512 5,594
North America 18,354 21,461 42,054
Rest of the World 65 3,871 3,522
28,478 38,242 70,559
6 month 6 month period ended 30 June 2002
Period ended
30/06/03 Continuing Discontinued Total
Activities Activities
(Unaudited) (Unaudited)
#'000 #'000 #'000 #'000
Class of business:
Assembly Systems 7,893 10,793 - 10,793
Build-to-Print 1,546 1,346 - 1,346
Flexible Systems 719 2,257 - 2,257
Life Science 8,165 7,379 243 7,622
Nuclear Solutions 6,807 6,285 - 6,285
Process Systems 584 4,874 - 4,874
Support Services 787 939 428 1,367
Tooling Systems 1,977 3,698 - 3,698
28,478 37,571 671 38,242
12 month period ended 31 December 2002 (audited)
Continuing Discontinued Total
Activities Activities
#'000 #'000 #'000
Assembly Systems 19,143 - 19,143
Build-to-Print 3,213 - 3,213
Flexible Systems 983 3,401 4,384
Life Science 15,352 265 15,617
Nuclear Solutions 12,755 - 12,755
Process Systems 6,869 - 6,869
Support Services 1,696 - 1,696
Tooling Systems 6,882 - 6,882
66,893 3,666 70,559
3. Continuing and discontinued activities
The results of continuing and discontinued activities in prior periods were as
follows:
6 month period 12 month period
ended 30 June 2002 ended 31 December 2002
(unaudited) (audited)
Continuing Discontinued Continuing Discontinued
Activities Activities Total Activities Activities Total
#'000 #'000 #'000 #'000 #'000 #'000
Turnover 37,571 671 38,242 66,893 3,666 70,559
Cost of sales (27,886) (471) (28,357) (49,104) (3,259) (52,363)
Gross profit 9,685 200 9,885 17,789 407 18,196
Distribution and
administration expenses
before exceptional items (14,966) (435) (15,401) (25,735) (3,767) (29,502)
Exceptional items
Acquisition goodwill - - - (16,400) - (16,400)
impairment
Impairment of intangible - - - (308) - (308)
fixed assets
Legal and professional - - - (816) - (816)
fees
Restructuring costs (397) - (397) (648) - (648)
Other operating income 46 - 46 39 15 54
Operating Loss (5,632) (235) (5,867) (26,079) (3,345) (29,424)
ROBOTIC TECHNOLOGY SYSTEMS PLC
Interim results for six months ended 30 June 2003
4. EBITDA and adjusted loss after tax
6 month 6 month 12 month
period period period
ended ended ended
30/06/03 30/06/02 31/12/02
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Operating loss (2,679) (5,867) (29,424)
Amortisation 831 1,732 2,459
Depreciation 1,107 1,223 2,358
EBITDA (741) (2,912) (24,607)
Exceptional items 290 397 18,172
EBITDA before exceptional items (451) (2,515) (6,435)
Loss after tax (2,930) (6,581) (35,457)
Exceptional items 290 397 18,172
Loss on termination of business segments - 417 4,972
Acquisition goodwill amortisation 642 1,429 2,128
Adjusted loss after tax (1,998) (4,338) (10,185)
5. Earnings per share
Loss per ordinary share has been calculated using the weighted average number of
shares in issue during the relevant period. The calculation of both basic and
diluted earnings per share for the six months ended 30 June 2003 are based upon
a loss after tax of #2,930,000 (six months ended 30 June 2002 a loss after tax
of #6,581,000, 12 month period ended 31 December 2002 a loss after tax of
#35,457,000). The weighted average number of shares used in the basic
calculation is 61,100,204 (30 June 2002: 58,773,901; 31 December 2002:
59,884,638).
The calculation of diluted loss per ordinary share is identical to that used for
the basic loss per ordinary share. This is because the exercise of share
options would have the effect of reducing the loss per ordinary share and is
therefore not dilutive under the terms of FRS 14.
Adjusted basic loss per share has been calculated on adjusted loss after tax
(note 4).
ROBOTIC TECHNOLOGY SYSTEMS PLC
Interim results for six months ended 30 June 2003
6 Shareholders' funds
Profit and
Share Share Shares to Other loss Total
capital premium be issued Reserve reserve
#'000 #'000 #'000 #'000 #'000 #'000
At 1 January 2003 611 74,490 120 571 (19,155) 56,637
Share scheme options - 7 - - - 7
exercised
UITF 17 share option - 66 - 66
charges
Exchange differences - - - - (552) (552)
Loss for the period - - - - (2,930) (2,930)
At 30 June 2003 611 74,497 120 637 (22,637) 53,228
7 Reconciliation of operating loss to net cash outflow from operating
activities
6 month 6 month 12 month
period period period
ended ended Ended
30/06/03 30/06/02 31/12/02
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Operating loss (2,679) (5,867) (34,396)
Depreciation and amortisation 1,938 2,699 25,321
Decrease in stocks 1,901 925 1,024
Decrease in debtors 2,071 4,997 2,826
Decrease in creditors (3,046) (8,014) (2,413)
Profit/(loss) on disposal of current asset investment (37) 16 (84)
Loss on disposal of tangible fixed assets 16 - 58
Loss on disposal of intangible fixed assets - - 7
Charge in respect of provisions 16 125 307
Restructuring provision (579) - 1,327
Net cash outflow from operating activities (399) (5,119) (6,023)
ROBOTIC TECHNOLOGY SYSTEMS PLC
Interim results for six months ended 30 June 2003
8 Notes to the cashflow statement
6 month 6 month 12 month
period period period
Ended ended ended
30/06/03 30/06/02 31/12/02
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Capital expenditure and financial investment
Payments to acquire intangible fixed assets - (249) (307)
Payments to acquire tangible fixed assets (238) (2,249) (6,209)
Payments/(receipts) from current asset investments (87) 746 764
(325) (1,752) (5,752)
Financing
Issue of share capital 7 45 70
Loan advances 1,555 6,832 9,452
Capital element of finance leases (16) (17) (26)
(1,564) 6,860 9,496
9 Dividend
The directors do not recommend the payment of a dividend.
ROBOTIC TECHNOLOGY SYSTEMS PLC
Interim results for six months ended 30 June 2003
Independent Review Report to Robotic Technology Systems PLC
Introduction
We have been engaged by the company to review the financial information for the
six months ended 30 June 2003 on pages 7 to 14. 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 the terms of our
engagement. Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this 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 reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors.
Review work performed
We conducted our review in accordance with guidance in Bulletin 1999/4: Review
of interim financial information issued by the Auditing Practices Board. A
review consists principally of making enquiries of 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 is
substantially less in scope than an audit performed in accordance with 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.
KPMG Audit Plc
Chartered Accountants
Manchester
17 September 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UNRRROKRKAUR