Interim Results

RNS Number:4342H
Ansell Limited
13 February 2003



                                                            13th February, 2003


                         Ansell Ltd. First Half Results

                   Strong Cash Flow Underpins Interim Result


Performance Highlights Ansell Limited:

  * Profit attributable to shareholders was up strongly in the operating
    currency U.S. dollars to US$10.8 million from a prior year loss of US$47.3
    million. In Australian dollars (AUD), profit attributable to shareholders
    was A$19.5 million compared with a loss of A$92.8 million last year.

  * Earnings per share (EPS) were positive USD 5.8c (AUD10.4c) vs. prior year
    negative USD 25.3c (AUD 49.7c).

  * Cash generated (reduction in Net Debt) was US$30.6 million (A$54.3
    million).

  * Gearing improved further to 25.7%, from 29.5% at June 30, 2002.

  * Directors recognise the Company's cash generation potential, and are
    undertaking a comprehensive review of Ansell's capital management
    strategies. In the light of this review, the Board, has determined there
    will be no interim dividend declared.

Ansell Healthcare Business Segment:


  * Sales were US$363.1 million, up 1% on prior year. The stronger AUD vs. the
    USD translated this result to A$653.8 million, down 7.5% on prior year.

  * Earnings Before Interest Tax and Amortisation (EBITA) were US$43.1
    million, up 4.1% on prior year. The stronger AUD vs. the USD translated this
    result to A$77.5 million, down 4.7% from last year.

  * Cash generated, before interest but after capital expenditure and taxes
    was a healthy US$46.9 million (A$84.5 million), up from US$40.4 million
    (A$86.8 million).

Outlook


  * The Board and management currently believe Ansell is on track to achieve
    double digit EBITA growth in U.S. dollars for the full year.




                                                             13th February, 2003



                       Ansell Ltd First Half 2003 Results

                   Strong Cash Flow Underpins Interim Result


                                                          31st December, 2002            31st December, 2001
                                                              US$ m            A$ m         US$ m             A$ m
Operating Revenue - Healthcare Segment                        363.1           653.8        *360.0           *706.8
Operating Profit (Segment EBITA)                               43.1            77.5          41.4             81.3
Profit Attributable                                            10.8            19.5        (47.3)           (92.8)
Net Operating Assets - Ansell Ltd.                            686.5         1,212.0         718.9          1,406.0
Net Operating Assets - Healthcare Segment                     596.2          1052.6         654.5           1280.1
Depreciation - Healthcare Segment                               8.9            16.0          10.9             21.2

Earnings Per Share                                             5.8c           10.4c       (25.3)c          (49.7)c


*Excludes Discontinued Businesses. With Discontinued Businesses US$770.8 million
and A$1,513.3 million.


Ansell today announced a first half Profit Attributable to Shareholders of
US$10.8 million (A$19.5 million), a significant improvement on the previous
year's loss of US$47.3 million (A$92.8 million).


The Chairman of Ansell, Dr Ed Tweddell, commented; "There has been a tremendous
focus on restructuring the company and improving shareholder returns. Today's
release demonstrates progress towards the goal of improving results to the level
rightfully expected and demanded by shareholders. It is also pleasing to have
earnings per share for the half of US5.8c (A10.4c), up on the previous year's
negative US25.3c (A49.7c), an improvement of US31.1c (A60.1c) per share".


In a difficult global economic environment, sales were up 1% in the operating
currency, U.S. dollars, at US$363.1 million. However, the appreciation of the
AUD against the USD translated to a 7.5% decline in sales (A$653.8 million).
Strong sales performances in the Occupational and Consumer divisions were offset
by surgical glove availability and examination glove pricing issues in the
Professional division (see discussion below).


Significant progress was also made in reducing total Unallocated Corporate costs
from last year's US$8.0 million (A$15.7 million) to US$6.7 million (A$12.1
million). Of the current period's total Unallocated costs, US$2.9 million
related to Operation Full Potential start-up costs.


Ansell's Chief Executive Officer, Harry Boon, said; "EBITA for the Healthcare
business at US$43.1 million was up 4.1% in the operating currency, U.S. dollars,
though lower at A$77.5 million when translated into the stronger AUD". He also
noted, "The Occupational and Consumer divisions showed strong revenue and EBITA
growth in the first half. Occupational continued to build momentum with strong
sales of the HyFlexTM family of gloves, and condom sales rose strongly within
Consumer. We are also seeing reduced product costs and greater efficiencies
following the completion of manufacturing transfers to Asia for these key
products."



Professional Healthcare

                                                    31st December, 2002                 31st December, 2001
                                                        US$ m              A$ m             US$ m              A$ m
Operating Revenue                                       124.7             224.6             142.2             279.1
Operating Profit (Segment EBITA)                         15.9              28.6              23.0              45.2
Assets Employed                                         220.5             389.3             223.9             438.0
Depreciation                                              4.5               8.1               5.0               9.7


In the first half, this division accounted for approximately 34% of Ansell's
total revenues and 37% of segment EBITA.


The period saw continuing strong worldwide demand for the division's flagship
product, powder free surgeons gloves. The ramp-up of production from Ansell's
Shah Alam, Malaysia facility following the transfer of production from the U.S.
took longer than anticipated, but is now complete. This reduced supply of
surgeons gloves was exacerbated by a regulatory Detention imposed on Shah Alam
by the US Food and Drug Administration (FDA) in October 2002. The FDA action was
lifted in early January, 2003 and shipments are now returning to normal levels.


In the hospital examination glove market, continued price competition and
oversupply eroded selling prices and gross margins.

Offsetting these factors, the Professional division achieved factory cost
savings from the relocation of production from the USA to Asia. In line with
previously announced strategy, powder-free surgeons glove capacity has been
added in Sri Lanka by converting two under-utilised examination glove production
lines.

Mr Boon further commented, "Notwithstanding the supply disruption to the U.S.
and European markets in Shah Alam surgeons gloves, the results of the
Professional division were sound and we are in a better supply position for the
second half. With no supply constraint in the U.S. and cost benefits of
manufacturing in Asia flowing through, we are regaining momentum in sales and
earnings in Professional division."


Occupational Healthcare

                                                    31st December, 2002                 31st December, 2001
                                                        US$ m              A$ m             US$ m              A$ m
Operating Revenue                                       177.4             319.4             161.6             317.3
Operating Profit (Segment EBITA)                         15.0              27.0              10.5              20.6
Assets Employed                                         210.8             372.2             222.9             436.0
Depreciation                                              3.1               5.5               4.5               8.7


In the first half, this division accounted for 49% of Ansell's total revenues
and 35% of segment EBITA.

Sales increased by 9.8%, with solid performance across all geographic regions,
despite the difficult external economic environment. Outstanding profit growth
in U.S. dollars of 43% was driven by worldwide HyFlexTM sales (up 51%), initial
benefits from the transition of manufacture to Asia, and real growth in Europe.
Importantly, division EBITA does not yet reflect expected benefits from the
transition of knitting operations from the U.S. to Juarez, Mexico, where solid
progress has been made, with over 80% of knitting machines now operational, and
daily production in December up 59% compared with July.

The Occupational Value Proposition (OVP) medium term growth initiative has made
an encouraging start, with initial business proposals well received by eight
large multi-nationals. Management anticipates the first major OVP contract to be
signed in the second half, in accordance with the timing previously announced.

Management expects continued momentum for the Occupational business into the
second half, as the HyFlexTM family of gloves continues to gain new market
share, OVP secures its first contracts, and benefits flow from the transition of
manufacturing to Asia and Mexico.


Consumer Healthcare

                                                    31st December, 2002                 31st December, 2001
                                                        US$ m              A$ m             US$ m              A$ m
Operating Revenue                                        61.0             109.8              56.2             110.4
Operating Profit (Segment EBITA)                         12.2              21.9               7.9              15.5
Assets Employed                                          71.5             126.2              76.6             149.8
Depreciation                                              1.3               2.4               1.4               2.8



In the first half, this division accounted for 17% of Ansell's revenues and 28%
of segment EBITA.

Retail condom sales grew strongly with a double-digit increase in the United
States. Wal-Mart presented an award to Ansell for high overall service
satisfaction levels. Our worldwide condom tender and private label businesses
also grew strongly. Reduced condom manufacturing costs have been realised
following the successful plant transfer to Asia and capacity is expected to be
increased to keep pace with growing demand. Retail household gloves also showed
good gains in Europe and Australia.


Operation Full Potential (OFP)

This three-year program was launched in July, and has made steady progress. The
first wave of OFP initiatives was focused on recruiting additional resources,
identifying cost reduction opportunities, re-structuring Europe, and launching
program measurement and tracking systems. All have been implemented on schedule.


The second wave is now underway and is focused on medium-term strategic issues,
such as surgical glove growth, pricing analysis, distribution partnerships,
implementation of the Occupational Value Proposition, marketing channel
management, and accelerating product innovation.


The OFP team is now fully in place to support the business plans that will drive
Ansell's sales and earnings growth. Management is confident that OFP will help
Ansell deliver the forecast benefits over the course of the program.


Sale of Non-Core Investments

Good progress continues to be made on the sale of non-core investments. During
the first half, two investments were sold; Pacific Marine Batteries and BT
Equipment. These sales generated US$9.4 million (A$16.7 million) of cash, of
which US$3.4 million (A$6.0 million) was received on January 31, 2003. The
proceeds from these divestments represent a premium to the total book value of
Ansell's investments in these companies.


Numerous legacy issues were resolved during the first half, moving the Company
closer towards its goal of being a global business, focussed on protective
products and solutions in the broad healthcare context. Management is committed
to resolving all significant legacy issues in the shortest possible time.


South Pacific Tyres


Ansell's only significant continuing non-healthcare business, South Pacific
Tyres, a 50/50 Joint Venture with The Goodyear Tire & Rubber Company, maintained
its progress in restructuring and returning to profitability. The Joint Venture
is accounted for as an investment and, as such, operating results are not
included in Ansell's accounts.


As previously reported, the Joint Venture Partners have an Agreement enabling
Ansell to "put" its investment in SPT to Goodyear during the twelve month period
from August 2005. If that option is not exercised, Goodyear has a "call" option
exercisable in the following six months. As part of this restructuring
agreement, Ansell is not required to contribute any further cash to the Joint
Venture.

At this stage, SPT is performing broadly in line with the restructure plan
developed and approved in 2001.

Corporate Costs

As foreshadowed, the continued resolution of legacy issues carried over from the
old company structure has enabled us to progressively reduce Statutory Head
Office activity and related costs. Ongoing Corporate Costs were more than halved
from US$8.0 million in the prior year to US$3.8 million in the first half of
F'03 (excluding Operation Full Potential start up costs of US$2.9 million).

Head count at the Statutory Head Office has reduced from 35 to 25 over the 12
months to December 2002. Further cost reductions are planned, as activities are
further integrated with the Healthcare business. The Company intends shortly to
relocate its Asia Pacific regional office to share the existing Statutory Head
Office facilities in Richmond, Melbourne, and to sub-lease the surplus building
space.

Board and Senior Staff

During the half, Ms Carolyn Kay resigned as a Director, after two and a half
years of dedicated service. At the same time, Mr Dale Crandall joined the Board.
Mr Crandall comes with a strong international finance and accounting background,
having been a Senior Partner with Price Waterhouse in the U.S. and more
recently, President and Chief Operating Officer of a major American healthcare
company.

The senior executive team was further strengthened with the recruitment to
Ansell of Mr Rustom Jilla (Chief Financial Officer), Mr Scott Papier (Vice
President, Sourcing & Supply), Mr Duane Dickson (Director, Operation Full
Potential), and Dr Michael Zedalis (Senior Vice President, Science &
Technology). All are based in Red Bank, New Jersey, and bring many years of
management experience at highly regarded multi-national companies such as the
BOC Group, Wyeth/American Home, Union Carbide and Honeywell/Allied Signal.

Finance

Cash flow continues to be strong, with the Company converting over 84% of EBITA
to cash. Capital expenditure in the half was US$4.2 million (A$7.6 million),
with no major new projects, while Ansell Healthcare's working capital was
further improved by a reduction of US$7.0 million (A$12.4 million).
Consequently, net debt was reduced by US$30.6 million (A$54.3 million) during
the half to US$176.4 million (A$311.4 million). Liquidity remains strong, with
US$140.4 million (A$247.8 million) of cash on deposit and an unused US$100
million bank borrowing facility.


This strong cash performance enabled gearing (Net Interest Bearing Debt to Net
Interest Bearing Debt plus Equity) to be further reduced to a conservative
25.7%, compared to 29.5% at June 30, 2002. Interest cover has improved to 5.0x,
up from 4.2x at June 30, 2002.

Ansell's global business is exposed to movements in various exchange rates,
particularly the Euro vs. the USD. The Company's operating profit benefited in
the half from the strengthening of the Euro, after taking into account the
smoothing effect of a pre-existing currency hedging program. The Company manages
its exchange rate exposure in a variety of ways, and anticipates further
benefits in the second half should the Euro maintain its recent strength vs. the
USD.

As a result of restructuring Ansell's U.S. entities, the Company decided to
accelerate the recovery of deferred tax assets held on the balance sheet
relating to previous U.S. tax losses. During the half, US$4.9 million was
recognised as a non-cash tax expense, which increased the effective or book tax
rate for the period to 44.7%. In the second half, the tax rate is anticipated to
revert to below 20% through utilisation of unbooked tax losses.

There were no material non-recurring write-downs for the half.

Capital Structure

Ansell's strategic vision is to be a global leader in broad-based healthcare
protection. From an investor perspective, the commitment is to significantly
enhance shareholder returns over time. Progress has been made on re-focusing the
company around the core healthcare business.

The Board, having noted Ansell's return to profitability, strong free cash flow
and conservative gearing, believes it is an appropriate time to undertake a
comprehensive review of Ansell's capital management philosophy and strategies.
This will be carried out over coming months.

Pending this review, the Board has determined that no interim dividend would be
declared for the first half.

Financial Report

A copy of the Half-Yearly Financial Report of Ansell Limited in the form lodged
with the Australian Stock Exchange has been posted on the Ansell Limited website
- www.ansell.com.


For further information please contact:


Media


Peter Brookes

Cannings

Telephone: [phone]

Email: [e-mail]





Investors & Analysts


David Graham

General Manager - Finance & Treasury

Ansell Limited

Telephone : [phone]

Mobile : [phone]

Email [e-mail]


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            The company news service from the London Stock Exchange
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