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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Ferrovial SE | EU:FER | Euronext | Ordinary Share |
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Ferraris Group PLC
10 November 2003
10 November 2003
Ferraris Group plc
Preliminary results for the year ended 31 August 2003
Ferraris Group plc, the international medical diagnostics Group, announces
Preliminary results for the year ended 31 August 2003.
Highlights
* The Group's trading performance was in line with, and cash position ahead of,
expectations
- Sales were #65.1m (2002: #58.0m)
- Gross margins improved to 51.2% from 47.8%
- Operating profit, before goodwill, discontinued and exceptional
items, was #6.2m (2002: #4.8m*)
- Profit before tax, after goodwill, discontinued and exceptional
items, was #1.7m (2002: loss of #0.5m*)
- EPS (as shown in note 4) before goodwill, discontinued and
exceptional items, was 12.2p (2002: 11.8p*)
*Prior year numbers restated for change in accounting policy during the year for
R&D costs, now written off as incurred
* The proposed final dividend is increased to 3.6p (2002: 3.4p), making a
full year dividend of 5.8p (2002: 5.6p), reflecting a good performance for
the year and the Board's confidence in future prospects.
* In an increasingly consolidated marketplace, the Board believes best
value for shareholders will be achieved by focussing solely on the Group's
Medical Diagnostics operations. The Group will concentrate all resources on
taking advantage of the considerable opportunities in this area.
Three significant acquisitions - Del Mar, PiKo and Bionostics - in medical
diagnostics were made during the year, extending the Group's portfolio of
products and capabilities and introducing new opportunities for growth.
* External advisors have been appointed to advise on the divestment of the
Group's life sciences operations, which Ferraris hopes to complete in 2004.
* The Board looks forward to an exciting year with good growth prospects.
Ian Dighe, Chairman, commented:
"In my second annual report as Chairman I am pleased to report on a significant
year for the Group. During the period we further defined our future direction
and strategy, strengthened our management team and completed three pivotal
acquisitions that have transformed the Group and its prospects.
"Having clearly defined our strategy to concentrate upon medical diagnostics, we
are now focussed on completing the reorganisation of respiratory activities and
driving organic growth from our strong portfolio of products and services,
leveraging our global distribution channels to increase market penetration.
"Costs of providing healthcare services for a generally ageing population are
under close scrutiny throughout the world, as spending outpaces economic growth
in most developed countries. In this environment we are well positioned to take
advantage of medicine's move towards early diagnostic analysis and prevention as
a cheaper alternative to providing long term care. We believe our comprehensive
range of diagnostic products and services offers competitive value for
customers.
"Ferraris is I believe now better placed to take advantage of the commercial and
strategic opportunities that are available, and I look forward to an exciting
year with good growth prospects."
- ends -
For further information, please contact:
Ferraris Group plc Today:020 7067 0700
Steven Mills, Chief Executive Thereafter: 0121 782 6000
Simon Dighton, Group Finance Director
Weber Shandwick Square Mile 020 7067 0700
Nick Oborne/ Rachel Lankester/ Susanne Walker
10 November 2003
Ferraris Group plc
Preliminary results for the year ended 31 August 2003
CHAIRMAN'S STATEMENT
In my second annual report as Chairman I am pleased to report on a significant
year for the Group. During the period we further defined our future direction
and strategy, strengthened our management team and completed three pivotal
acquisitions that have transformed the Group and its prospects.
I am pleased to report that alongside these corporate developments we increased
sales, margins, operating profit and earnings per share prior to goodwill
amortisation and exceptional items. In the light of this performance and our
confidence in the Group's prospects, the Board proposes an increase in the final
dividend.
Strategy
I reiterate my comments from the Listing Particulars sent to shareholders at the
time of acquiring Bionostics Inc. The Company's strategy is to:
* build a significant global diagnostics business by achieving leadership
in selected high margin segments of the market and extending both the
product and customer base;
* fully exploit our presence in the critical care segments of cardiac,
respiratory, and blood diagnostics; and
* strengthen operational management to maximise the performance of the
existing business.
In line with this strategy we have decided to focus solely on medical
diagnostics. In an increasingly consolidated marketplace, we believe that best
value for shareholders will be achieved by concentrating all our resources on
taking advantage of the considerable opportunities offered by this area. We have
decided to seek offers for our Life Science businesses and have appointed
external advisors to assist in valuing this Division and evaluate options for
divestment.
We shall continue to invest in and properly manage this profitable division,
divesting at a proper valuation and only to buyers able to realise these
businesses' potential. We hope to complete this programme during 2004 and will
keep shareholders updated as progress is made.
Since the year end we have started the process of integrating the pulmonary and
asthma management activities into a single respiratory division. We believe this
move, which completes the internal reorganisation programme, will give these
operations the critical mass to compete more competitively and enhance profit
margins. These actions are likely to cost approximately #2.5 million, of which
the cash outflow is #1.5 million. The Group would expect to recoup savings
ultimately of #1.0m per annum but this level is not expected to be fully
realised until 2005/6. Further details are shown in the operating review.
Our operations are now focussed in four core areas of diagnostics, namely;
cardiac, respiratory, blood and clinical trials services. There is a single
management team for each product area controlling activities on an international
basis.
Corporate Activity
To remind shareholders, three transactions were completed in the year:
* Del Mar Medical Systems LLC January 2003
* PiKo January 2003
* Bionostics Inc July 2003
Del Mar, based near Los Angeles, California, specialises in cardiac holter
monitoring and is a natural strategic and complementary addition to the cardiac
product group. The business of PiKo, including its intellectual property rights,
is that of miniature digital peak flow meters for personal patient monitoring
and has extended the range of consumable respiratory products. These
transactions were financed by a combination of shares to vendors and cash from
increased bank facilities.
Bionostics, based near Boston, Massachusetts, is a leading provider of liquid
quality standards used to confirm the performance of medical diagnostic testing
devices. It gives the group capabilities in blood diagnostics, thus broadening
the portfolio of critical care capabilities. Finance for this acquisition was a
combination of shares and loan stock issued to the vendors, together with a
Placing and Open Offer which raised approximately #12 million.
The Placing and Open Offer enabled us to attract a number of new institutions
onto the share register. In particular, the strategic investment made by
Mannheim LLC, a private investment group based in New York, was significant.
Mannheim specialises in investments in healthcare, and its expertise and
detailed knowledge of the business sector will be particularly useful to us as
we continue to develop our medical diagnostic activities.
Financial Performance and Dividends
It is pleasing to be able to report operating profit (before goodwill
amortisation and exceptional items) at #6.2 million (2002: #4.8m before
discontinued losses), an uplift of 30% on 2002 from sales of #65.1m (2002:
#58.0m before discontinued items). Related earnings per share were 12.2p (2002:
11.8p).
Operating profit after goodwill and exceptional items was #2.8 (2002: #0.8m) and
earnings per share 2.9p (2002: loss 3.4p).
The Directors recommend a final dividend of 3.6p per share (2002: 3.4p), making
a total of 5.8p per share (2002: 5.6p).
Directors
At the time of the Bionostics transaction in July 2003, I welcomed to the Board,
Dr. Gerald Moller and Bruce Blessington. Kevin D'Silva resigned from the Board
in June 2003. Gerald Moller, a former chief executive of Boehringer Mannheim and
a past director of Roche, is a non-executive director. The Board is already
benefiting from his international expertise and perspective in evaluating future
opportunities. Bruce Blessington, President of Bionostics, is an executive
director and has been appointed Chief Operating Officer of the Group.
Jonathan North has been a non-executive director of the company for some years.
Recently he has been Chairman of the Remuneration Committee and has also given
his advice on various legal matters. In view of certain health difficulties, he
has decided to reduce his commercial commitments and is intending to retire from
the Board at the forthcoming Annual General Meeting. His contribution has been
significant and I extend to him both my sincere thanks for his wise counsel and
very best wishes for the future.
Employees
Businesses cannot succeed without dedicated and motivated employees. I record
the thanks of the Board to all employees for their hard work during the year and
welcome new employees to the Group.
Prospects
Having clearly defined our strategy to concentrate upon medical diagnostics, we
are now focussed on completing the reorganisation of respiratory activities and
driving organic growth from our strong portfolio of products and services,
leveraging our global distribution channels to increase market penetration.
Disposal of our Life Science Division will deliver additional cash resources
which we will use to reinvest in the growth of Medical Diagnostics and, as
appropriate at the time of disposal, reduce debt.
Costs of providing healthcare services for a generally ageing population are
under close scrutiny throughout the world, as spending outpaces economic growth
in most developed countries. In this environment we are well positioned to take
advantage of medicine's move towards early diagnostic analysis and prevention as
a cheaper alternative to providing long term care. We believe our comprehensive
range of diagnostic products and services offers competitive value for
customers.
Your company is I believe now better placed to take advantage of the commercial
and strategic opportunities that are available, and I look forward to an
exciting year with good growth prospects.
I R Dighe
10 November 2003
REVIEW OF OPERATIONS
A key operating objective during the year of focussing on enhancing profit
margins has yielded positive results. Reported group operating margin (before
goodwill and exceptional items) at 9.5%, represents an increase from 8.2% on
2002, as restated for the changed accounting policy to expense research and
development costs as incurred. This improvement is a result of an increasing
proportion of sales in medical diagnostics, consolidation within that division,
and continued success from our investment in product development.
In the Medical Diagnostics Division, we have not only launched a number of new
products but have continued to implement design improvements on our diagnostic
devices and services, involving miniaturisation and communication telemetry.
Medical Diagnostics Division - Sales #39.5m (2002: #32.3m)
Each of the four operating groups now operates globally under a single
management team.
Cardiac Group
The cardiac group, now operating under a single brand name, delivered record
profits in line with expectations.
The US performance was particularly encouraging and demonstrated the successful
integration of Delmar Medical Systems after its acquisition in January 2003.
This process included a move to new premises in Irvine, California, in April
2003. All US cardiac activities are now combined in a single modern facility
with good highway access for distribution. As a result of this combination,
development projects can now be streamlined, thus avoiding undue duplication of
products and allowing the division to concentrate on obtaining FDA approvals
over the full range of products. Approval of the new interpretative PC-ECG
system, Cardio Direct 12 and the mobile 12 lead Cardio Collect was obtained in
August 2003. This regulatory clearance of the interpretation and measurement
algorithms clears the way to distribute proven resting ECG product lines in the
US market, especially targeting private practices in conjunction with the
CardioNavigator, cardiology information management system software.
Our commercial alliance in the USA with Draegar/Siemens continues to develop.
Recent orders have been won and our business partner readily acknowledges the
important part that Del Mar Reynolds products play in enabling a full range of
equipment to be offered to hospitals.
As indicated at the interim report stage, the market in both the UK and Germany
has been challenging. The previously announced additional government spending in
the National Health Service has not benefited most Medical Diagnostic Suppliers.
To date, Diagnostic and Treatment Centres have been slow to develop in the UK as
PFI partners conduct critical reviews of the operating returns. Although in
excess of 20 centres are planned for 2004/05, indications of how many will
contain cardiac facilities are unclear, and demonstrable benefits may not be
evident until 2005 onwards.
The German market has been notable for frequent discussions between insurance
funds, the German Hospitals Association (DKG) and BVMed, the medical device
trade association, over reimbursement issues. Del Mar Reynolds Elektronik GmbH
is however well positioned, working closely with the Respiratory Division, in
offering combined diagnostic solutions to both cardiology and respiratory
professionals.
Respiratory Group
Combining the various respiratory products under a global common banner and
improving margins are two of the most important operational objectives for 2004.
Our previous strategy of combining asthma management activities has now been
extended to encompass the entire respiratory device activities. Work has already
commenced to consolidate all US operations onto the existing Louisville,
Colorado site and this project should be completed by February 2004.
Manufacturing can be monitored in a single area, regulatory and administration
costs reduced and service/sales staff trained to cover the entire product range.
Specific benefits are:
* The combined entity of Ferraris Respiratory provides global market
recognition as a leading player in its sector.
* Combined distribution channels provide enhanced visibility for all
product lines.
* The opportunity to deliver better after sales service to customers.
* Maximisation of efficiency and profitability.
A similar exercise using this business model is under review in Europe.
Acceleration of the consolidation strategy has been appropriate against a
backdrop of tough market conditions for the respiratory sector throughout the
world. The US market was especially flat for capital equipment this year, a
factor exaggerated by the expectation and then onset of the war in Iraq. During
this uncertain period significant sums of Government influenced expenditure were
diverted away from medical budgets. This factor, to a large extent, reduced
sales of the Infant Pulmonary Laboratory, a specialist but high ticket item
which nevertheless produced over $1m of income in its first year.
In the UK, continued restraint was evident in NHS spending for lung function
capital equipment whilst the difficulties of the German market are commented
upon under the Cardiac Group heading of this report.
During the year we expended significant resource (financial and personnel) upon
the development and launch of new products. These include:
--------------------------------------------------------------------------------
Product Brand Product Description Launch Date
--------------------------------------------------------------------------------
PiKo Digital peak flow meter February 2003
--------------------------------------------------------------------------------
Raptor Range of flow based pulmonary lung function August 2003
equipment
--------------------------------------------------------------------------------
Betterflow Spirometer for EU market September 2003
--------------------------------------------------------------------------------
KoKo Star Desk top spirometer April 2004
--------------------------------------------------------------------------------
PiKo sales in Europe have been encouraging and in line with projections, with
several large orders secured from leading pharmaceutical companies. Acceptance
in the US market has been slower than originally anticipated but we are pleased
that the previously reported delay in production volumes due to the SARS
epidemic has now been eliminated. We have revised our marketing strategy for the
US and hope to improve penetration of this market quickly. This modern device
won an award in the US Medical Design Excellence Awards 2003 for the best over
the counter and self-care product.
Prior to August 2003, all Ferraris pulmonary lung function products were based
on volume measurement. This method of assessment had severely restricted sales,
particularly in USA, where many respiratory therapists prefer a flow-based
system. A comprehensive flow based range branded 'Raptor' has been developed
internally and was well received at recent exhibitions. Initial sales are
encouraging. Other spirometry developments will add to the already extensive
range and should enable additional sales to be achieved from a comprehensive
portfolio of products leveraging well defined distribution channels.
I am pleased to report that Ferraris Respiratory has recently been awarded an
opportunity to supply Premier with a range of consumable respiratory products..
Premier is a major hospital group purchasing organisation in the USA, comprising
1,600 affiliated hospitals.
Blood Group
Bionostics, a leading provider of liquid control standards used to confirm the
performance of medical diagnostic testing devices, joined the Ferraris Group in
July 2003. Its initial contribution has been in line with market expectations
and its integration into Ferraris both swift and efficient.
Having established a pre-eminent position in the supply of blood gas critical
care quality controls, the same business model was applied with success to the
blood glucose sector used to monitor diabetes. This market is growing by
approximately 15% per annum and is directly related to the global increase in
obesity.
Bionostics' prime objective is to continue to capture market share from its
traditional markets, which themselves are set to increase as a result of
significant anticipated use of protein based diagnostic tools. Development of
new products, particularly in the area of coagulation and haemoglobin A1C is
also planned together with continued investment in producing new complex blood/
gas formulations in response to market needs. Retention of the intellectual
property rights over the liquid controls sold to OEM customers, usually under
long term contracts, is a barrier to others attempting to enter this sector of
diagnostics. It is equally important to keep production costs under regular
review using a combination of lean manufacturing techniques and judicious
capital investment. In this respect, an extension to the automated packaging
facilities is planned for 2004.
Investment in the recently formed statistical services business has yet to yield
its potential. A number of sizeable opportunities have been identified and their
conversion to customers is an important goal to achieve.
Clinical Trials Group
The US based and more recently established European group have been particularly
busy delivering profit ahead of original expectations. The new name of Quantum
Research, combining PDS and Hertford Medical International, is now recognised as
a global entity in the clinical trials sector.
Work in the US continued at a hectic pace throughout the year on a wider range
of trials for an extended international client list. Ferraris proprietary
devices, both cardiac and respiratory, enable a wider range of services to be
offered in conjunction with the recently developed KoKoLink real time web
enabled software. Some 40 trials are currently being undertaken involving 2,500
sites in 30 countries. Cross training of personnel in cardiac and respiratory
techniques has been successfully achieved during the year with a resultant
improvement in the skill base.
During the first half of the year much effort was expended combining the
European activities on to a single site in Welwyn Garden City, including the
training of personnel referred to above. This investment and the strategy behind
acquiring additional European cardiac expertise through the acquisition of
Hertford Medical International last year was rewarded by the securing of two
significant contracts for an international pharmaceutical client, announced in
August 2003. These contracts, for the provision of clinical trials services and
supply of both cardiac and respiratory equipment, totalled #4 million. Much
preparatory work was undertaken in the year and trials themselves are scheduled
to commence in the last calendar quarter of 2003, lasting for up to 24 months.
Work on these projects for a client new to Quantum Research will involve both US
and European personnel.
Quantum Research continues to enhance its reputation for its expanded range of
services and, with a useful number of contracts either secured or in the
pipeline, prospects look encouraging.
Life Sciences Division Sales #25.7m (2002: #25.7m)
Metalcraft
At the interim report stage reference was made to lower than budgeted level of
activity being experienced from Oxford Magnet Technologies, our most significant
customer for specialist MRI scanner components. This trend continued throughout
the year. Important work was, however, undertaken on a range of lean
manufacturing projects including an examination of effective supply chain
management using "lower cost countries". A key objective in maintenance of
operating margins was achieved.
In October 2003 we renewed our status of "Preferred Supplier" to our prime OEM
customer for a further three years. This long term arrangement gives visibility
to plan for any changes necessary in manufacturing to ensure safety critical
components can be produced at the competitive prices demanded by this market.
The business has also recently secured orders for components in production
volumes from GE, amounting to #2m per annum. This is a significant achievement
from such an important company in the MRI scanner sector and for whom the only
previous work involved developing individual prototypes.
Metalcraft achieved a creditable performance in the light of the conditions
noted above and was helped in the second half of the year by release of
previously delayed production on its Cern contract, together with useful work
for BNFL. Order books look strong for the current year with the prospect of good
progress.
Instrument Technology
With such a high proportion of sales going to the semi-conductor industry, where
market conditions are still stagnant, performance at Instrument Technology was
inevitably subdued. Two downsizing exercises were undertaken to bring costs in
line with operating income, hence the last quarter of the financial year was
more profitable than the previous nine months.
Useful new accounts were identified in USA and give optimism that the business
will continue to gain market share, even in challenging market conditions. On a
reduced cost base, there is every indication of a return to higher levels of
profitability this year but further measurable progress will only be achieved as
the sector comes out of its low cyclical trough and the benefits of operational
gearing are seen.
Oxford Cryosystems
Many of the end users of products sold by Oxford Cryosystems depend upon
Government funded grants for their project finance. For this reason, diversion
of funds to other priority requirements during the Iraq war had a major effect
on sales, especially in USA, for some six months of the financial year. In
addition, consolidation of customers' businesses also reduced opportunities for
OEM sales. Despite these conditions performance outside the USA was in line with
target and encouragingly the introduction of the new improved Cryostream 700+
Series in the second half of the year particularly accelerated sales.
Continued investment in research and development is crucial for this business to
introduce a wider range of product for the specialist sector it serves. Recently
released prototype equipment and software for microscopy is in the market and
has been well received for diverse applications. Grants previously frozen are
gradually being released and, as commercial alliances such as that with
PANalytical gather pace, demand is expected to grow.
FINANCE DIRECTOR'S REPORT
Operating Results
Group operating profit before goodwill amortisation and exceptional items was
#6.2m (2002: #4.8m) before discontinued losses, an increase of 30%. Operating
profit after goodwill amortisation and exceptional items was #2.8m (2002:
#0.8m).
Group turnover from continuing operations increased from #58.0m to #65.1m for
2003, an increase of 12%. Sales in the Life Sciences division were maintained at
a consistent level whilst Medical Diagnostics turnover rose by 22%. This
increase reflects adverse currency movements of 4%, contribution from
acquisitions of 23%, the replacement of sales of clinical trials equipment by
equipment leasing of 11% and organic growth of 14%. Medical Diagnostics turnover
now represents 61% of total sales compared to 56% last year, with 59%
originating from the USA.
Gross margins on continuing activities before exceptional items continued to
improve, moving to 51.2.% from 47.8% This improvement was due mainly to the
increasing proportion of income generated from Medical Diagnostics, in
particular clinical research which carries high gross margins but increased
overhead expenses.
Operating expenses from continuing operations before exceptional items rose from
#24.7m to #29.4m with the increase due to the operating costs of the acquired
companies and the increase in goodwill amortisation due to the acquisitions. The
exceptional costs of #1.1m are discussed below.
During the year, the company changed its accounting policy to expense Research
and Development costs as incurred, and on the new basis the expense for the year
was #2.1m (2002: #2.5m). This change of policy was made, after discussions with
our advisors, to demonstrate additional clarity in our results and to be
consistent with current accounting trends in the healthcare sector. 2002 results
have been restated in accordance with the new accounting policy.
The net interest charge of #1.1m (2002: #0.4m) this year did not benefit from
realised foreign exchange gains (2002: #0.4m). Interest cover, before goodwill
amortisation and exceptional items was 5.9 times.
The taxation charge of #1.2m before exceptional items gives an effective tax
rate of 41.6%, representing the higher rates of taxation in the USA and the
partial non-allowability of goodwill amortisation for taxation.
The exceptional charge includes expenses incurred on long term contractual
arrangements for key customers in our Life Sciences division and payments made
in connection with Mr K D'Silva leaving the Board. The Life Science costs have
been expensed with the investment expected to yield commercial benefit over the
next three years.
Earnings per Share and Dividend
Earnings per share before goodwill amortisation and exceptional items was 12.2p,
compared to 11.8p the previous year, an increase of 3.4%. Earnings per share
after goodwill amortisation and exceptional items was 2.9p (2002: loss 3.4p).
The proposed final dividend is 3.6p per share (2002: 3.4p) which, when added to
the interim dividend paid of 2.2p per share (2002: 2.2p) means that the total
dividend of 5.8p (2002: 5.6p) is covered 1.8 times by profits after tax and
before goodwill and exceptional items.
Cash Flow and Net Debt
Net debt increased during the year to #26.4m from #15.7m as a result of the
acquisitions of Del Mar Medical Sytems Inc, PiKo and Bionostics Inc. These
acquisitions accounted for an increase in borrowings of #9.6m net of the
proceeds from the share issue used to finance the acquisition of Bionostics Inc.
Cash flow generated from operating activities increased to #4.5m (2002: #3.1m),
which represented a strong second half performance for the year as the first
half showed a cash outflow of #0.7m.
Working capital has increased during the year by #2.5m mainly as a result of a
reduction in creditors of #2.1m. This creditor reduction is due to a combination
of factors as reported at the interim results, including earlier payment to
suppliers as part of a commercial package to maintain margins and payment of
reorganisation costs provided last year. Since the interim results working
capital has been reduced by #1.0m.
Capital expenditure during the year was #2.4m of which #1.0m was purchased by
finance lease. The largest investment during the year of #0.7m was the addition
of Ferraris diagnostic equipment to support the clinical trials business.
Gearing is 49.1% (2002: 44.4%), a level with which we are comfortable.
Balance Sheet and Shareholders' Funds
As a result of the share issue to finance the acquisition of Bionostics Inc
shareholders' funds have increased from #35.5m to #53.9m. Goodwill has increased
due to the acquisitions during the year.
The acquisitions of both Del Mar and PiKo have an element of deferred contingent
consideration satisfied in both cash and shares. The balance sheet has been
prepared on the assumption that the maximum amount of consideration is payable.
Treasury Policy
During the year, the Group took out additional facilities to finance the
acquisitions. Currently the group has total facilities of #37.2m, including
#5.9m of leasing lines. As the Group generates an increasing proportion of its
income from the USA, the borrowing structure has been altered to continue to
offset exchange risk. At 31 August 2003, the net debt of #26.4m included #14.9m
of US $ dominated borrowings, representing an increase in US $ borrowings of
#10.9m from the previous year.
The Group has continued not to speculate on short term interest rates and the
majority of the Group's borrowings are on floating rates.
- ends -
For further information, please contact:
Ferraris Group plc Today: 020 7067 0700
Steven Mills, Chief Executive Thereafter: 0121 782 6000
Simon Dighton, Group Finance Director
Weber Shandwick Square Mile 020 7067 0700
Nick Oborne/ Rachel Lankester/ Susanne Walker
FERRARIS GROUP PLC
Consolidated Profit and Loss Account
For the year ended 31 August 2003
2003 2002
Before Before
Discontinued Discontinued Discontinued
and and and
Exceptional Exceptional Exceptional Exceptional
Items Items Total Items Items Total
(as restated) (as restated) (as restated)
Notes #'000 #'000 #'000 #'000 #'000 #'000
Turnover 3
Continuing operations 59,387 - 59,387 57,932 - 57,932
Acquisitions 5,755 - 5,755 84 - 84
-----------------------------------------------------------------------------------------------------------
65,142 - 65,142 58,016 - 58,016
Discontinued operations - - - - 4,250 4,250
-----------------------------------------------------------------------------------------------------------
65,142 - 65,142 58,016 4,250 62,266
Cost of Sales (31,808) (653) (32,461) (30,300) (2,135) (32,435)
-----------------------------------------------------------------------------------------------------------
Gross Profit/(Loss) 33,334 (653) 32,681 27,716 2,115 29,831
Selling and distribution
expenses (9,755) (54) (9,809) (9,251) (546) (9,797)
Administration expenses (19,656) (440) (20,096) (15,413) (3,851) (19,264)
-----------------------------------------------------------------------------------------------------------
Operating profit/(loss)
before amortisation of goodwill 6,202 (1,147) 5,055 4,786 (1,830) 2,956
Amortisation of goodwill (2,279) - (2,279) (1,734) - (1,734)
Discontinued operations - - - - (452) (452)
-----------------------------------------------------------------------------------------------------------
Operating profit/(loss)
Continuing operations 3,813 (1,147) 2,666 3,052 (1,830) 1,222
Acquisitions 110 - 110 - - -
-----------------------------------------------------------------------------------------------------------
3,923 (1,147) 2,776 3,052 (1,830) 1,222
Discontinued operations - - - - (452) (452)
-----------------------------------------------------------------------------------------------------------
Total operating profit/(loss) 3,923 (1,147) 2,776 3,052 (2,282) 770
Loss on disposal of
discontinued operations - - - - (810) (810)
-----------------------------------------------------------------------------------------------------------
Profit/(loss) on ordinary
activities before interest 3,923 (1,147) 2,776 3,052 (3,092) (40)
Interest receivable 15 - 15 472 - 472
Interest payable (1,071) - (1,071) (880) (32) (912)
-----------------------------------------------------------------------------------------------------------
Profit/(loss) on ordinary
activities before taxation 2,867 (1,147) 1,720 2,644 (3,124) (480)
Taxation (1,192) 397 (795) (1,037) 555 (482)
-----------------------------------------------------------------------------------------------------------
Profit/(loss) after taxation 1,675 (750) 925 1,607 (2,569) (962)
Minority interests -
equity interests (2) - (2) (7) - (7)
-----------------------------------------------------------------------------------------------------------
Profit/(loss) for the
financial year 1,673 (750) 923 1,600 (2,569) (969)
Dividends on ordinary
shares (2,208) - (2,208) (1,600) - (1,600)
-----------------------------------------------------------------------------------------------------------
Transferred from reserves (535) (750) (1,285) - (2,569) (2,569)
-----------------------------------------------------------------------------------------------------------
Earnings per share - Basic 5.2p 2.9p 5.7p (3.4p)
Earnings per share - Before
goodwill amortisation 12.2p 9.9p 11.8p 2.7p
Earnings per share - Diluted 5.2p 2.8p 5.6p (3.4p)
The restatement of 2002 relates only to the change in Research & Development accounting policy.
FERRARIS GROUP PLC
Consolidated Balance Sheet
As at 31 August 2003
Group Group
2003 2002
(as restated)
Note #'000 #'000
Fixed assets
Intangible assets 59,359 33,451
Tangible assets 11,884 10,304
Investments - other investments 437 440
- own shares 642 524
---------- ----------
72,322 44,719
---------- ----------
Current assets
Stocks and work in progress 12,376 9,708
Debtors 15,825 13,333
Cash at bank and in hand 295 904
---------- ----------
28,496 23,945
Current liabilities
Creditors - amounts falling due within one year
Borrowings (7,559) (7,418)
Other creditors (15,432) (14,820)
---------- ----------
Net current assets 5,505 1,707
---------- ----------
Total assets less current liabilities 77,827 46,426
Creditors - amounts falling due after more than one year
Borrowings (19,182) (9,228)
Other creditors (234) (187)
Provisions for liabilities and charges (4,503) (1,551)
---------- ----------
53,908 35,460
---------- ----------
Capital and reserves
Called up share capital 12,448 7,237
Contingent equity share capital 582 201
Share premium account 29,200 19,297
Merger reserve 16,855 12,252
Profit and loss account (5,195) (3,542)
---------- ----------
Shareholders' funds - equity interests 6 53,890 35,445
Minority interests - equity interests 18 15
---------- ----------
53,908 35,460
---------- ----------
Approved by the Board on 10 November 2003.
S.G. Mills Directors
S.G. Dighton
FERRARIS GROUP PLC
Consolidated Cash Flow Statement
For the year ended 31 August 2003
2003 2002
(as restated) (as restated)
Notes #'000 #'000 #'000 #'000
Cash inflow from operating activities 5 4,496 3,084
Returns on investments and servicing
of finance
Interest received 15 472
Interest paid (806) (755)
Interest element of hire purchase and
finance lease payments (118) (168)
------------------------------------------------------------
Net cash outflow from returns on
investments and servicing of finance (909) (451)
Taxation
UK corporation tax paid (283) (1,045)
Overseas tax received (525) 189
------------------------------------------------------------
Tax paid (808) (856)
------------------------------------------------------------
Net cash inflow before investing activities 2,779 1,777
Capital expenditure and financial investment
Purchase of patents and development expenditure (1) -
Purchase of tangible fixed assets (1,367) (1,122)
Receipts from sales of tangible fixed assets 308 122
Purchase of fixed asset investments (117) (138)
------------------------------------------------------------
Net cash outflow from capital
expenditure and financial investment (1,177) (1,138)
Acquisitions and Disposals
Acquisition of subsidiary undertakings (17,460) (983)
Net (overdraft)/cash acquired with new
subsidiaries (90) 163
Cash received on disposal of
subsidiary undertakings - 2,638
Net cash disposed of with subsidiary
undertakings - (22)
------------------------------------------------------------
Net cash (outflow)/inflow arising from
acquisitions and disposals (17,550) 1,796
Equity dividends paid (1,637) (1,482)
------------------------------------------------------------
Net cash (outflow)/inflow before financing (17,585) 953
Management of liquid resources
Financing
Issue of ordinary share capital net of expenses 11,706 148
Other loans 10,000 (797)
Loan repayments (1,925) -
Loan note repayments (1,764) -
Hire purchase and finance lease payments (939) (1,017)
------------------------------------------------------------
Net cash inflow/(outflow) from financing 17,078 (1,666)
------------------------------------------------------------
Decrease in cash in year (507) (713)
------------------------------------------------------------
Reconciliation of net cash flow to movement in
net debt
Decrease in cash in the year (507) (713)
Cash (outflow)/inflow from movement in
debt and lease financing (5,371) 1,815
------------------------------------------------------------
Change in net debt resulting from cash flows (5,878) 1,102
New finance leases (989) (1,631)
New loan notes (3,012) -
Translation difference (105) 189
Hire purchases and loans (assumed)/transferred with
acquisitions & disposals (720) 647
------------------------------------------------------------
Movement in net debt in the year (10,704) 307
Net debt brought forward (15,742) (16,049)
------------------------------------------------------------
Net debt carried forward (26,446) (15,742)
------------------------------------------------------------
FERRARIS GROUP PLC
Statement of Total Recognised Gains and Losses
For the year ended 31 August 2003
Group
2003 2002
(as restated)
#'000 #'000
Profit/(loss) for the financial year 923 (969)
Currency translation difference on foreign currency net
investments (368) (378)
------------ ----------
Total recognised gains and losses for the year 555 (1,347)
Prior period adjustment (5,087)
------------
Total recognised gains and losses since last annual report (4,532)
------------
FERRARIS GROUP PLC
Notes to the Financial Statements
For the year ended 31 August 2003
1. The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 August 2003 or 2002. The financial
information for the year ended 31 August 2002 is derived from the statutory
accounts for that year which have been delivered to the Registrar of Companies.
The auditors report on those accounts was unqualified and did not contain a
statement under s237(2) or (3) Companies Act 1985. The statutory accounts for
the year ended 31 August 2003 will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and will
be delivered to the Registrar of Companies following the company's annual
general meeting.
2. The restatement of 2002 relates only to the change in accounting policy
to expense Research and Development expenditure as incurred. The decision to
change the accounting policy followed extensive discussions with shareholders,
advisers and bankers. We believe it will bring additional clarity to our results
and is consistent with current accounting trends. As a result of this change in
accounting policy, the comparatives have been restated to ensure comparability
of corresponding figures. This results in a decrease in operating profit of
#1,220,000 for the year to 31 August 2002. The net assets have been reduced by
#5,087,000
3. Segmental Analysis
Turnover Profit before tax Net assets/(liabilities)
2003 2002 2003 2002 2003 2002
(as restated) (as restated)
By class of business #'000 #'000 #'000 #'000 #'000 #'000
Continuing
operations
Medical Diagnostics 39,464 32,291 4,337 2,929 11,767 8,309
Life Sciences 25,678 25,725 1,865 1,857 9,358 9,458
-------- ------- -------- -------- -------- --------
65,142 58,016 6,202 4,786 21,125 17,767
Discontinued operations
Engineering - 4,250 - (452) - -
-------- ------- -------- -------- -------- --------
65,142 62,266 6,202 4,334 21,125 17,767
Exceptional items (1,147) (2,640)
Goodwill (2,279) (1,734) 59,229 33,435
Interest / net borrowings (1,056) (440) (26,446) (15,742)
-------- ------- -------- -------- -------- --------
65,142 62,266 1,720 (480) 53,908 35,460
-------- ------- -------- -------- -------- --------
Continuing 2003 2002
Activities Acquisitions Total Total
#'000 #'000 #'000 #'000
Turnover by geographical origin
United Kingdom 39,540 - 39,540 40,012
Europe 2,452 - 2,452 4,589
North America 17,395 5,755 23,150 17,665
-------- -------- -------- --------
59,387 5,755 65,142 62,266
-------- -------- -------- --------
Turnover by geographical
destination
United Kingdom 27,003 204 27,207 26,676
Europe 10,926 599 11,525 12,161
North America 19,134 4,670 23,804 21,746
Rest of the World 2,324 282 2,606 1,683
-------- -------- -------- --------
59,387 5,755 65,142 62,266
-------- -------- -------- --------
Segmental analysis of profit before taxation and net assets by geographical
origin have not been disclosed as the Directors are of the opinion that such
disclosure would be seriously prejudicial to the business.
4. Earnings per share
Basic earnings per share has been calculated on the weighted average number of
ordinary shares in issue during the relevant period. For diluted earnings per
share, where earnings are positive the weighted average number of ordinary
shares in issue is adjusted to assume conversion of all dilutive potential
ordinary shares, being share save and share option schemes, where the exercise
price is less than the average market price of the Company's ordinary shares
during the period.
2003 2002
Number Number
Weighted average number of shares - basic 32,341,312 28,295,605
Share option adjustment 73,879 226,041
Weighted average number of shares - diluted 32,415,191 28,521,646
(as restated)
#'000 #'000
Earnings attributable to ordinary shareholders
before goodwill, Engineering and exceptionals 3,952 3,334
Earnings attributable to ordinary shareholders
before goodwill 3,202 765
Earnings attributable to ordinary shareholders
after goodwill 923 (969)
Earnings per share - basic
- before goodwill, Engineering and exceptionals 12.2p 11.8p
- before goodwill 9.9p 2.7p
- after goodwill 2.9p (3.4p)
Earnings per share - diluted
- before goodwill, Engineering and exceptionals 12.2p 11.7p
- before goodwill 9.9p 2.7p
- after goodwill 2.8p (3.4p)
5. Notes to the Cash Flow Statement
Group
(a) Reconciliation of operating profit to net cash 2003 2002
inflow from operating activities (as restated)
#000 #000
Operating profit before discontinued and exceptional
items 3,923 3,052
Discontinued and exceptional items (1,147) (2,282)
---------- ---------
2,776 770
Depreciation charges 1,853 1,594
Amortisation of goodwill 2,279 1,734
Amortisation of other intangible assets 2 1
Loss on sale of tangible fixed assets 49 13
Increase in stocks (680) (990)
Decrease/(Increase) in debtors 314 (22)
Decrease in creditors and provisions (2,097) (16)
---------- ---------
Net cash inflow from operating activities 4,496 3,084
---------- ---------
(b) Analysis of net debt At 1st At 31st
September Other August
2002 Cash flow movements 2003
#000 #000 #000 #000
Cash at bank and in hand 904 (609) - 295
Bank overdrafts (2,905) 102 - (2,803)
--------- -------- ---------- ----------
Cash (2,001) (507) - (2,508)
Hire purchase and finance leases
due (887) 216 (507) (1,178)
within one year
Bank loans due within one year (1,862) (1,716) - (3,578)
Loan notes due within 1 year (1,764) 1,764 - -
Hire purchase and finance leases
due (1,172) 724 (1,202) (1,650)
after one year
Loans due after one year (8,056) (6,359) 48 (14,367)
Loan notes due after 1 year - - (3,165) (3,165)
--------- -------- ---------- ----------
Net debt (15,742) (5,878) (4,826) (26,446)
--------- -------- ---------- ----------
Other movements include cash/loans acquired on the acquisition of Bionostics Inc
and Del Mar Medical Systems.
Also included are new hire purchase and finance leases entered into during the
year.
6. Reconciliation of Movements in Group Shareholders' Funds
2003 2002
(as restated)
#'000 #'000
Profit/(loss) for the financial year 923 (969)
Dividends (2,208) (1,600)
---------- ----------
(1,285) (2,569)
Goodwill on acquisition written back - 365
Other recognised gains and losses relating to the year (368) (378)
Issue of shares 19,717 1,463
Contingent equity share capital 381 (965)
---------- ----------
Net addition/(reduction) to shareholders' funds 18,445 (2,084)
Shareholders' funds at 31st August 2002 35,445 37,529
---------- ----------
Shareholders' funds at 31st August 2003 53,890 35,445
---------- ----------
7. If approved, the final dividend will be paid on 16 January 2004 to
shareholders on the register at 19 December 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBOWROURARAA
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