Preliminary Announcement for the year ended 31 March 2008

Financial position transformed:

• Disposals for good value, the PPP settlement and strong operating performance result in significant net profit of £336 million and net cash today of around £200 million
• Redemption of High Yield Bonds and recent repayment of Term Loans result in the Group being effectively debt free
• Reshaping of portfolio and strong operating performance led to operating margin5 of 12.0% and underlying earnings per share2 growth of 35% to 17.0p
• Financial strength and strong presence in infrastructure/long cycle markets provide sound platform for growth

Continuing operations4

• Orders were £2,036 million (2007: £2,101 million), down 2% at constant exchange rates (CER).  An improvement at Process Systems was offset by a decline at Rail Group, reflecting its uneven order intake, and the anticipated reduction at Controls. 
• Revenue was up 6% at CER at £2,108 million (2007: £1,999 million) with good performances at Process Systems, up 9%, and Rail Group, up 20%, partly offset by the anticipated reduction at Controls.
• Operating profit5 was up 19% at CER at £254 million (2007: £216 million) with strong performances at Process Systems, Rail Group and Controls. 
• Operating margin increased to 12.0% (2007: 10.8%) with each of our three major business groups reporting double digit margins.
• Underlying earnings per share were up 35% to 17.0p (2007: 12.6p) and basic earnings per share were up 257% to 21.1p (2007: 8.2p).
• Operating cash flow was in line with last year at £234 million (2007: £237 million) with operating cash conversion of 92% (2007: 110%); excluding restructuring spend, operating cash conversion was 102% (2007: 116%).
• Return on operating capital6 was 53% (2007: 42%).

Financial

• Net cash at 31 March 2008 was £73 million (31 March 2007: £166 million net debt) and this excludes the £95 million receipt in respect of the PPP settlement received on 2 April 2008.
• Redemption of the remaining £343 million of High Yield Bonds on 17 March 2008 and the repayment of the £155 million Term Loans on 7 May 2008. 
• Today the Group has cash of around £200 million and is effectively debt free.

Contact:
Invensys plc                  Steve Devany                             tel: +44 (0) 20 7821 3758                       
Financial Dynamics       Andrew Lorenz

Richard Mountain                        tel: +44 (0) 20 7269 7121

Ulf Henriksson, Chief Executive of Invensys plc, commented:

“I am pleased to report that, during the past year, we have continued to transform the financial position of Invensys through a combination of further improved operating performances across the businesses, the disposals of non-core activities for good value and the successful negotiation of the PPP settlement. 

“Today we have around £200 million of cash and, following the redemption of the remaining High Yield Bonds and the recent repayment of the Term Loans, we are effectively debt free. We are looking to further modify our financing facilities in due course to ensure that we have arrangements in place that support the implementation of our business strategy.

“We are also making good progress on our journey to become an unquestioned leader in our markets by unlocking the potential of both ourselves and our customers.  We are building a strong foundation for growth with high performing processes, human and execution capabilities and a cohesive business for our customers, employees and shareholders in an ever-changing environment.  Our clear objective is to become a technology and controls company providing intelligent solutions to customers on a global basis across a broad range of industries. 

“In our long cycle and infrastructure businesses within Process Systems and Rail Group, we have achieved a good improvement in revenue and operating profit, and we are increasing our energy to capture more of the growth in their markets.  I expect order intake in these businesses to improve during the new financial year based upon the actions we are taking and the size and quality of their order pipelines.  At Controls, I am pleased that we have improved its profit and cash performance.

“Overall we expect the Group to make further progress in the new financial year.  The global energy and infrastructure markets for Process Systems and Rail Group remain strong and we expect them to continue to grow.  At Controls, we expect at least to maintain its operating profit and cash flow performance despite continued softness in some of its markets.”

Notes

• The financial information for the year ended 31 March 2008 (audited) and the quarter ended 31 March 2008 (unaudited) has been prepared under the Group’s accounting policies for the year ended 31 March 2008.  The Group’s accounting policies for the year ended 31 March 2008 are set out in the Annual report and accounts.
• Underlying earnings per share is calculated on profit from continuing operations before exceptional finance costs, foreign exchange gains and losses and the exceptional credit from the PPP settlement.
• Total Group comprises continuing and discontinued operations.
• Continuing operations are Process Systems, Eurotherm, Rail Group and Controls.  Discontinued operations comprise APV, Reversing Valves, Safety and Burco businesses in both years and Invensys Building Systems in the US and Asia Pacific in 2007.
• All references to operating profit (OPBIT) and operating margin in this announcement are before exceptional items.
• Return on operating capital is calculated as OPBIT divided by capital employed excluding goodwill, net pensions deficit, non-operating provisions and net tax liabilities.

Conference call
Ulf Henriksson, CEO, and Steve Hare, CFO, will be hosting a presentation and conference call for analysts and fund managers at 9.00 a.m. BST this morning:

Venue:             Financial Dynamics
Holborn Gate,
26 Southampton Buildings,
London, WC2A 1PB

Dial-in details (please note that the passcode is required).
UK:                  0800 028 1243
US:                    1 888 935 4574
Passcode:           2926947           

The presentation will be audio webcast live with slides, which can be accessed at:

http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=79275&eventID=1834820

A recording will be available at this address shortly after the completion of the call.

This announcement and the presentation materials are also available at http://www.invensys.com

Safe harbor
This announcement contains certain statements that are forward-looking.  These statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.  Forward-looking statements are not guarantees of future performance.  The Group's actual results of operations, financial condition and liquidity, and the development of the industries in which the Group operates, may differ materially from those made in or suggested by these statements and a number of factors could cause the results and developments to differ materially from those expressed or implied by these forward-looking statements.