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Results for Half Year Ended 30 September 2010

Posted 04 November 2010

Further progress in achieving sustainable growth particularly in emerging markets

Highlights

  • Orders were £1,148 million (H1 09/10: £1,079 million), up 6%
    (3% at CER 1)
  • Order book was flat at CER at £2,232 million (FY 09/10: £2,307 million), providing good revenue cover for the second half and next year; emerging markets now represent 46% (FY 09/10: 40%)
  • Revenue was up 9% (6% at CER) at £1,162 million (H1 09/10: £1,066 million), driven by order book conversion
  • Operating profit 2 was £100 million (H1 09/10: £102 million), down 2% (3% at CER) with good underlying performances in each of our divisions offset by additional contract implementation costs at Invensys Rail
  • Underlying earnings per share 3 were up 51% at 7.4p (H1 09/10: 4.9p), due to reductions in restructuring charges and IAS 19 finance charge
  • Operating cash flow 2 was £83 million (H1 09/10: £92 million) and operating cash conversion was 83% (H1 09/10: 90%)
  • Interim dividend increased by 50% to 1.5p per share (H1 09/10: 1.0p per share) in line with the intent to make progressive increases in payout
  • Maintained strong financial position with net cash totalling £336 million, leaving us well positioned to invest further in our businesses
  • Outlook for the year remains unchanged

Statement by Ulf Henriksson, Chief Executive

During the first half, we have successfully positioned Invensys to deliver sustainable growth through differentiated offerings, strategic partnerships and an emphasis upon emerging markets, which now represent nearly half our order book compared with 17% in March 2008.

Invensys Operations Management increased orders by 15% at CER as we continue to win large greenfield control and safety projects in emerging markets. Its order book is at record levels at £1.0 billion and its pipeline of current order prospects is around £4 billion. Revenue growth in the second half will increase as we convert recent large orders into revenue. We have also experienced a recovery in short-cycle equipment sales particularly in North America. Taken together these have contributed to a significant improvement in operating profit and another strong cash performance.

Invensys Rail has expanded further into new markets and we are encouraged by the prospects arising inside and outside China from our agreements with CSR Corporation Ltd (CSR). We have also been reassured by the recently announced commitment by the UK government to continued rail infrastructure investment for Network Rail, London Underground and Crossrail. Although we are incurring additional contract implementation costs for three mass transit contracts now amounting to £18 million which have affected first half results, Invensys Rail’s underlying performance and prospects remain strong with an order book of £1.2 billion and a large pipeline of order prospects amounting to approximately £9 billion.

Invensys Controls improved its performance. Higher volumes across the division, in particular North America, combined with restructuring benefits resulted in higher revenue and profitability.

Looking ahead, the outlook remains unchanged and we continue to expect the Group to deliver improved performance in the current year helped by a large order book. Further out, we have built good momentum and we are optimistic about the prospects arising from our partnership arrangements with companies in China and other emerging markets to drive growth in global sectors such as rail and nuclear power.

Notes

  1. Unless otherwise stated, % change is measured at constant exchange rates (CER) as a percentage of the H1 09/10 adjusted base and is calculated based upon underlying amounts in £’000s.
  2. Unless otherwise stated, references to operating profit (OPBIT), operating margin and operating cash flow in this announcement are before exceptional items.
  3. Underlying earnings per share is before exceptional US pension curtailment gain and PPP settlement credit in H1 09/10.

Presentation and conference call

Ulf Henriksson, CEO, and Wayne Edmunds, CFO, will be hosting a presentation and conference call for analysts and fund managers at 9.00 a.m. GMT this morning:

Venue:
City Presentation Centre
4 Chiswell Street
London
EC1Y 4UP

Dial-in details (please note that the confirmation code is required).

UK: +44 (0)20 7806 1966
US: +1 718 247 0886
France: 0800 942 823
Germany: 0800 673 8352
Italy: 800 979 137
Spain: 900 974 419

Confirmation Code: 4820130 or "Invensys“

The presentation will be audio webcast live with slides, which can be accessed at: http://www.thomsonwebcast.

Click Here

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 harbour

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.