smin19 Sep 2013 23:10
Positive Points:
The company announced the proposed payment of a special dividend (30 pence per share). The company regularly reviews the structure and efficiency of its balance sheet. Management noted that "over the past six years, we have consistently increased our investment in organic growth drivers and have invested some £600 million in bolt-on acquisitions to add complementary technologies and extend our geographic reach in high-growth markets. Although this investment remains our priority and we continue to actively evaluate potential acquisitions, we have not found opportunities that meet our acquisition and return criteria over the past 18 months. As a result, we have accumulated surplus cash on the balance sheet."
The board highlighted that "the overall performance benefited from our strength and breadth as a diversified engineering company, with our portfolio of leading-edge, technology-driven businesses which serve a wide range of end markets and geographies." Revenue growth in Smiths Detection, John Crane and Flex-Tek offset weaknesses in Smiths Medical and Smiths Interconnect.
Accompanying management outlook comments noted that "we remain well placed to benefit from growth in energy demand, the need for new fuel-efficient aircraft, increased US residential construction and the ever present need for improved security in an uncertain world."
The group confirmed in late May that it had received an approach for its Medical division. However, a suitable price for both parties could not be agreed. Speculation regarding potential divisional sales persists. Such disposals might make the remaining company more attractive as a takeover target.
Emerging market revenues rose by 14% and now represent 16% of total group revenues. Both China and the Rest of the World grew revenues by 6.8% and 16.4%, and now account for 3.1% and 19.5% of total group revenues respectively.
A progressive dividend policy continues to be pursued. The total dividend over the full year was increased by 4%.
Group net debt at 31 July 2013 was £744 million, down from £791 million at 31 July 2012.
Founded in 1851 by Samuel Smith as a clock and watch business, today Smiths Group is organised into 5 separate divisions (Smiths Detection, Smiths Medical, John Crane, Smiths Interconnect and Flex-Tek) with operations spanning 50 countries around the globe.
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