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21 May 2009 12:00
HYDRO INTERNATIONAL PLC ("the Group")
2009 AGM Trading Statement
As indicated in our 2008 Annual Report Hydro is not immune to the wider economic recession and the impact this has on our business. This impact has been greatest in our Stormwater businesses in both the US and the UK, reflecting their exposure to private housing and commercial development, mitigated to a degree by increased levels of public infrastructure work.
The Group's Wastewater businesses (including Eutek Systems acquired in May 2008) have seen order intake at encouraging levels, assisted in the US by government stimulus measures which have already brought forward a number of projects. However, in some cases customers are looking to the stimulus funding to retrospectively subsidise projects that were ordered previously, resulting in extended delivery timescales and affecting revenues in the first half year. The effect is expected to work through the system by the end of the financial year.
The overall result is to accentuate further our Company's tendency to report most of its profit in the second half. Although we anticipate profits reported in the first half to be lower than the result for the first half of last year, current forecasts indicate that profit for the year (net of the mitigating actions referred to below) will be in line with the Board's expectations.
The Board continues to closely monitor performance and keep the Group's cost structure under review, making appropriate reductions where to do so would not jeopardise our long term plans.
The Executive Incentive Scheme (EIS) set out in the Annual Report matures this year and, because of the substantial increase in profit achieved over the three year period of the scheme, is on track to pay out in full. However, in view of prevailing economic conditions the directors have elected to defer, for one year, half of the bonus due and, in addition, to make payment of this deferred element conditional upon the achievement of a further profit target. The extension of the scheme over four years also has the effect of reducing the profit impact of the bonus in any single reporting period.
The management team continue to work hard to develop the business in line with the Board's long-standing strategic plan. We have confidence in the Group's underlying robustness, which is founded upon a developing range of products, a diverse spread of market sectors, a lean business model and a strong balance sheet.
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For further information, please contact:
Tony Hollox
Group Finance Director
Hydro International plc Tel: +44 (0) 1275 878371
21 May 2009
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