Spirax-Sarco Regulatory News (SPX)

7 Nov 2008 07:00



Friday 7th November 2008 [embargoed until 7.00 am]

INTERIM MANAGEMENT STATEMENT

Spirax-Sarco Engineering plc, the world leader in the control and efficient use of steam and in peristaltic pumping, issues the following Interim Management Statement based on the four month period to 31st October 2008.

Trading

As expected, we have begun to see some moderation in the pace of growth in demand from our customers, particularly in Continental Europe, although the overall organic sales growth trend in the first half year has broadly continued through October. Despite the Korean Won weakening sharply, currency effects have continued to move in our favour and have added 8% to Group revenues this year, with a larger benefit to operating profit.

Our business is today even more well spread across all geographic regions and across an even wider range of industries and products. We have a large element of replacement sales and the relatively high cost of energy has supported our energy-saving solutions for customers. These factors have historically provided some resilience.

Financial position

We continue to operate with a strong balance sheet. The Group had a net cash balance at 30th June 2008 of £12m, despite having made an initial £11m payment in February for the acquisition of Flexicon. There has been no material change in the financial position of the Group during the period, with net cash balances increasing to £26m at 31st October 2008. The company intends to purchase one million of its own shares to be held in Treasury to meet the requirements of the Group share schemes. The net liability in respect of post-retirement benefits rose to £33m (net of deferred tax) at the half-year and fluctuates in relation to movements in equity and bond markets, which remain volatile. We still expect capital expenditure to be higher than normal this year and in 2009.

Outlook

In our prospects statement in the half-year results announcement made in August, we noted the deteriorating global macro-economic environment, which has been confirmed by more recent GDP and Industrial Production rates and forecasts, and which increases the uncertainty looking forward. However, our business is well spread and generally resilient, and we have a strong balance sheet. We continue to invest for the long term, particularly in developing market areas where economic conditions look more favourable, and are focused on progressively growing our market share. Given continued beneficial exchange rates and no significant deterioration in trading conditions in our markets, we expect to achieve good progress for the year.

Enquiries:

Mark E Vernon, Chief Executive

David Meredith, Director Finance

Tel: 01242 535236