19 Sep 02. Alvis Group turnover for the six months to 30 June 2002 was £91,751,000 (2001: £69,497,000), profit before tax and exceptional items was £7,811,000 (2001: £6,074,000), profit before tax after exceptional items was £7,895,000 (2001: £22,175,000) and earnings per share after tax and preference dividends were 5.1p (2001: 15.1p). Earnings per share before exceptional items were 5.0p (2001: 3.5p).
The first half of 2002 was ahead of the equivalent period for 2001 with a particularly strong performance from the Alvis Vehicles operation, where turnover was twice that of the previous year, producing a good first half performance. At Hägglunds Vehicle Group, lower turnover and a change in mix resulted in a slightly worse operating return. As anticipated, interest receipts have fallen back from their peak in 2001, but the overall profitability before exceptional items is up on 2001, driven by the higher levels of turnover and trading profit.
The outstanding convertible preference shares were redeemed in April 2002 at a cost to the Group of £31,462,000.
The Group’s net funds position has reduced in the first half from £141.7m to £79.8m. The reduction reflects the redemption of the convertible preference shares and a net outflow from operations of £26.3m. The latter reflects a marked increase in working capital build on a number of major vehicle programmes which commence deliveries to the customer in the second half of 2002 and early 2003.
At Hägglunds Vehicle work on CV90 for the Swedish MOD continued in the first half. Deliveries of new CV90 chassis were at lower levels than in 2001 as the contract is now winding down, but were replaced by work on upgrading CV90s for international missions. Spares deliveries were also at higher levels. The overall slight reduction in Hägglunds sales in the first half was primarily due to lower sales at Hägglunds Moelv in Norway following completion of the Armoured Engineer Vehicle contract and cancellation of the Armoured Mine Clearing Vehicle contract. Hägglunds Moelv made a loss in the first half. The Hägglunds Moelv business is being restructured to match the lower sales level.
At Hägglunds Vehicle pre-series deliveries of CV9030 vehicles for Finland were made, and these are now undergoing customer trials. Series production will be initiated in 2003. There has been a large build up of engineering and manufacturing work on CV9030 for Switzerland and the first deliveries are taking place now. The demonstration and reliability growth phase of the All Terrain Vehicle (Protected) programme for the British Royal Marines has gone well, and the UK MOD has approved the design for production, which will commence in 2003.
At Alvis Vehicles the increase in sales was driven by serial deliveries of Piranha vehicles to Oman. Work is now winding down on this programme and deliveries will be largely completed by the end of this year. The development of MRAV has continued and the first prototype is now running in Germany. The second will be delivered before the end of the year and the UK prototypes will follow in 2003. Product support activity ran at increased levels compared with 2001.
The Vickers transaction has been approved by Alvis shareholders and by the South African authorities. It remains subject to competition clearance in UK. A decision is expected shortly, and, if favourable, we expect to complete the transaction by 30 September.
In the UK, the combined Alvis Vehicles/Vickers Defence Systems business will be named Alvis Vickers Ltd, and Vickers Bridging and Vickers OMC will be renamed Alvis Bridging Ltd and Alvis OMC Pty respectively. In Sweden and Norway, Hägglunds Vehicle AB and Hägglunds Moelv AS will be renamed Alvis Hägglunds AB and Alvis Moelv AS respectively. Alvis Vickers Ltd will be headed by Mr Trevor Harrison, formerly Group Director of Marketing, as Managing Director.
Order intake in the period was £48.2m. Our order book at 30 June 2