14 Mar 02. ALVIS plc announced its results for the year ended 31st December 2001 yesterday. Turnover was down to £149.4m(2000: £203.5m);profit before exceptional items and tax £11.8m (2000:£13.4m); profit before tax, boosted by exceptional items, £28.2m (2000: £12.8m); earnings per share before exceptional items 6.3p
(2000: 7.3p); basic earnings per share18.2p (2000:6.9p); dividend per share (full year) 5.5p (2000: 5.0p);order book £562.6m (2000: £610.5m); net funds position of £142m at year end
Nick Prest, Chairman and Chief Executive of Alvis, commented:
“Profitability in 2001 was maintained despite the foreseen programme gap. Prospects for progress in 2002 and beyond are encouraging based on the existing order book and anticipated new business.”
The main changes to the composition of the pre-exceptional profit before tax in 2001 as compared with 2000 were:
– reductions in sales and operating profits at Hägglunds Vehicle arising from a lower level of deliverable orders;
– a lower contribution from our former associate company, Avimo Group as a result of the sale of our interest at the beginning of the year;
– a large increase in interest arising from increased cash balances from advance receipts and the Avimo sale proceeds.
An exceptional profit of £16.1m arose from the sale of the remaining 17% stake in Avimo Group.
The reduction in sales had been anticipated as Hägglunds is in transition between the end of CV90 deliveries to Norway in late 2000 and the commencement of deliveries to Finland and Switzerland in the second half of 2002. High levels of activity in spares production, and in engineering work and component production for the new CV90 programmes, have enabled Hägglunds to maintain a respectable operating result of £5.8m (2000: £9.9m) on much lower turnover of £79.8m (2000: £125.5m). At Alvis Vehicles sales reduced to £69.6m (2000: £76.3m) as a result of a reduction in domestic upgrade work, partly offset by increased export sales. An improvement in operating margin provided an operating profit of £2.2m (2000: £2.1m).
The contribution of £0.3m from Avimo (2000: £3.3m) was for the last three months prior to the shareholding being sold.
The substantial increase in net interest earnings to £5.6m (2000: £0.4m) reflected the receipt of the Avimo sale monies and larger advance receipts on vehicle contracts. In fact, if the interest on contract advances is added to operating profits, the profit contribution from vehicle contracts at around £10.1m was only a little lower than the equivalent figure for 2000 of £11.8m.
The Group’s net funds position was £141.7m at the end of 2001 (2000: £46.6m). This was after spending £5.5m on market purchases of 5,552,106 of the Group’s convertible preference shares. The Group’s “own” net cash balance, that is to say after deducting unapplied customer advances, was £53.9m (2000: £52.6m).
At Hägglunds Vehicle deliveries of CV90s and Leopard 2 tanks to the Swedish MoD continued, and initial deliveries of vehicles upgraded for international missions were made. The first two BvS10 All Terrain Vehicles were delivered to the UK Royal Marines in June, and as part of their test programme took part in the challenging exercise Saif Sareea II in Oman. They acquitted themselves very well, as did the wide range of Alvis Vehicles products which took part. Altogether some 700 vehicles of eleven different types supplied by Alvis took part in the exercise, and the feedback from both the British and Omani Armies was very favourable.
In addition to BvS10, Hägglunds is simultaneously launching major new CV90 programmes for Finland and Switzerland, and a significant proportion of the company’s resources was applied to this in 2001. A large number of new, highly qualified engineers have joined the company. To accommodate this increase and improve production efficiency, a £4m facilities investment programme is being implemented between 2001 and 2003.