5 November 2009

RESULTS FOR HALF YEAR ENDED 30 SEPTEMBER 2009

A solid performance in demanding markets

Highlights

• Orders were £1,079 million (H1 2008/09: £1,156 million), down 7% (18% at CER1); two additional orders at Invensys Rail totalling £194 million were announced after the period end

• Revenue was £1,066 million (H1 2008/09: £1,090 million), down 2% (13% at CER) 

• Operating profit2 was £102 million (H1 2008/09: £120 million), down 15% (24% at CER) 

• Underlying earnings per share3 were 4.9p (H1 2008/09: 9.2p) 

• Basic earnings per share were 9.6p (H1 2008/09: 9.2p), including an exceptional gain of £36 million arising from the closure of US defined benefit pension plans

• Operating cash flow2 was £92 million (H1 2008/09: £135 million) and operating cash conversion was 90% (H1 2008/09: 113%)

• Interim dividend of 1.0p per share (H1 2008/09: nil)

• Maintained strong financial position reflected in Standard & Poor's award of investment grade rating - no debt7 and net cash and deposits totalling £290 million 

Ulf Henriksson, Chief Executive of Invensys plc, commented:

"In the first half of the year, we have produced another solid performance despite the adverse economic climate.  We are beginning to see some early signs of stabilisation and possible modest recovery. The benefits from our growth and productivity initiatives, restructuring and overhead reductions will underpin our performance in the second half. 

"In the second half, we believe that Invensys Operations Management should have a significant improvement in performance and Invensys Rail will produce another robust result. Invensys Controls should also produce a good improvement in performance in a more stable market.  Therefore, based upon our current views of our markets and exchange rates, we continue to expect that the Group will achieve an improvement in performance in the current year.  

"Looking further out, I believe that we are building market share due to our people, our technologies and our execution capabilities.  This creates a strong position from which Invensys should benefit as markets recover."

Contact:	Invensys plc	Steve Devany	tel: +44 (0) 20 7821 3758
		Annabel Michie	tel: +44 (0) 20 7821 2121
	Financial Dynamics	Andrew Lorenz
		Richard Mountain	tel: +44 (0) 20 7269 7291

Notes

1.	Unless otherwise stated, % change is measured as the change at constant exchange rates (CER) as a percentage of the H1 2008/09 adjusted base and is calculated based upon underlying amounts in £'000s.
2.	All references to operating profit (OPBIT) and operating margin in this announcement are before exceptional items and all references to operating cash flow are before restructuring spend.
3.	Underlying earnings per share is calculated on profit from continuing operations before exceptional US pension curtailment gain, PPP settlement credit and exceptional finance costs and income.
4.	Total Group comprises continuing and discontinued operations.
5.	Continuing operations are Invensys Operations Management, Invensys Rail, Invensys Controls and Corporate.
6.	IMServ has been transferred to Invensys Operations Management from Invensys Controls and comparatives have been restated accordingly.
7.	144A notes of £8 million due January 2010 remain outstanding; the Company has no right to call these notes prior to maturity but the notes have been covenant defeased through cash collateralisation. In addition, there were £1 million of finance leases at 30 September 2009.

Presentation and conference call

Ulf Henriksson, CEO, and Wayne Edmunds, CFO, will be hosting a presentation and conference call for analysts and fund managers at 9.00 a.m. GMT this morning:

Venue:	Financial Dynamics
	Holborn Gate
	26 Southampton Buildings
	London WC2A 1PB

Dial-in details (please note that the access code is required).

UK and international:	+44 (0) 20 3003 2666
US:	+1 866 966 5335
Access code:	Invensys

The presentation will be audio webcast live with slides, which can be accessed at:

http://www.thomson-webcast.net/uk/dispatching/?event_id=205f1cd10b814a3817fdf0d94a6ec1de&portal_id=99882bc8cb87c958d9714e71d3f0e9a7 

A recording will be available at this address shortly after the completion of the call.

This announcement and the presentation materials are also available at http://www.invensys.com

Safe harbor

This announcement contains certain statements that are forward-looking. These statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Forward-looking statements are not guarantees of future performance. The Group's actual results of operations, financial condition and liquidity, and the development of the industries in which the Group operates, may differ materially from those made in or suggested by these statements and a number of factors could cause the results and developments to differ materially from those expressed or implied by these forward-looking statements.

BUSINESS REVIEW

Performance highlights

For the half year ended 30 September All data relates to continuing operations (other than free cash flow)	H1 2009/10	H1 2008/09	% Total change	% Change at CER
Orders (£m)	1,079	1,156	(7%)	(18%)
Revenue (£m)	1,066	1,090	(2%)	(13%)
Operating profit 2(£m)	102	120	(15%)	(24%)
Operating margin2 (%)	9.6%	11.0%
Operating cash flow (£m)	92	135	(32%)	(37%)
Cash conversion (%)	90%	113%
Earnings per share - basic (p)	9.6p	9.2p	4%
Earnings per share - underlying3(p)	4.9p	9.2p	(47%)
Free cash flow (£m)	16	177	(91%)

Chief Executive's Statement 

In the first half of the year, we have produced another solid performance despite being affected by the current economic climate. We have a robust order book, further evidence of which was the announcement of the two large rail orders after the period end.

At Invensys Operations Management, positioning ourselves to help our customers improve the efficiency and safety of their assets has helped us do better than our competition.  Demand held up well except in North America, where we saw delays in orders particularly from integrated oil and gas companies, and except in the markets for our Eurotherm and measurement and instrumentation products.  

Invensys Rail produced another excellent result and, since the period end, we have continued our success in export markets with our first large contract in Brazil for the resignalling of three metro lines in Sao Paulo and our success in core markets with the award of a major US signalling contract.  In the UK, we have seen some temporary delays in Network Rail orders, but expect these to come through in the second half, and we have been invited by London Underground to bid for the resignalling of the Sub Surface Railways.

At Invensys Controls, we achieved our objective of remaining profitable and cash generative despite significant declines in volumes. We are seeing signs of stabilisation in the North American appliance market, where we are growing market share, and a slowdown in the decline in some countries in Europe which should help us to improve our performance in the second half.

We also had a good financial performance with operating cash conversion of 90%. Our financial position remains strong, which is now reflected in the investment grade rating from Standard & Poor's.  We remain debt free with £290 million of net cash and deposits.

The Board

Paul Lester CBE will be joining the Board on 1 January 2010 as a Non-Executive Director and a member of the Remuneration Committee. Paul has been Chief Executive of VT Group plc, the defence and support services company, since 2002. He is a Non-Executive Director of Chloride Group plc.

Bay Green will be stepping down as a member of the Remuneration Committee on 1 January 2010 but will be remaining on the Board as a Non-Executive Director and Chairman of the Audit Committee.

Dividend

For the last financial year, the strength of the Group's financial position, our excellent operational cash flow and the resilience being shown by our longer-cycle businesses within Invensys Operations Management and Invensys Rail gave the Board confidence to recommence dividend payments to shareholders for the first time since 2003, starting at a prudent level which should allow a progressive dividend policy going forward. Following the payment of a 1.5p per share final dividend in respect of the previous financial year, the Board has now declared an interim dividend of 1.0p per share (H1 2008/09: nil) payable on 11 December 2009 to shareholders on the register on 14 November 2009.

Pensions

Changes in interest rates and credit spreads during the period have been reflected in our revised IAS 19 deficit calculations. The changes in the principal IAS 19 accounting assumptions, particularly discount rates, have now brought the accounting deficit of our UK Main Scheme into line with the current three year funding plan agreed with the UK Trustee.  Specifically the UK Main Scheme IAS 19 accounting deficit of £271 million compares with a deficit at 31 March 2008 of £285 million, which is the basis for the current triennial funding plan agreement of £38 million per annum. The IAS 19 accounting deficits for our US and other smaller schemes are also now better aligned.

Overall, the Group's IAS 19 accounting liabilities are £603 million which compare with £308 million at 31 March 2009. This change does not impact our funding requirements in the near to medium term which are principally determined by the UK trustee and the US Pension Protection Act agreements. In the longer term, our strategy of minimising risk through liability driven investment strategies and ongoing liability management plans are designed to mitigate and control ongoing scheme funding requirements.

Outlook

In the second half, we believe that Invensys Operations Management should have a significant improvement in performance and Invensys Rail will produce another robust result. Invensys Controls should also produce a good improvement in performance in a more stable market.  

Therefore, based upon our current views of our markets and exchange rates, we continue to expect that the Group will achieve an improvement in performance in the current year.  

Invensys Operations Management

For the half year ended  30 September	H1 2009/10	H1 2008/09*	% Total change	% Change at CER
Orders (£m)	491	554	(11%)	(23%)
Revenue (£m)	474	498	(5%)	(17%)
Operating profit (£m)	33	48	(31%)	(41%)
Operating margin (%)	7.0%	9.6%
Operating cash flow (£m)	55	34	62%	37%
Operating cash conversion (%)	167%	71%

* Restated - see note 6 on page 2

Invensys Operations Management is a global technology, software and consulting organisation. We design, manufacture, install, test and commission software and computer-based hardware for the automation and regulation of industrial and facility operations, the management of certain administrative functions of manufacturing businesses, and simulation of manufacturing process operations. We also provide control, data and measurement instrumentation solutions and services to manage specific parameters of the manufacturing process for the global industrial control and process markets. We have now integrated IMServ, an energy and carbon solutions business formerly within Invensys Controls, which will strengthen our offering in energy management.  

Markets

Demand for our advanced applications and safety systems has held up in most markets; however, North America saw some significant declines as customers, particularly integrated oil and gas companies, held back on expenditure due to poor end markets. This has been partially offset by improving demand from customers in the Middle East and Asia for large greenfield oil, gas and power projects. In particular, following our success in winning a $250 million contract in China last year, we remain confident about the further opportunities available to us in the global nuclear power market where significant new capacity and plant upgrades are planned in the medium term.  

Despite the current economic climate, we have seen some resilience in demand for our solutions and services aimed at helping our customers to improve the efficiency of their production processes and extend the life of their assets.  The success of our advanced applications and solutions such as SimSci-Esscor (simulation software), Wonderware (HMI/SCADA), Infusion (enterprise control systems) and Triconex (critical safety systems) are supporting the growth of our base control systems.  Weakness in demand and pricing pressure has continued to impact the measurement and instrumentation sector. 

Developments

The integration of Invensys Process Systems, Wonderware, Eurotherm and IMServ into a single division is proceeding, with new management structures in place and functional teams being merged.  We added further depth and domain expertise to the leadership team with the appointments of Teemu Tunkelo and Dr Ravi Gopinath as regional presidents for Europe/Russia/Africa and Asia Pacific respectively. Mr Tunkelo was formerly in charge of ABB's global control systems, analytical and force measurement businesses and Dr Gopinath joined Invensys from Geometric, a firm specialising in engineering products and technologies, where he was chief executive officer.  

During the first half, we entered a ground breaking five-year strategic relationship with Cognizant, a leading provider of consulting, technology and business outsourcing, to help improve the design, development and delivery of our products and solutions for customers around the globe. The Cognizant relationship will make available to Invensys significantly increased capacity for the same cost and give us access to their world class intellectual property. 

Our strategy of investing in the development of solutions that help our customers to improve the performance and safety of their operations has helped us to perform well in a demanding market. These advanced applications were the subject of several new contracts with major customers during the first half, examples of which are:

• We reached a multi-year agreement with ConocoPhillips, the third-largest integrated energy company in the United States, to provide dynamic simulation for the development of ConocoPhillips' proprietary E-Gas technology. We will supply our DYNSIM® modelling and simulation software to help improve the design, start-up and operation of new coal gasification plants. In addition, we will be a preferred supplier of dynamic simulation software to licensees of ConocoPhillips' E-Gas technology.

• We signed a five-year contract to supply a comprehensive operator training, process design and operation optimisation solution to Malaysia LNG Tiga Sdn Bhd (MLNG Tiga). This is the third liquefied natural gas (LNG) plant located within the Petronas LNG complex in Bintulu, Sarawak, Malaysia. The Petronas LNG Complex is the world's largest integrated LNG production facility at a single location, with a total of eight production trains and a combined capacity of approximately 23 million tons per annum.

• We announced a partnership with Codelco, the world's largest copper producer, on a corporate-wide development agreement to improve the performance and longevity of Codelco's processing assets, increasing the overall economic value of that company's business through the use of advanced process control, advanced regulatory control, real-time business performance measurement, simulators and operator training systems.

• We signed a contract with Coastal Gujarat Power Limited, a wholly owned subsidiary of Tata Power Limited, to provide integrated services and solutions that will fully optimise India's first ultra-mega 4000MW power plant. It will be India's largest coal-fired power plant when completed in 2013. Under the terms of the agreement, Invensys will provide distributed and critical control systems, emergency shutdown systems, advanced process control, plant optimisation and operator training simulator technology. 

Performance

Order intake in the first half was £491 million (H1 2008/09: £554 million), down 23% at CER reflecting mainly a decline in North America, significantly reduced orders for our Eurotherm and measurement and instrumentation products, and some delays in signing larger project orders in the Middle East and Asia.  However, the pipeline of order prospects remains strong.

Revenue in the period was down 17% at CER to £474 million (H1 2008/09: £498 million) again due to North America and our Eurotherm and measurement and instrumentation products.

With the reduction in volumes, operating profit was down 41% at CER at £33 million (H1 2008/09: £48 million). Operating cash flow was strong at £55 million (H1 2008/09: £34 million) helped by a reduction in overdue receivables, resulting in cash conversion for the half year of 167% (H1 2008/09: 71%). 

Invensys Rail

For the half year ended  30 September	H1 2009/10	H1 2008/09	% Total change	% Change at CER
Orders (£m)	319	335	(5%)	(13%)
Revenue (£m)	335	306	9%	2%
Operating profit (£m)	73	65	12%	5%
Operating margin (%)	21.8%	21.2%
Operating cash flow (£m)	46	77	(40%)	(43%)
Operating cash conversion (%)	63%	118%

Invensys Rail is a multinational leader in delivering state-of-the-art railway control and communication solutions. We enable the world's railways to help meet the ever-increasing demand for rail services by providing a range of solutions that safely and cost effectively increase the capacity of their networks by increasing frequency and maximising operational effectiveness.  

Our broad offering ranges from highly complex integrated control centre solutions that supervise and control complete railways to sophisticated train based systems that automate train operation and protection, interlocking systems that ensure safe running across a network and a complete range of trackside products. 

Markets

Our target markets have remained strong with continued recognition of the importance of rail as an environmentally sustainable and economically efficient means of transport for both passenger and freight traffic.  In Spain we continue to see success but we have seen temporary delays in order intake in the UK which is expected to reverse in the second half.  In the US, the potential effect of a delay in the signing of the new Transportation Bill on our crossings business has been alleviated in the short term by an extension of funding.  In addition, we have seen continued strength in export markets where we have recently signed our first large contract in Brazil and we are in negotiations for the award of a number of export contracts in the coming months.

Developments

In the UK, we have been invited to tender for the resignalling of the Sub Surface Railways (the Circle, District, Hammersmith & City, and Metropolitan lines of the London Underground), and we expect a decision to be made towards the middle of 2010. In the US, we integrated the recently acquired Quantum Engineering business into our US operations with the consolidation of our manufacturing facilities. We continue to explore the opportunities for Quantum's technology to play a major part in the mandated introduction of positive train control across much of the US rail network.

Following the period end, two important contracts have been announced. We are part of a consortium which signed a €280 million (approximately £255 million) contract, of which our share is £153 million, to upgrade the signalling and automatic train control on lines 8, 10 and 11 of Sao Paulo's Metro system. We will install our Sirius Communication Based Train Control (CBTC) system on all three lines and associated rolling stock along with WESTRACE interlockings, point machines and LED signals. In the US, the Port Authority Board has approved the award of a project, subject to final approval by the Governors of the States of New York and New Jersey, to a consortium which includes Invensys Rail to upgrade the signalling of the PATH mass transit system; our share of that contract is valued at $68 million (approximately £41 million).

Performance

Orders in the first six months were £319 million (H1 2008/09: £335 million), down 13% at CER, reflecting the lower intake of domestic orders in the UK and the effect of the large orders secured last year in Spain. Revenue of £335 million (H1 2008/09: £306 million) was 2% higher at CER, with growth in Spain compensating for the lower activity in the UK.

Operating profit rose to £73 million (H1 2008/09: £65 million), an increase of 5% at CER benefiting from a favourable sales mix and good commissioning record offset by increased investment in sales and marketing in export markets. The operating margin improved to 21.8% (H1 2008/09: 21.2%).

 

Operating cashflow was £46 million (H1 2008/09: £77 million) and cash conversion was 63% (H1 2008/09: 118%), reflecting the uneven timing of large cash receipts particularly in the UK; we expect higher cash conversion in the second half of the year.

Invensys Controls

For the half year ended  30 September	H1 2009/10	H1 2008/09*	% Total change	% Change at CER
Orders (£m)	269	267	1%	(12%)
Revenue (£m)	257	286	(10%)	(22%)
Operating profit (£m)	14	23	(39%)	(43%)
Operating margin (%)	5.4%	8.0%
Operating cash flow (£m)	21	39	(46%)	(53%)
Operating cash conversion (%)	150%	170%

* Restated - see note 6 on page 2

Invensys Controls designs, engineers and manufactures components, systems and services used in appliances, heating, air conditioning/cooling, refrigeration and thermostatic products across a wide range of industries in residential and commercial markets.  

Markets

Market conditions remained challenging in the first half with significantly reduced customer production across many sectors.  However, we are seeing signs that demand in North America is stabilising and that the rate of decline in several European countries is slowing.  

Developments

Overall, the actions that we have taken have significantly increased our operational gearing and we are now well positioned to achieve a significant improvement in performance when markets recover.  We have successfully focussed on remaining profitable and cash generative despite the significant reduction in revenue.  This has been achieved through restructuring, productivity improvements and overhead reductions to mitigate the effect of the reduced volumes. Also several new product introductions have helped lessen the impact of poor market conditions.  

We have continued to rationalise and reorganise our manufacturing footprint. Last year we closed two facilities, one in Brazil and the other in the US, and this year we are proceeding with the closures of two further plants, one in Mexico and another in the US. We have moved into a new production facility in Qingdao, China which offers room for further expansion.

Performance

Orders during the period were £269 million (H1 2008/09: £267 million), down 12% at CER. Revenue was £257 million (H1 2008/09: £286 million), a 22% decrease at CER reflecting the reduced orders and some impact from promotional activity last year which brought forward sales.  

Despite these significant reductions in volumes, our actions have resulted in creditable profit and cash performances. Operating profit was down 43% at CER at £14 million (H1 2008/09: £23 million) and operating cashflow was £21 million (H1 2008/09: £39 million) with strong cash conversion of 150% (H1 2008/09: 170%).

Risks and uncertainties

This section provides a description of the principal risks and uncertainties for the remaining six months of the Group's financial year, as required by DTR 4.2.7R of the Disclosure and Transparency Rules.

As part of our routine procedures, the principal risks and uncertainties are kept under review.  In particular we have considered the potential impact of recent developments in the world's financial markets upon both the Group's financial position and that of its customers and suppliers.  We have concluded that the principal risks and uncertainties remain as detailed on pages 26 to 27 of the 2009 Annual Report and Accounts, a copy of which is available on the Company's website at www.invensys.com.  These risks are summarised as follows:

• The Group faces intense competition, and failure to maintain a competitive and technologically advanced product range could reduce its margins and revenue growth.

• The timing and frequency of substantial contract awards, particularly in the Group's Invensys Rail business, are uneven.

• The Group's Invensys Operations Management business is reliant on the capital expenditure requirements from the oil and gas and chemical sectors.

• The Group is subject to ongoing litigation and environmental liabilities.

• Operating in global markets subjects the Group to risks associated with changes in political and economic conditions and in applicable laws and regulations.

• The Group may be subject to liability as a result of product liability claims.

• The Group could be exposed to deterioration in its financial results if the performance improvement initiatives of certain of the Group's operations are not successful.

• The Group may be exposed to liability through the actions of joint venture partners, co-source partners or its supply chain.

• Undertaking large, long-term projects exposes the Group's business to risk of loss.

• The Group may be exposed to additional liabilities with respect to its UK and US pension plans.

• If the Group is unable to recruit and retain skilled personnel, it may not be able to effectively implement its business strategy.

• The turbulence in the financial markets and the related downturn in business confidence has and will continue to have an impact on general business prospects.

The business review includes a commentary on the outlook for the business divisions and the Group for the remaining six months of the financial year.  

Additional Financial Information

Orders

A summary of orders and movements at CER by business division is set out below:

For the half year ended 30 September	H1 2008/09 Orders £m	Exchange movement £m	H1 2008/09 at CER £m	Change at CER £m	H1 2009/10 Orders £m	% Change at CER
Invensys Operations Management6	554	84	638	(147)	491	(23%)
Invensys Rail	335	32	367	(48)	319	(13%)
Invensys Controls6	267	39	306	(37)	269	(12%)
Continuing operations	1,156	155	1,311	(232)	1,079	(18%)

The order book for continuing operations was £2,048 million at 30 September 2009 (31 March 2009: £2,083 million), an increase of 1% at CER. Two additional contracts at Invensys Rail totalling £194 million were announced after the period end. 

Revenue

A summary of revenue and movements at CER by business division is set out below:

For the half year ended 30 September	H1 2008/09 Revenue £m	Exchange movement £m	H1 2008/09 at CER £m	Change at CER £m	H1 2009/10 Revenue £m	% Change at CER
Invensys Operations Management6	498	76	574	(100)	474	(17%)
Invensys Rail	306	22	328	7	335	2%
Invensys Controls6	286	43	329	(72)	257	(22%)
Continuing operations	1,090	141	1,231	(165)	1,066	(13%)

Operating profit 

A summary of operating profit and movements at CER by business division is set out below:

For the half year ended 30 September	H1 2008/09 OPBIT £m	Exchange movement £m	H1 2008/09 at CER £m	Change at CER £m	H1 2009/10 OPBIT £m	% Change at CER
Invensys Operations Management6	48	9	57	(24)	33	(41%)
Invensys Rail	65	5	70	3	73	5%
Invensys Controls6	23	2	25	(11)	14	(43%)
Corporate	(16)	(1)	(17)	(1)	(18)	9%
Continuing operations	120	15	135	(33)	102	(24%)

Operating cash flow and cash conversion

A summary of operating cash flow and cash conversion by business division is set out below:

For the half year ended 30 September	Operating cash flow		Cash conversion
	H1 2009/10 £m	H1 2008/09 £m	H1 2009/10 %	H1 2008/09 %
Invensys Operations Management6	55	34	167%	71%
Invensys Rail	46	77	63%	118%
Invensys Controls6	21	39	150%	170%
Corporate	(30)	(15)	-	-
Continuing operations	92	135	90%	113%

Exceptional items

There was a net exceptional credit totalling £9 million (H1 2008/09: £14 million charge). This included a gain arising from the curtailment of the US defined benefit pension plans of £36 million (H1 2008/09: £nil); restructuring costs of £21 million (H1 2008/09: £12 million); and £6 million (H1 2008/09: £2 million) of impairments of property, plant and equipment. The restructuring costs for the period comprise the integration of Invensys Process Systems, Wonderware, Eurotherm and IMServ into Invensys Operations Management, the transfer of operations to our global development partner, Cognizant, and other rationalisation projects across the Group.  Full year restructuring costs including impairments is expected to be £60 million.

Net finance costs

Net finance costs increased to £4 million (H1 2008/09: £1 million). This charge primarily comprises bonding costs offset by income on the Group's net cash position. The increased charge reflects the lower returns achieved on the net cash position. 

Taxation

The tax charge for continuing operations is £9 million (H1 2008/09: £13 million) which comprises a current year income tax charge of £12 million (H1 2008/09: £18 million), offset by a deferred tax credit of £3 million (H1 2008/09: £5 million credit). As the Group is involved in worldwide operations, Invensys is subject to several factors which affect the tax charge and hence the effective tax rate. The key factors are the levels and mix of profitability in different jurisdictions in which the Group may or may not have offsetting tax losses, and the differing tax rates imposed in those jurisdictions.

Net profit

Net profit increased to £79 million (H1 2008/09: £75 million). Lower operating profit and increased restructuring charges were more than offset by the gain arising from the curtailment of the US defined benefit pension plans.  

Earnings per share

Basic earnings per share from continuing operations were 9.6p (H1 2008/09: 9.2p). Underlying earnings exclude a £36 million exceptional curtailment gain on the closure of the US defined benefit pension plans and a £2 million exceptional tax credit in respect of the PPP settlement resulting in an underlying earnings per share from continuing operations of 4.9p (H1 2008/09: 9.2p).

Free cash flow

Free cash flow was £16 million (H1 2008/09: £177 million). The reduced free cash flow is driven by the lower operating cash flow, increased spend on restructuring, additional legacy contributions to the UK Main Pension Scheme and the one-off inflow in the prior year of £95 million in respect of the PPP settlement.

Capital structure

The Group's capital structure is as follows:

	30 September 2009 £m	31 March 2009 £m
Capital employed*	52	354
Cash and cash equivalents	277	296
Borrowings	(9)	(10)
Net cash	268	286
Total equity - funds	320	640
Comprising:
- Equity holders of parent	243	553
- Minority interests	77	87
	320	640

*Includes cash deposits of £22 million (31 March 2009: £23 million).

Total equity

Total equity decreased by £320 million primarily due to a pension actuarial loss of £439 million, translation exchange losses of £32 million and a dividend payment of £12 million offset by net profit of £79 million and the reversal of the IFRIC 14 irrecoverable element of potential future pension surplus of £86 million. 

Minority interests

The minority interest balance is £77 million (31 March 2009: £87 million), the majority of which relates to the interests of the minority in Baan Company NV.

Net cash

Net cash was £268 million (31 March 2009: £286 million) with an additional £22 million (31 March 2009: £23 million) held on deposit, resulting in a total cash and deposits balance of £290 million (31 March: £309 million).

Capital employed

Capital employed decreased by £320 million to £52 million, mainly attributable to an increase in the net pension liability of £295 million and reductions in property, plant and equipment of £35 million and goodwill of £17 million.  

Pension liabilities

Pension liabilities were £603 million (31 March 2009: £308 million) with the principal balance being on the UK Main Scheme where the closing IAS 19 deficit amounted to £271 million (31 March 2009: £94 million).  

Dividend

The Board has declared an interim dividend of 1.0p per share (H1 2008/09: nil). The dividend is covered 4.9 times by underlying earnings. 

  Invensys plc

Consolidated income statement (unaudited)

For the half year ended 30 September 2009

		Half year ended		Half year ended		Year ended
		30 September		30 September		31 March
		2009		2008		2009
	Notes	£m		£m		£m
Continuing operations
Revenue	2	1,066		1,090		2,284
Operating expenses before exceptional items		(964)		(970)		(2,040)
Operating profit before exceptional items	2	102		120		244
Exceptional items	4	9		(14)		(66)
Operating profit	3	111		106		178
Foreign exchange losses on financial items	5	-		-		-
Exceptional finance costs		-		-		(1)
Finance costs		(6)		(5)		(12)
Total finance costs		(6)		(5)		(13)
Exceptional finance income		-		-		27
Finance income		2		4		8
Total finance income		2		4		35
Other finance charges - IAS 19		(19)		(17)		(35)
Profit before taxation	2	88		88		165
Taxation - UK		2		-		6
Taxation - overseas		(11)		(13)		(29)
Profit after taxation - continuing operations		79		75		142
Loss after taxation - discontinued operations	6	-		-		(9)
Profit for the period		79		75		133
Attributable to:
Equity holders of the parent		77		73		130
Minority interests		2		2		3
		79		75		133
Earnings/ (loss) per share
Continuing operations
Earnings per share (basic)	7	9.6	p	9.2	p	17.4p
Earnings per share (diluted)	7	9.5	p	9.1	p	17.2p
Discontinued operations
Loss per share (basic)	7	0.0	p	0.0	p	(1.1)p
Loss per share (diluted)	7	0.0	p	0.0	p	(1.1)p
Total Group
Earnings per share (basic)	7	9.6	p	9.2	p	16.3p
Earnings per share (diluted)	7	9.5	p	9.1	p	16.1p

  Invensys plc

Consolidated statement of comprehensive income (unaudited)

For the half year ended 30 September 2009

		Half year ended		Half year ended		Year ended
		30 September		30 September		31 March
		2009		2008		2009
	Note	£m		£m		£m
Profit for the period		79		75		133
Other comprehensive income
Net gains on valuation of available-for-sale investments:
Gains taken to equity		-		25		25
Transferred to income statement for the period		-		-		(25)
Cash flow hedges:
Gains/(losses) taken to equity		9		1		(8)
Transferred to the income statement - cost of sales		(3)		(1)		4
Exchange differences on translation of foreign operations		(32)		34		133
Actuarial (loss)/gain recognised on defined benefit pension schemes		(439)		30		10
Irrecoverable element of potential future pension surplus	9	86		(29)		(20)
Other comprehensive income for the period, net of tax		(379)		60		119
Total comprehensive income for the period		(300)		135		252
Attributable to:
Equity holders of the parent		(300)		132		233
Minority interests		-		3		19
		(300)		135		252

  Invensys plc

Consolidated balance sheet (unaudited)

As at 30 September 2009

		30 September		30 September		31 March
		2009		2009		2009
	Notes	£m		£m		£m
ASSETS
Non-current assets
Property, plant and equipment		270		286		305
Intangible assets - goodwill		289		265		306
Intangible assets - other		121		101		123
Deferred income tax assets		33		28		32
Amounts due from contract customers		-		3		-
Other receivables		22		25		21
Other financial assets	12	1		14		1
		736		722		788
Current assets
Inventories		150		158		164
Amounts due from contract customers		230		194		236
Trade and other receivables		485		483		524
Cash and cash equivalents	12	277		186		296
Income tax receivable		4		2		4
Other financial assets	12	22		-		23
Derivative financial instruments		9		3		2
		1,177		1,026		1,249
Assets held for sale	10	2		28		1
TOTAL ASSETS		1,915		1,776		2,038
LIABILITIES
Non-current liabilities
Borrowings	12	(1)		(7)		(1)
Provisions		(107)		(104)		(111)
Income tax payable		(29)		(25)		(32)
Deferred income tax liabilities		(15)		(15)		(15)
Amounts due to contract customers		(38)		(23)		(42)
Other payables		(11)		(12)		(12)
Pension liabilities	9	(603)		(288)		(308)
		(804)		(474)		(521)
Current liabilities
Trade and other payables		(472)		(470)		(510)
Amounts due to contract customers		(200)		(211)		(219)
Borrowings	12	(8)		(1)		(9)
Derivative financial instruments		(5)		(3)		(4)
Income tax payable		(33)		(44)		(35)
Provisions		(73)		(55)		(100)
		(791)		(784)		(877)
TOTAL LIABILITIES		(1,595)		(1,258)		(1,398)
NET ASSETS		320		518		640
Capital and reserves
Equity share capital		80		80		80
Treasury shares		(1)		(4)		(1)
Other reserves		2,531		4,222		2,555
Retained earnings		(2,367)		(3,852)		(2,081)
Equity holders of the parent		243		446		553
Minority interests		77		72		87
TOTAL EQUITY		320		518		640

Invensys plc

Consolidated statement of changes in equity (unaudited)

For the half year ended 30 September 2009

							Other reserves
		Issued	Treasury		Share	Capital			Cash flow	Foreign	Total		Retained		Attributable to	Minority	Total
		capital	shares		premium	redemption	Capital	Special	hedge	exchange	other		earnings		equity holders	interests
					account	reserve	reserve	reserve	reserve	reserve	reserves				of the parent
		£m	£m		£m	£m	£m	£m	£m	£m	£m		£m		£m	£m	£m
Balance at 1 April 2009		80	(1)		348	-	1,582	495	(4)	134	2,555		(2,081)	-	553	87	640
Profit for the period		-	-		-	-	-	-	-	-	-		77		77	2	79
Other comprehensive income/(loss) for the period		-	-		-	-	-	-	6	(30)	(24)		(353)		(377)	(2)	(379)
Total comprehensive income/(loss) for the period		-	-		-	-	-	-	6	(30)	(24)		(276)		(300)	-	(300)
Share-based payment		-	-		-	-	-	-	-	-	-		6		6	-	6
Purchase of own shares by Employee Share Trust		-	(4)		-	-	-	-	-	-	-		-		(4)	-	(4)
Distribution of own shares under share-based payment arrangements		-	4		-	-	-	-	-	-	-		(4)		-	-	-
Dividends paid to equity shareholders		-	-		-	-	-	-	-	-	-		(12)		(12)	(1)	(13)
Purchase of minority interests*		-	-		-	-	-	-	-	-	-		-		-	(9)	(9)
Balance at 30 September 2009		80	(1)		348	-	1,582	495	2	104	2,531		(2,367)		243	77	320
Balance at 1 April 2008		80	(7)		740	923	2,509	-	-	17	4,189		(3,951)		311	69	380
Profit for the period		-	-		-	-	-	-	-	-	-		73		73	2	75
Other comprehensive income for the period		-	-		-	-	-	-	-	33	33		26		59	1	60
Total comprehensive income for the period		-	-		-	-	-	-	-	33	33		99		132	3	135
Share-based payment		-	-		-	-	-	-	-	-	-		3		3	-	3
Purchase and distribution of own shares under share-based payment arrangements		-	3		-	-	-	-	-	-	-		(3)		-	-	-
Balance at 30 September 2008		80	(4)		740	923	2,509	-	-	50	4,222		(3,852)		446	72	518
Balance at 1 April 2008		80	(7)		740	923	2,509	-	-	17	4,189		(3,951)		311	69	380
Profit for the year		-	-		-	-	-	-	-	-	-		130		130	3	133
Other comprehensive (loss)/income for the year		-	-		-	-	-	-	(4)	117	113		(10)		103	16	119
Total comprehensive (loss)/income for the year		-	-		-	-	-	-	(4)	117	113		120		233	19	252
Share-based payment		-	-		-	-	-	-	-	-	-		11		11	-	11
Purchase of own shares by Employee Share Trust		-	(2)		-	-	-	-	-	-	-		-		(2)	-	(2)
Distribution of own shares under share-based payment arrangements		-	8		-	-	-	-	-	-	-		(8)		-	-	-
Dividends paid to minority interests		-	-		-	-	-	-	-	-	-		-		-	(1)	(1)
Capital reduction:
Bonus issue of B shares		927	-		-	-	(927)	-	-	-	(927)		-		-	-	-
Cancellation of capital redemption reserve		-	-		-	(923)	-	-	-	-	(923)		923		-	-	-
Cancellation of B shares		(927)	-		-	-	-	-	-	-	-		927		-	-	-
Cancellation of share premium account		-	-		(392)	-	-	-	-	-	(392)		392		-	-	-
Transfer to special reserve		-	-		-	-	-	495	-	-	495		(495)		-	-	-
Balance at 31 March 2009		80	(1)		348	-	1,582	495	(4)	134	2,555		(2,081)		553	87	640

*Relates to the purchase of 3.67 million shares from some minority shareholders of Baan Company NV in liquidation (Baan).

Invensys plc

Consolidated cash flow statement (unaudited)

For the half year ended 30 September 2009

		Half year ended		Half year ended		Year ended
		30 September		30 September		31 March
		2009		2008		2009
	Notes	£m		£m		£m
Operating activities
Operating profit:
Continuing operations	3	111		106		178
Discontinued operations	6	-		-		-
Depreciation of property, plant and equipment		23		21		46
Amortisation of intangible assets - other		11		10		22
Provision for impairment charged to operating profit	4	6		2		17
Loss on sale of assets and operations	4	-		-		1
PPP settlement proceeds		-		95		95
Sale of property, plant and equipment		1		-		3
Non-cash charge for share-based payment		6		6		11
Decrease/(increase) in inventories		5		(3)		15
Decrease in receivables		17		75		111
Decrease in net amounts due to contract customers		(17)		(53)		(69)
Decrease in payables and provisions		(35)		(26)		(33)
Difference between pension contributions paid and amounts  recognised in operating profit		(66)		(19)		(56)
Cash generated from operations		62		214		341
Income taxes paid		(16)		(15)		(34)
Interest paid		(5)		(7)		(8)
Exceptional finance costs		-		-		(1)
Net cash flows from operating activities		41		192		298
Investing activities
Interest received		1		7		10
Purchase of property, plant and equipment		(11)		(15)		(32)
Expenditure on intangible assets - other		(15)		(9)		(24)
Purchase of subsidiaries		(9)		(50)		(50)
Sale of financial assets		-		-		32
Sale of subsidiaries		(4)		(11)		(20)
Cash invested in financial assets		-		-		(13)
Net cash acquired on purchase of subsidiaries		-		3		3
Cash flows from investing activities		(38)		(75)		(94)
Financing activities
Purchase of own shares by Employee Share Trust		(4)		(3)		(3)
Facility fees paid		-		(6)		(6)
Transfer of treasury bonds defeasing 144A covenants		-		(7)		(7)
Repayment of long-term borrowings		-		(156)		(156)
Dividends paid to equity shareholders		(12)		-		-
Dividends paid to minority interests		(1)		-		(1)
Cash flows from financing activities		(17)		(172)		(173)
Net (decrease)/increase in cash and cash equivalents		(14)		(55)		31
Cash and cash equivalents at beginning of period		296		235		235
Net foreign exchange difference		(5)		6		30
Cash and cash equivalents at end of period		277		186		296

  

Invensys plc

Notes (unaudited)

1  Basis of preparation

Statement of compliance

The Group's condensed Consolidated Financial Statements for the six months ended 30 September 2009 have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union (EU). They do not include all the information and disclosures required in the Annual report and accounts, and should be read in conjunction with the Group's Annual report and accounts as at 31 March 2009, that are prepared in accordance with IFRS as adopted by the EU.

Significant accounting policies

The accounting policies adopted in the preparation of the condensed Consolidated Financial Statements are consistent with those followed in the preparation of the Group's Annual Report and Accounts for the year ended 31 March 2009, except for the following new standards, amendments to existing standards and new interpretations which have been adopted by the Group for the half year:

IAS 1 Revised Presentation of Financial Statements

IFRS 8 Operating Segments

Amendments to IAS 23  Borrowing Costs

Amendments to IAS 32  Financial Instruments

Amendments to IFRS 2  Vesting Conditions and Cancellations

Amendments to IFRS 1  First-time Adoption of IFRS and IAS 27 - Consolidated and Separate Financial Statements

Amendments to IFRS 1  First-time Adoption of IFRS

Amendments to IFRS 7  Improving disclosures about financial instruments

Improvements to IFRS (annual improvements)

IFRIC 13  Customer Loyalty Programmes

IFRIC 15  Agreements for the Construction of Real Estate

IFRIC 16  Hedges of a Net Investment of a Foreign Operation

IAS 1 Revised and IFRS 8 address the presentation of the Financial Statements and the disclosure of segment information. Their adoption has had no impact on the financial position or performance of the Group, but has changed certain aspects of presentation and disclosures which are explained below. The other standards and interpretations listed above have had no material impact on the Financial Statements.

IAS 1 Revised makes various changes to the presentation of the primary Financial Statements and the terminology used by IFRS. The standard introduces the statement of comprehensive income, which requires all items of recognised income and expense to be presented either in one single statement or in two linked statements. The Groups has elected to present two statements, so continues to present a separate income statement as in previous periods, and a second statement beginning with the profit for the period and displaying the components of other comprehensive income. IAS 1 Revised also requires all entities to present a statement of changes in equity as a primary statement, including details of transactions with equity shareholders, with profit or loss and other comprehensive income each shown as a single line with details presented in separate statements. Previously the Group has shown changes in equity arising from transactions with equity shareholders in a note to the accounts. As permitted, the Group as not adopted all of the proposed revised IFRS terminology introduced by IAS 1 Revised. For example, the Group continues to refer to the balance sheet, rather than a "statement of financial position".

IFRS 8 requires disclosure of information about the Group's operating segments and replaces the requirement to determine primary (business) and secondary (geographical) reporting segments. The Group has determined that the operating segments are the same as the business segments previously identified under IAS 14 Segment Reporting. Additional disclosures about each of these segments is shown in Note 2, including revised comparative information.

2  Segment Information

The Group has adopted IFRS 8 Operating Segments, which requires operating segments to be identified based on the way that the Group's businesses are reviewed by the chief operating decision maker in order to allocate resources to each business and assess its performance. Although this approach is different from that of the predecessor standard (IAS 14), which required the identification of primary (business) and secondary (geographical) segments, the Group has determined that its operating segments are the same as the business segments previously reported. However, reorganisation of the Process Systems and Eurotherm businesses, which were previously reported as separate components of Invensys Operations Management, has resulted in these businesses being combined and qualifying as a single operating segment.

For management purposes, the Group is organised into businesses based on their products and services and has three reportable operating segments as explained in the Business Review; Invensys Operations Management, Invensys Rail and Invensys Controls. Operations presented as discontinued are explained in Note 6.

Management monitors the operating results of each of these businesses separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated primarily on operating profit or loss before exceptional items as identified in the consolidated income statement. Restructuring costs and impairment losses on operating assets, which are reported in the consolidated income statement as exceptional items, are also monitored at the segment level. Other exceptional items together with foreign exchange gains or losses, finance costs, finance income, finance charges relating to pension arrangements under IAS 19 Employee Benefits and income tax are managed on a Group basis and are not allocated to operating segments.

Segment assets and liabilities are determined based on the operating assets and liabilities monitored by the chief operating decision maker on a segment basis. These are consistent with the prior year with the exception of goodwill which is excluded from segment assets on adoption of IFRS 8. The comparative information has been reclassified accordingly.

The following tables set out the information relating to revenue, profit or loss and net operating assets employed for each operating segment that IAS 34 requires to be disclosed in the interim financial statements of a financial year for which IFRS 8 will be applied in the 2009 Annual Report and Accounts. The Group continues to disclose geographical analyses of revenue and profit or loss although this information is additional to that required by IAS 34. Restructuring costs by operating segment are disclosed in Note 4.

Operating segments		Half year ended		Half year ended		Half year ended		Half year ended		Half year ended		Half year ended			Year ended		Year ended		Year ended
		30 September		30 September		30 September		30 September		30 September		30 September			31 March		31 March		31 March
			2009		2009		2009		2008		2008		2008		2009		2009		2009
			£m		£m		£m		£m		£m		£m		£m		£m		£m
			Total revenue		Inter- company revenue		External revenue		Total revenue		Inter- company revenue		External Revenue		Total Revenue		Inter- company revenue		External Revenue
Segment revenues
Business division
Invensys Operations Management*			478		4		474		502		4		498		1,102		9		1,093
Invensys Rail			335		-		335		306		-		306		636		-		636
Invensys Controls*			257		-		257		286		-		286		556		1		555
Eliminations			(4)		(4)		-		(4)		(4)		-		(10)		(10)		-
Total Group			1,066		-		1,066		1,090		-		1,090		2,284		-		2,284
			Operating profit/(loss)**			Operating profit/(loss)			Operating profit/(loss)**			Operating profit/(loss)			Operating profit/(loss)**			Operating profit/(loss)
Segment profit
Business division
Invensys Operations Management*					33		17				48		46				119		88
Invensys Rail					73		71				65		65				134		133
Invensys Controls*					14		7				23		11				26		-
Total segment					120		95				136		122				279		221
Corporate					(18)		16				(16)		(16)				(35)		(43)
Total Group					102		111				120		106				244		178
Reconciliation to profit before taxation:
Exceptional finance costs							-						-						(1)
Finance costs							(6)						(5)						(12)
Exceptional finance income							-						-						27
Finance income							2						4						8
Other finance charges - IAS 19							(19)						(17)						(35)
Profit before taxation - continuing operations							88						88						165
Segment assets and liabilities					Assets		Liabilities				Assets		Liabilities				Assets		Liabilities
Business division
Invensys Operations Management*					578		(354)				597		(317)				669		(401)
Invensys Rail					329		(281)				267		(267)				312		(289)
Invensys Controls*					333		(123)				364		(133)				350		(131)
Total segment assets/(liabilities)					1,240		(758)				1,228		(717)				1,331		(821)
Corporate					74		(151)				66		(162)				69		(177)
Total Group					1,314		(909)				1,294		(879)				1,400		(998)
Reconciliation to total assets and total liabilities:
Intangible assets - goodwill					289		-				265		-				306		-
Cash and cash equivalents					277		-				186		-				296		-
Pension liabilities					-		(603)				-		(288)				-		(308)
Current and deferred income tax assets/(liabilities)					35		(83)				37		(91)				64		(92)
Total assets/(liabilities)					1,915		(1,595)				1,782		(1,258)				2,038		(1,398)

* From 1 April 2009, IMServ is managed through the Invensys Operations Management division, whereas previously it was managed through the Invensys Controls division. Comparatives have been reclassified accordingly.

** Before exceptional items.

Geographical information

Half year ended

Half ye