Lloyd's Register Group Reports Fourth Year of Record Performance

In his report on the accounts for the year ended June 30, 2007, David Moorhouse, Chairman of Lloyd’s Register, has announced that Group income rose by 17% to £497 million with good growth in operating surplus, marking the fourth consecutive year of record performance.

“What is of particular note this year is the fact that all our business sectors performed well. Our strategic plan targeted £500 million of income by the end of the 2007/08 financial year and but for £3 million we would have achieved that target a full year earlier. Now we anticipate materially exceeding that original target figure by the end of next year,” Mr Moorhouse said. “This performance has enabled us to continue our strong support for education in engineering, science and technology, donating another £6 million to the Lloyd’s Register Educational Trust. In line with our global activity this charity is also now much more international in terms of the institutions it supports and this year significant new grants are being made to educational establishments in Korea, Singapore, Greece, Canada and the United States of America.”

In October 2006, Lloyd’s Register acquired NedTrain Consulting, the engineering consultancy division of the Netherlands State Railways, now renamed Lloyd’s Register Rail Europe. This is now the focus of the Group’s Transportation business in Europe and is already performing ahead of expectation. Since the end of the financial year Lloyd’s Register has also bought out its joint venturer in Knowledge Based Management Ltd, leaders in the field of knowledge based asset inspection. Its software, together with the reliability-based mechanical integrity (RBMI) software acquired with Capstone in 2005, gives the Group’s Asset Management business (formerly Industry) a unique offering of leading software products combined with the leading skills of its inspectors and assessors.  “These acquisitions help us fulfil our constitutional objective to enhance the safety of life, the environment and property around the world in industries and with services where we can really make a difference,” Mr Moorhouse said.

At the beginning of the 2007/08 financial year, Richard Sadler took up the position of Chief Executive Officer and Mr Moorhouse’s position changed from that of Executive Chairman to Chairman.  Mr Sadler, who returned to Lloyd’s Register after a period working in the banking sector, is committed to upholding the Group’s constitutional purpose as Lloyd’s Register moves towards its 250-year anniversary in 2010.

“In a world of increased social responsibility, environmental awareness and global complexity, Lloyd’s Register’s role in helping clients fulfil their obligations to society and the environment is more important than ever. No organization can exist for 250 years without innovation and change. It is essential that we keep adapting to support the markets we serve and ensure continued growth while fulfilling our purpose. We will continue to diversify our range of services, investing in people, technology and quality services in order to ensure long-term sustainability based on independence and integrity,” Mr Sadler said.

The Group’s Marine business, which accounts for around 50% of Lloyd’s Register’s total income, grew its revenues by 12%. Over 7 million gross tonnes (mgt) was added to the Lloyd’s Register classed fleet, which at the end of June stood at 134.5 mgt, another all time high for the Group. The number of ships on order to Lloyd’s Register class increased to 1,214 totalling in excess of 46 mgt over the same period and since then, the order book has gone past 50 mgt. The Marine business won 114% more new construction orders in China in 2006/07 than in the previous financial year, underlining the Lloyd’s Register's status as the leading classification society in China. Lloyd’s Register also won the majority of the contracts awarded for the extra large Q-max liquefied natural gas carriers, consolidating its position as the market leader for the classification of LNG ships. Today, Lloyd’s Register classes twice the number of LNG ships than its nearest rival. Lloyd’s Register is also at the forefront of large container ship design support, providing answers to design and operational issues posed by increases in size. In July the 10,000 teu container ship COSCO Asia became the latest large container ship to join the Lloyd’s Register fleet. Lloyd’s Register has also developed new container ship concepts to meet the dimensions of the proposed expansion of the Panama Canal.

The Group’s Management Systems business, LRQA, which accounts for more than 20% of Group income, reported a 7% increase in revenue. The strategy of focusing on adding value through its Business Assurance approach to management systems certification made a significant contribution. LRQA also witnessed increased interest in its environmental systems certification offering and in new areas of supply chain management, IT security assurance and occupational health and safety and in the work of its specialist carbon team. Extending its service into the supply chain security arena allowed LRQA to make significant in-roads into the associated area of port security, awarding its first ISO/PAS 28000 certificate of approval for international supply chain security to Dubai Ports (DP) World.

Lloyd’s Register’s Oil & Gas business, accounting for around 10% of Group income, saw revenues rise by 19%. This growth was largely a result of the further internationalization of its operations notably in Kazakhstan and Western Canada, where the Alberta oil sands provide one of the most demanding environmental and technical challenges in the world. The Oil & Gas business also achieved considerable growth in the floating offshore market coupled with strong demand for the RBMI services and software provided by Lloyd’s Register Capstone.

The Group’s Transportation business now accounts for almost 10% of revenue and achieved revenue growth of 130% in 2006/07 in large part due to the acquisition of NedTrain Consulting. Good organic growth was also achieved from its existing business. Following Lloyd’s Register’s appointment last year to the Dubai Palm Jumeirah project, the Group was appointed by the Dubai Roads and Transport Authority to undertake the independent safety assessment of the new Dubai Metro project. The business made another major advance in the year by signing a contract with the China Academy of Railway Sciences to advise the China Ministry of Railways on safety management. The contract is strategically important for taking the business into the huge potential market of mainland China and for creating a relationship with an important client in the Chinese railway industry.

The Group’s Asset Management business, formerly known as Industry, accounts for around 10% of total income and achieved growth of 14% in 2006/07. Following Lloyd’s Register’s role in the creation of PAS 55 (the Publicly Available Specification for Asset Management), the Group has developed a global leadership position in its application, issuing nine certificates in the UK, the Netherlands and the US, the last one being for National Grid’s US Transmission business, a first for the Group in North America.  In 2006/07 the Group also introduced the Multi-Utility Registration Scheme, an accreditation scheme for providers operating in the UK across the gas, electricity and water sectors.

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