RNS No 756h
BIRSE GROUP PLC
8th July 1997
Birse Group plc
Preliminary Results
PRE-TAX PROFITS UP 79%
* Turnover up to #410m (1996: #363m)
* Operating profit up 15% to #3.24m (1996: #2.817m)
* Pre-tax profit up 79% to #2.017m (1996: #1.124m)
* Earnings per share increased by 83% to 1.1p (1996: 0.6p)
* Net bank debt reduced to #2m (7% of shareholders' funds)
* Total dividend for the year of 0.5p per share
* Forward construction order book up by #53m
Commenting on the results, Chairman Peter Birse, said:
"It is particularly pleasing to have returned to the dividend list. We have
a strong, high quality order book and I am confident that the progress made
last year will continue."
Chairman's Statement
I am pleased to report that your Group continues to trade profitably.
Profit before tax for the year was #2.017 million up from #1.124 million in
1995/96. Returns are still modest in line with my predictions that recovery
from the recession would be slow. However, I believe the scene is now set
for more significant progress in the current year to 30 April 1998.
Turnover increased by 13% to #410 million exceeding #400 million for the
first time and operating profit moved ahead to #3.24 million from #2.817
million. All our continuing operating businesses in Construction, Plant
Hire and Property traded profitably and the final remnants of our Housing
business were disposed of at a cost of #162,000.
Net bank debt at the end of the year was just over #2 million compared to #7
million at 30 April 1996. We are targeting a very substantial movement into
net cash in the course of the current year and in consequence an elimination
of interest charges in future periods. Construction is set for a further
significant increase in turnover in 1997/98. At the end of June 1997 our
forward order book was #53 million ahead of June 1996. I should emphasise
that additional business is being secured without compromising our
commitment to the quality of our order book.
Although Construction turnover for the year was up 11% at #395 million
activity for the second half was somewhat depressed due to delay in
commencement of a number of major projects. This, together with discounted
settlements on two major projects, had the effect of holding back profits
for the period under review.
Birse Construction again advanced its position and reputation in the
industry and has recently secured a number of notable contracts. The
company's management and staff development programme has reached a stage
where very substantial benefits are being seen right across the business.
The resulting improvements in performance are now expected to accelerate
over the coming year.
The emphasis on employee performance and customer satisfaction achieved
through an internal and external partnership approach is now becoming
accepted as best business practice and I believe this will deliver benefits
to all involved in the industry.
Construction marketing has been focused on areas of the market with well
founded future potential and in this regard the company has had further
success in increasing its share of the rail, water, waste and sports stadia
sectors.
I remain optimistic for the future and more so as we move further away from
the cheapest price/confrontational scenario which has been prevalent in the
industry for so long.
Birse Process Engineering has now established an industrial division to
complement its water engineering division and its performance again exceeded
expectations. The opportunities for this specialist division are exciting
and a management structure has been established to ensure that it takes full
advantage of them.
BPH Equipment was able to recommence significant capital investment during
the year, benefits from this should start to be seen in the year ending
April 1998. Operating profit for the year under review was #1.1 million,
slightly ahead of last year.
Birse Properties returned an operating profit for the year of approximately
#500,000 and I am confident that our property holdings will contribute
further to group profit as we trade out over the next few years.
With net bank debt at #2 million balance sheet gearing stood at less than 7%
at the year end. However, as I indicated at the interim results this
position is not necessarily representative of the position throughout the
year and will vary due to a number of seasonal and settlement factors.
Nevertheless the elimination of debt and establishment of an ongoing
positive cash position is now a realistic objective which I believe can be
achieved before I next report to you at the end of the current half year.
I am particularly pleased that we have been able to recommence distributions
to shareholders and the directors are recommending a final dividend of 0.3p
making a total for the year of 0.5p per ordinary share.
I look forward to the coming year and believe that we have good reason to be
confident that Birse Group will justify the loyalty shown by so many of its
shareholders.
In conclusion I record my sincere appreciation of the contributions made by
customers, employees, suppliers and sub-contractors to our progress toward
more impressive performance.
P M Birse, Chairman
8th July 1997
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 April 1997
1997 1996
Note #'000 #'000
Turnover 1 409,895 362,647
Cost of sales (390,464) (345,175)
---------- ----------
Gross profit 19,431 17,472
Administrative
expenses (16,191) (14,655)
---------- ----------
Operating profit 1 3,240 2,817
Net interest (1,223) (1,693)
---------- ----------
Profit on ordinary
activities before
taxation 2,017 1,124
Taxation 2 100 -
---------- ----------
Profit for the
financial year 2,117 1,124
Dividends on equity 3
shares (957) -
---------- ----------
Transferred to
reserves 1,160 1,124
====== ======
Earnings per ordinary 4
share 1.1p 0.6p
====== ======
The above figures relate exclusively to continuing operations.
There is no material difference between the results disclosed and the
results on an unmodified historical cost basis.
CONSOLIDATED BALANCE SHEET
As at 30 April 1997
1997 1996
#'000 #'000
Fixed Assets
Tangible assets 13,417 11,595
Investments 7,650 8,950
---------- ----------
21,067 20,545
---------- ----------
Current Assets
Stocks 5,552 12,225
Debtors 128,813 116,797
Investments 658 618
Cash at bank and in hand 12,013 14,417
---------- ----------
147,036 144,057
---------- ----------
Creditors: Amounts falling due
within one year 122,280 112,083
---------- ----------
Net Current Assets 24,756 31,974
---------- ----------
Total Assets Less Current
Liabilities 45,823 52,519
Creditors: Amounts falling due
after more than one year (16,532) (24,404)
---------- ----------
Net Assets 29,291 28,115
====== ======
Capital and Reserves
Called up share capital 19,132 19,123
Share premium account 7 -
Special reserve 308 308
Revaluation reserve 607 607
Profit and loss account 9,237 8,077
---------- ----------
Shareholders' Funds - equity
interest 29,291 28,115
====== ======
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 April 1997
As Restated
1997 1996
#'000 #'000 #'000 #'000
Net cash inflow from
operating activities 10,321 10,051
Returns on investments
and servicing of
finance
Interest received 345 397
Interest paid (1,617) (2,192)
Interest element of
finance lease rentals
and hire purchase
contracts (21) (19)
---------- ----------
Net cash outflow from
returns on investments
and servicing of
finance (1,293) (1,814)
Taxation
UK Corporation tax
received 100 -
Capital expenditure and
financial investment
Purchase of tangible
fixed assets (4,378) (1,706)
Sale of tangible fixed
assets 402 173
---------- ----------
Net cash outflow from
investing activities (3,976) (1,533)
---------- ----------
Cash inflow before
management of liquid
resources and financing 5,152 6,704
Management of liquid
resources
Purchase of current
asset investments (40) (118)
Sale of current asset
investments - 1,050
Movement in short term
cash deposits (268) (390)
---------- ----------
Net cash
(outflow)/inflow from
management of liquid
resources (308) 542
Financing
Issue of ordinary
shares 16 -
Loan advances received - 6,020
Loan repayments (7,468) (9,292)
Capital element of
finance lease rentals
and hire purchase
contracts (64) (58)
---------- ----------
Net cash outflow from
financing (7,516) (3,330)
---------- ----------
(Decrease)/increase in
cash in the year (2,672) 3,916
===== =====
The comparative figures for the consolidated cash flow statement have been
restated in order to comply with Financial Reporting Standard 1 (revised).
NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS
for the year ended 30 April 1997
1. Segment
information Turnover Operating profit
a) Turnover and
results
1997 1996 1997 1996
#'000 #'000 #'000 #'000
Contracting 394,717 354,463 2,124 2,210
Plant hire 13,009 12,052 1,074 1,013
Commercial property 13,648 1,208 499 410
Housing 601 301 (162) (53)
Group centre - - (295) (763)
Intra-group (12,080) (5,377) - -
---------- ---------- ---------- ----------
409,895 362,647 3,240 2,817
====== ======
Net interest (1,223) (1,693)
---------- ----------
Profit on ordinary
activities before
taxation 2,017 1,124
====== ======
b) Net assets 1997 1996
#'000 #'000
Contracting 13,822 12,464
Plant hire 6,328 4,919
Commercial property 13,743 19,952
Housing 106 872
Group centre (1,584) (2,797)
---------- ----------
32,415 35,410
Unallocated net
liabilities (3,124) (7,295)
---------- ----------
29,291 28,115
====== ======
The above analysis reflects the segments by which the Group is managed. All
turnover arises from work performed within the United Kingdom.
1997 1996
#'000 #'000
Unallocated net liabilities comprise:
Net borrowings (2,003) (7,067)
Obligations under finance leases and
hire purchase contracts (164) (228)
Dividends payable on equity shares (957) -
---------- ----------
(3,124) (7,295)
====== ======
Net assets for each segment represents non-interest bearing operating assets
less non-interest bearing operating liabilities.
2. Taxation 1997 1996
#'000 #'000
United Kingdom corporation tax at 33% - -
(1996: 33%)
Deferred taxation - -
---------- ----------
- -
Adjustment to prior years' tax
provision
Corporation tax 100 -
---------- ----------
100 -
====== ======
No tax charge arises on the profits of the year as a result of the
utilisation of losses brought forward and other timing differences not
recognised in previous years.
The tax credit relating to prior years' arises in consequence of repayments
secured in the period under review.
3. Dividends on equity shares 1997 1996
#'000 #'000
Interim 0.2p per ordinary share (1996 383 -
- nil)
Final proposed 0.3p per ordinary 574 -
share (1996 - nil)
---------- ----------
957 -
====== ======
The interim dividend was paid on 2 May 1997. Subject to the approval of
shareholders at the Annual General Meeting the final dividend will be paid
on 5 November 1997 to shareholders appearing on the register at the close of
business on 3 October 1997.
4. Earnings per ordinary share
The calculation of earnings per ordinary share is based on profits of
#2,117,000 (1996: #1,124,000) and on the weighted average of 191,261,655
(1996: 191,227,707) ordinary shares in issue during the year.
5. Net bank borrowings 1997 1996
#'000 #'000
Net bank borrowings comprise:
Cash at bank - on demand 9,409 12,081
- on short term deposit 2,604 2,336
Bank loans and overdrafts
Due within one year (750) -
Due after one year (13,266) (21,484)
---------- ----------
(2,003) (7,067)
====== ======
6. Financial information
The financial information incorporated in this announcement does not
constitute full statutory accounts within the meaning of the Companies Act
1985. Full accounts for the year ended 30 April 1997 upon which Deloitte &
Touche have given an unqualified audit report will be filed with the
Registrar of Companies in due course.
Peter Birse, Chairman
Birse Group plc Tel: 01652 633 222
Charles Watson
Financial Dynamics Tel: 0171 831 3113
END
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