RNS No 6653j
BIRSE GROUP PLC
6th February 1998
Peter Birse, Chairman
Birse Group plc Tel: 01652 633 222
Charles Watson
Financial Dynamics Tel: 0171 831 3113
BIRSE GROUP PLC
ANNOUNCEMENT OF INTERIM RESULTS
Birse Group, the leading construction group today announces results for the
six months to 31 October 1997.
Highlights include:
* Pre-tax profits up to #2.1m (1996: #1.2m)
* Earnings per share up to 0.8p (1996: 0.5p)
* Debt reduced to #0.1m, with the Group expected to move to a substantial
net cash position at the year end
* Interim dividend up to 0.3p (1996: 0.2p)
Commenting on the announcement, Chairman, Peter Birse, said:
"Today's results are indicative of the continued progress of the Group to a
more acceptable financial performance. With the quality of the business
secured by the Group continuing to improve, we are confident of further
progress being achieved."
Chairman's Statement
I am pleased to report a profit of #2.1 million for the six months to 31
October 1997 up from #1.2 million for the corresponding period last year.
Profitability is to some extent being held back by the delays and associated
costs of settling long term contract accounts.
Group turnover for the period at #221 million was #8 million lower than for
the six months ended 31 October 1996. However, we expect turnover for the
full year to show an increase over 1996/97 as workload is more evenly spread
in the current year.
The Directors believe that by continuing to focus on long term relationships
with both customers and suppliers the quality of the business secured by
your Group will continue to improve and that this will particularly impact
on future results.
A further reduction in debt was achieved during the period under review and
at 31 October 1997 stood at #0.1 million. Whilst this is indicative of a
trend in the right direction the figure is not representative of the average
debt during the period. Your Board remains fully committed to a substantial
movement into net cash by the end of the current year.
Construction
Birse Construction continues to make progress towards its objectives and is
engaged on many notable projects. Although turnover is down slightly over
the six months it will be higher in the second half and show a reasonable
increase for the full year. Operating profit increased to #1.5 million from
#1.1 million.
We have formed a special task force of senior managers and directors to
precipitate settlement of all outstanding long term contract accounts. At
the same time we continue to implement strict procurement criteria to avoid
a recurrence of this unfortunate aspect of our industry. I detect a growing
pressure within the industry to tolerate neither late payment nor the meagre
margins endured for the generally high level of risk which contractors are
expected to bear. The increase in partnership and similar non
confrontational forms of contract is allowing such issues to be openly
discussed by all parties and I am confident that this will lead to
opportunities to secure more reasonable returns.
Birse Construction continued to focus on more selective areas of the market
and has been successful in a number of specialist sectors, namely:-
- Increased involvement in railway work and in particular Railtrack's
investment programme.
- Further progress in the Sports Stadia sector with successful completion
of Bolton Wanderers new stadium and award of further high profile work at
Aintree, Reading and Preston.
- Greater participation in the Water Companies' investment programme.
- Major force in the design and construction of large distribution
facilities with repeat business accruing from national clients.
- Acknowledged leader in partnering major road projects with public
authorities evidenced by winning the 1997 Contract Journal Construction
Industry Award for partnership contracting.
Birse Process Engineering has had considerable success in diversifying into
the general industrial market whilst increasing activity in the water
sector. The Directors are confident that this business will become an
increasingly significant contributor to Group performance.
Whilst the Board is conscious that greater profits remain to be generated
from its construction activities it is confident that its strategy is
correct and will soon achieve target objectives.
Plant Hire
BPH increased turnover and profits by around 16% compared to the
corresponding period last year.
The heavy construction market has shown signs of improvement and the
offshore oil related division has achieved increased utilisation.
The diesel services division has succeeded in broadening its base of
activities both in the UK and overseas and further expansion is planned.
Investment has focused on improving service to industrial and oil industry
customers and an increasing involvement in the requirements of Birse
Construction where benefits to both companies can be secured.
Property
Birse Properties continues to trade profitability and further progress is
anticipated on sales and partnership developments.
The first phase of a joint development on land at Warrington has been
successfully completed and a further phase is in the final stages of
negotiation.
People
In December 1997 Mike Wilson, Chief Executive of Birse Construction and a
Director of Birse Group plc, resigned from both positions. On behalf of the
Board I would like to express our sincere appreciation of the contribution
made by Mike to the development of Birse Construction and wish him well in
the future.
Our staff development continues to produce remarkable results. I am
personally very conscious of the exceptional levels of confidence, morale
and co-operative communication that currently exist throughout the Group and
of the potential that these create for future performance.
Group Finance
I am pleased to report that the Directors are able to recommend that the
interim dividend be increased from 0.2p to 0.3p.
Prospects
The Group continues to progress towards a more acceptable financial
performance. Your Board remain confident in its stated strategy which is to
focus upon the key elements of forging closer relationships with customers,
staff empowerment and concentration on business with an acceptable
risk/reward profile.
Peter M Birse
Chairman
6 February 1998
Consolidated Results
for the 6 months ended 31 October 1997
6 Months 6 Months Year
Ended Ended Ended
31.10.97 31.10.96 30.4.97
Note #'000 #'000 #'000
Turnover 2 220,953 229,227 409,895
---------- ---------- ----------
Operating profit 2 2,568 1,886 3,240
Net interest (482) (667) (1,223)
---------- ---------- ----------
Profit on ordinary
activities before
taxation 2 2,086 1,219 2,017
Taxation 3 (479) (305) 100
---------- ---------- ---------
Profit for the
financial period 1,607 914 2,117
Dividends on equity
shares 4 (574) (383) (957)
---------- ---------- ----------
Transferred to
reserves 1,033 531 1,160
====== ====== ======
Earnings per
ordinary share 5 0.8p 0.5p 1.1p
====== ====== ======
Consolidated Balance Sheet
as at 31 October 1997
As at As at As at
31.10.97 31.10.96 30.4.97
#'000 #'000 #'000
Fixed Assets
Tangible assets 14,202 11,356 13,417
Investments 6,400 8,950 7,650
---------- ---------- ----------
20,602 20,306 21,067
---------- ---------- ----------
Current Assets
Stocks 5,227 5,028 5,552
Debtors 143,383 134,418 128,813
Investments - 643 658
Cash at bank and in hand 12,325 9,232 12,013
---------- ---------- ----------
160,935 149,321 147,036
---------- ---------- ----------
Creditors: Amounts falling due
within one year
Bank loans and overdrafts - - (750)
Other creditors (134,883) (123,856) (121,530)
---------- ------------ ----------
(134,883) (123,856) (122,280)
---------- ---------- ----------
Net Current Assets 26,052 25,465 24,756
---------- ---------- ----------
Total Assets Less Current 46,654 45,771 45,823
Liabilities
---------- ---------- ----------
Creditors: Amounts falling due after
more than one year
Bank loans and overdrafts (12,330) (14,099) (13,266)
Other creditors (3,927) (3,026) (3,266)
---------- ---------- ----------
(16,257) (17,125) (16,532)
---------- ---------- ----------
Net Assets 30,397 28,646 29,291
====== ====== ======
Capital and Reserves
Called up share capital 19,172 19,123 19,132
Share premium account 40 - 7
Special reserve 308 308 308
Revaluation reserve 607 607 607
Profit and loss account 10,270 8,608 9,237
---------- ---------- ----------
Shareholders' Funds - equity
interest 30,397 28,646 29,291
====== ====== ======
Consolidated Cash Flow Statement
for the 6 months ended 31 October 1997
6 Months 6 Months Year
Ended Ended Ended
31.10.97 31.10.96 30.4.97
#'000 #'000 #'000
Net cash inflow from operating
activities 3,132 3,593 10,321
Returns on investment and
servicing of finance (466) (520) (1,293)
Taxation (108) - 100
Capital expenditure and
financial investment (868) (808) (3,976)
Dividends paid to equity
shareholders (383) - -
---------- ---------- ----------
Cash inflow before management of
liquid resources and financing 1,307 2,265 5,152
Management of liquid resources (38) (144) (308)
Financing (1,653) (7,425) (7,516)
---------- ---------- ----------
Decrease in cash in the period (384) (5,304) (2,672)
====== ====== ======
Consolidated Cash Flow Statement
for the six months ended 31 October 1997
(continued)
6 Months 6 Months Year
Ended Ended Ended
31.10.97 31.10.96 30.4.97
#'000 #'000 #'000
Reconciliation of operating
profit to net cash inflow from
operating activities
Operating profit 2,568 1,886 3,240
Depreciation net of profit on
disposal of fixed assets 1,333 1,047 2,154
Decrease in stocks 325 7,197 6,673
Increase in debtors (14,426) (17,525) (11,776)
Increase in provisions - - 1,300
Increase in creditors 13,332 10,988 8,730
---------- ---------- ----------
Net cash inflow from operating
activities 3,132 3,593 10,321
====== ====== ======
Analysis of net debt
Cash at bank on demand 9,025 6,777 9,409
Cash at bank on short term 3,300 2,455 2,604
deposit
Debt due within one year - - (750)
Debt due after more than one
year (12,330) (14,099) (13,266)
Finance leases (124) (188) (164)
Current asset investments - 643 658
---------- ---------- ----------
Net debt at 31 October 1997 (129) (4,412) (1,509)
====== ====== ======
Reconciliation of cash flows to
movements in net debt
Decrease in cash in the period (384) (5,304) (2,672)
Cash outflows from reduction in
debt and lease financing 1,726 7,425 7,532
Cash outflow from management of
liquid resources 38 144 308
---------- ---------- ----------
Movement in net debt in the
period 1,380 2,265 5,168
Net debt at 1 May 1997 (1,509) (6,677) (6,677)
---------- ---------- ----------
Net debt at 31 October 1997 (129) (4,412) (1,509)
====== ====== ======
Notes to the Interim Accounts
1. Preparation of Interim Accounts
The interim accounts, which relate exclusively to continuing operations,
have been prepared on the basis of the accounting policies set out in the
Group's statutory accounts for the year ended 30 April 1997.
The Group's auditors, Deloitte & Touche, have carried out a review of the
interim accounts, which were approved by the Board of Directors on 6
February 1998, and their report is reproduced on page 11.
The financial information presented is unaudited and does not amount to full
statutory accounts within the meaning of the Companies Act 1985. Full
accounts for the year ended 30 April 1997, upon which Deloitte & Touche gave
an unqualified audit report, have been delivered to the Registrar of
Companies.
2. Segment Information
6 Months 6 Months Year
Ended Ended Ended
31.10.97 31.10.96 30.4.97
#'000 #'000 #'000
Turnover
Contracting 216,336 218,584 394,717
Plant Hire 7,445 6,430 13,009
Commercial Property 310 6,780 13,648
Housing 140 394 601
Intra-group (3,278) (2,961) (12,080)
---------- ---------- ----------
220,953 229,227 409,895
====== ====== ======
Results
Contracting 1,537 1,149 2,124
Plant Hire 734 635 1,074
Commercial Property 281 256 499
Housing 58 (80) (162)
Group Centre (42) (74) (295)
---------- ---------- ----------
Operating profit 2,568 1,886 3,240
Net interest (482) (667) (1,223)
---------- ---------- ----------
Profit on ordinary
activities before taxation 2,086 1,219 2,017
====== ====== ======
3. Taxation
The tax charge for the period is reduced as a result of the release of
deferred tax assets not recognised in prior periods.
4. Dividends on Equity Shares
An interim dividend of 0.3p per ordinary share (1996 - 0.2p) will be paid on
5 May 1998 to shareholders on the register on 3 April 1998.
5. Earnings per Ordinary Share
The calculation of earnings per ordinary share is based on profit of
#1,607,000 (1996: #914,000) and the weighted average of 191,537,960 (1996:
191,231,521) ordinary shares in issue during the period.
Review Report by the Auditors
to Birse Group plc
We have reviewed the interim accounts, for the six months ended 31 October
1997 set out on pages 5 to 10 which are the responsibility of, and have been
approved by, the Directors. Our responsibility is to report on the results
of our review.
Our review was carried out having regard to the Bulletin 'Review of Interim
Financial Information' issued by the Auditing Practices Board. This review
consisted principally of applying analytical procedures to the underlying
financial data, assessing whether accounting policies have been consistently
applied, and making enquiries of management responsible for financial and
accounting matters. The review excluded audit procedures such as tests of
controls and verification of assets and liabilities, and was, therefore,
substantially less in scope than an audit performed in accordance with
Auditing Standards. Accordingly we do not express an audit opinion on the
interim accounts.
On the basis of our review:
- in our opinion the interim accounts have been prepared using accounting
policies consistent with those adopted by Birse Group plc in its financial
statements for the year ended 30 April 1997; and
- we are not aware of any material modifications that should be made to
the interim accounts as presented.
DELOITTE & TOUCHE
Chartered Accountants
10-12 East Parade
Leeds
LS1 2AJ
6 February 1998
END
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