RNS No 9615x
BIRSE GROUP PLC
7th July 1998
Contact: Peter Birse, Chairman
Birse Group plc Tel: 01652 633 222
Charles Watson
Financial Dynamics Tel: 0171 831 3113
PRELIMINARY RESULTS
FURTHER PROGRESS & INCREASED PROFITS
* Pre-tax profit up to #5.162m (1997: #2.017m)
* Earnings per share increased to 2.1p (1997: 1.1p)
* Net cash balances of #7.5m at year end (1997: net debt of
#2m)
* Total dividend for the year of 0.8p per share (1997: 0.5p)
Commenting on the results, Chairman Peter Birse, said:
This improved performance is largely attributable to our
strategy of focusing on business with an acceptable risk /
reward profile. Management will continue its drive to improve
margins and consolidate its premier position in the market for
partnered work."
Chairman's Statement
I am pleased to report a further increase in profit for the year
under review. Profit before tax for the year was #5.162million,
up from #2.017million in 1996/97. Although this represents an
increase of 156% I regard the margin as inadequate in relation
to the risk and management effort inherent in the business. I
am, however, confident that there is considerable scope for
further improvement.
Turnover for the year increased by over 8% to #444million.
Operating profit improved to #6.019million from #3.24million
underpinned by stronger performances from our core construction
and plant hire businesses. The #0.721million operating profit
returned by our commercial property operations is consistent
with our stated objective of achieving a profitable withdrawal
from this sector.
At the end of the year under review the Group had net cash of
#7.5million compared to net debt of #2.0million at 30 April
1997. This represents very satisfactory progress and is
representative of a continuing positive trend. However, we do
not expect the net cash position to recur on an ongoing basis
until we make further progress on settling long term contract
accounts and on completing the sale of our remaining property
portfolio.
The order book at the end of June 1998 was at approximately the
same level as June 1997. I would, therefore, expect turnover in
the current year to be around the same or perhaps slightly
higher than the year under review. However, in the medium term
the focus is very much on improving margins rather than
significantly increasing turnover.
Birse Construction increased turnover by 10% to #435million.
Operating profit increased from #2.124million to #4.105million
equating to a net margin of slightly below 1% which is
supportive of my earlier comments that there is considerable
scope for improvement.
The Process Engineering division made excellent progress and has
established a rapidly expanding presence in the industrial
sector to complement its leading position in the water industry.
Whilst early indications were that the volume of available
partnered work appeared to be levelling off, the first half of
1998 has seen a resurgence of interest by clients in alternative
procurement methods and I am now confident that we are set to
benefit from our premier position in this sector of the market.
Our ongoing cultural change and 'Birse Way' project continues to
develop and strengthen our senior management teams and I am
particularly confident that the people leading the business will
continue to underwrite its successful development for some time
to come.
Our plant hire company, BPH Equipment, increased operating
profit by 9% to #1.165million. BPH has recently established a
new Site Services operation and purchased ten additional 50-80
tonne capacity hydraulic cranes. Consequently, I expect more
significant progress in the coming year.
Commercial Property increased profits from #0.499million to
#0.721million and prospects remain favourable for showing
further profits on disposal of the remainder of the portfolio.
The net cash position of #7.5million at the year end is
encouraging. Whilst I expect to see a further reduction in the
interest charge during 1998/99 I do not anticipate a move into a
permanent positive cash position until sometime in the second
half of the financial year.
I am pleased that the Directors are able to recommend payment of
a final dividend of 0.5p per ordinary share giving a total of
0.8p per ordinary share for the year against 0.5p in 1996/97.
I look forward to the coming year and the further rewards it
will bring to shareholders as progress is made in the
implementation of our strategy of concentrating on business with
an acceptable risk/reward profile, empowering staff and forging
closer relationships with customers and suppliers.
Peter M Birse
Chairman
7 July 1998
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 April 1998
1998 1997
Note #'000 #'000
Turnover 1 444,342 409,895
Cost of sales (419,452) (390,464)
---------- ----------
Gross profit 24,890 19,431
Administrative expenses (18,871) (16,191)
---------- ----------
Operating profit 1 6,019 3,240
Net interest (857) (1,223)
---------- ----------
Profit on ordinary activities
before taxation 5,162 2,017
Taxation 2 (1,069) 100
---------- ----------
Profit for the financial year 4,093 2,117
Dividends on equity shares 3 (1,534) (957)
---------- ----------
Transferred to reserves 2,559 1,160
====== ======
Earnings per ordinary share 4 2.1p 1.1p
====== ======
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 1998
1998 1997
#'000 #'000
Fixed assets
Tangible assets 15,094 13,417
Investments 6,400 7,650
---------- ----------
21,494 21,067
---------- ----------
Current assets
Stocks 5,012 5,552
Debtors 140,818 128,813
Investments - 658
Cash at bank and in hand 19,463 12,013
---------- ----------
165,293 147,036
---------- ----------
Creditors: Amounts falling due within (138,012) (122,280)
one year
---------- ----------
Net current assets 27,281 24,756
---------- ----------
Total assets less current liabilities 48,775 45,823
Creditors: Amounts falling due after
more than one year (16,594) (16,532)
Provisions for liabilities and charges (250) -
---------- ----------
Net assets 31,931 29,291
====== ======
Capital and reserves
Called up share capital 19,177 19,132
Share premium account 43 7
Special reserve 308 308
Revaluation reserve 607 607
Profit and loss account 11,796 9,237
---------- ----------
Shareholders' funds - equity interest 31,931 29,291
====== ======
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 April 1998
1998 1997
#'000 #'000 #'000 #'000
Net cash inflow from operating 13,964 10,321
activities
Returns on
investments and
servicing of finance
Interest received 433 345
Interest paid
(1,295) (1,617)
Interest element of
finance lease rentals
and hire purchase
contracts (23) (21)
---------- ----------
Net cash outflow from
returns on
investments and
servicing of finance (885) (1,293)
Taxation
UK Corporation tax
(paid)/received
(including advance
corporation tax) (252) 100
Capital expenditure and financial
investment
Purchase of tangible fixed
assets (4,465) (4,378)
Sale of tangible fixed assets 162 402
Sale of fixed asset
investments 1,250 -
------- ----------
Net cash outflow from investing
activities (3,053) (3,976)
Dividends paid to equity shareholders (957) -
-------- --------
Cash inflow before management
of liquid resources and
financing 8,817 5,152
Management of liquid
resources
Purchase of current asset
investments - (40)
Sale of current asset
investments 658 -
Movement in short term cash
deposits (974) (268)
------- ----------
Net cash outflow from
management of liquid
resources (316) (308)
Financing
Issue of ordinary shares 81 16
Loan repayments (2,034) (7,468)
Capital element of finance
lease rentals and hire
purchase contracts (72) (64)
------- ----------
Net cash outflow from
financing (2,025) (7,516)
-------- --------
Increase/(decrease) in cash in the
year 6,476 (2,672)
====== ======
NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS
for the year ended 30 April 1998
1. Segment information
(a) Turnover and results
Turnover Operating profit
1998 1997 1998 1997
#'000 #'000 #'000 #'000
Contracting 434,995 394,717 4,105 2,124
Plant hire 14,655 13,009 1,165 1,074
Commercial
property 900 13,648 721 499
Housing 140 601 58 (162)
Group centre - - (30) (295)
Intra-group (6,348) (12,080)
---------- ---------- ---------- ----------
444,342 409,895 6,019 3,240
====== ======
Net interest (857) (1,223)
---------- ----------
Profit on ordinary
activities before
taxation 5,162 2,017
====== ======
(b) Net assets 1998 1997
#'000 #'000
Contracting 7,620 13,822
Plant hire 7,875 6,328
Commercial
property 12,237 13,743
Housing 17 106
Group centre (767) (1,584)
---------- ----------
26,982 32,415
Unallocated net
assets/(liabilities)
4,949 (3,124)
---------- ----------
31,931 29,291
====== ======
The above analysis reflects the segments by which the Group is
managed. All turnover arises from work performed within the
United Kingdom.
1998 1997
#'000 #'000
Unallocated net assets/(liabilities)
comprise:
Net cash at bank/(bank borrowings) 7,481 (2,003)
Obligations under finance leases and
hire purchase contracts (181) (164)
Corporation tax (567) -
Deferred tax (250) -
Dividends payable on equity shares (1,534) (957)
---------- ----------
4,949 (3,124)
====== ======
Net assets for each segment represents non-interest bearing
operating assets less non-interest bearing operating
liabilities.
2. Taxation
1998 1997
#'000 #'000
United Kingdom corporation tax at 31% (819) -
(1997: 33%)
Deferred tax (250) -
---------- ----------
(1,069) -
Adjustments to prior years' tax
provision
Corporation tax - 100
---------- ----------
(1,069) 100
====== ======
The tax charge for the year is reduced below the expected rate
of 31% as a result of timing differences not previously
recognised for deferred tax purposes net of certain expenditure
disallowed for corporation tax.
3. Dividends on equity shares
1998 1997
#'000 #'000
Interim 0.3p per ordinary share 574 383
(1997 - 0.2p)
Final proposed 0.5p per ordinary 960 574
share (1997 - 0.3p)
---------- ----------
1,534 957
====== ======
The interim dividend was paid on 5 May 1998. Subject to the
approval of shareholders at the Annual General Meeting the final
dividend will be paid on 5 November 1998 to shareholders
appearing on the register at the close of business on 2 October
1998.
4. Earnings per ordinary share
The calculation of earnings per ordinary share is based on
profits of #4,093,000 (1997: #2,117,000) and on the weighted
average of 191,653,062 (1997: 191,261,655) ordinary shares in
issue during the year.
5. Net cash at bank/(bank borrowings)
1998 1997
#'000 #'000
Net cash at bank/(bank borrowings)
comprise:
Cash at bank - on demand 15,885 9,409
- on short term deposit 3,578 2,604
Bank loans and overdrafts:
Due within one year - (750)
Due after one year (11,982) (13,266)
---------- ----------
7,481 (2,003)
====== ======
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
1998 upon which Deloitte & Touche have given an unqualified
audit report will be filed with the Registrar of Companies in
due course.
END
FR UBUBAMBGRGMQ
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