RNS No 5117n
BIRSE GROUP PLC
16th July 1999
Contacts:
Peter Watson, Chief Executive
Martin Budden, Finance Director
Birse Group plc
Telephone: 01652 633222
Charles Watson / Tom Baldock
Financial Dynamics
Telephone: 0171 831 3113
BIRSE GROUP PLC
PRELIMINARY RESULTS
Birse Group plc, the leading UK construction group, today
announces results for the year ended 30 April 1999.
These may be summarised as follows:
- Recovery in pre-tax profits for the full year to #2.2 m (1998:
#5.2 m) following first half loss of #1.9 m.
- Management strengthened with the appointment of Peter Watson as
Group Chief Executive; Peter Birse to become non-executive
Chairman.
- Property disposals of #3.6 m in the year supplemented by the
sale of the investment property at Epping for #5.1 m subsequent to
year end.
- Total dividend for the year maintained at 0.8 pence per share.
Commenting on the results, Chairman Peter Birse said:
"Following a difficult first half, management's determination to
focus on work offering acceptable margins and reliable cash flows
has delivered a much improved second half performance.
I am also delighted to announce the appointment of Peter Watson as
Group Chief Executive, a move that greatly strengthens our
management team and underpins my confidence in the medium and long
term prospects for Birse."
CHAIRMAN'S STATEMENT
At the interim stage I had to report a pre-tax loss of
#1.861million but I also stated that my belief in the Group's
medium and longer term prospects remained undiminished.
I am now pleased to provide tangible support for that confidence
by reporting a recovery of pre-tax profits for the full year to
#2.189million. These results, however, still do not adequately
reflect the quality of business that your Group continues to move
towards. Turnover for the year at #358million was #86million
lower than the previous year. The reduction in turnover is mainly
due to the application of more stringent criteria in the selection
of work process, reflecting Birse Construction's move towards
improved quality of business whilst reducing the associated risks.
This is consistent with your Group's strategy to increase its
focus on improving margins. I believe that this strategy will
ultimately produce strong performances from our core construction
business, which is now set to operate at improved levels of
activity.
Operating costs were reduced in pursuit of more efficient
performance. The reduction in personnel resulted in redundancy
and associated costs of #0.5million all of which was incurred in
the first half of the year, with some savings benefit flowing
through into the second half.
The net bank debt position at the year end was #5.3million
compared with net cash of #7.5million at 30 April 1998. Average
debt levels during the year were also higher. The increased
utilisation of cash by the Group was due to the reduction in
activity levels and the increased investment needed by BPH
Equipment Limited. The ongoing disposal of our commercial
property portfolio continues to generate cash and contribute to
Group profits. There were further disposals at Warrington and of
the investment property at Crawley; subsequent to the year end the
investment property at Epping has been sold for #5.1million.
During the year BPH carried the costs of new equipment without
benefiting from the commensurate increases in revenue. The recent
performance is unsatisfactory and the focus of the plant hire
operation has been realigned as a result of which I look forward
to improved levels of performance and a better return on our
investment.
Management has been further strengthened to ensure the successful
implementation of the Group's strategies. I take this opportunity
to announce the appointment of Peter Watson as Group Chief
Executive and the simultaneous change in my own role to that of
non executive Group Chairman. Peter's appointment provides
additional broad based business strength to our Group management
team, and is the first step in my succession plan. The
appointment during the year of John Elders, Managing Director of
Birse Construction, to the Group board adds further depth to the
Group's construction expertise. We have appointed Heather
Appleford as Finance Director of Birse Construction Limited, which
allows Martin Budden, our Group Finance Director to make a more
powerful contribution to the management of the Group.
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 which is in line with 1997/1998.
Prospects
The focus of the Group's construction activities continue to be
concentrated upon those client relationships offering acceptable
margins and reliable cash flows, and the settlement of outstanding
long term contract accounts. In plant hire BPH's activities will
be confined to those earning an acceptable return on capital
employed. With regard to our property interests, all that now
remains to be achieved is the optimum realisation of the profit
inherent in the Warrington site.
I believe that the pursuit of these strategic objectives will
ultimately eliminate debt and provide an appropriate return to our
shareholders.
P M BIRSE, Chairman
16th July 1999
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 April 1999
Note 1999 1998
#'000 #'000
Turnover 1 357,525 444,342
Cost of sales (334,128) (419,452)
Gross profit 23,397 24,890
Administrative expenses (19,715) (18,871)
Operating profit 1 3,682 6,019
Net interest (1,493) (857)
Profit on ordinary activities 1 2,189 5,162
before taxation
Taxation 2 (158) (1,069)
Profit for the financial year 2,031 4,093
Dividends on equity shares 3 (1,542) (1,534)
Transferred to reserves 489 2,559
Earnings per ordinary share - basic 4 1.1p 2.1p
- diluted 4 1.1p 2.1p
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 1999
1999 1998
#'000 #'000
Fixed Assets
Tangible assets 16,469 15,094
Investments 5,091 6,400
21,560 21,494
Current Assets
Stocks 4,415 5,012
Debtors 125,137 140,818
Cash at bank and in hand 3,856 19,463
133,408 165,293
Creditors: Amounts falling due (117,488) (138,012)
within one year
Net Current Assets 15,920 27,281
Total Assets Less Current 37,480 48,775
Liabilities
Creditors: Amounts falling due after
more than one year (4,848) (16,594)
Provisions for Liabilities and (100) (250)
Charges
Net Assets 32,532 31,931
Capital and Reserves
Called up share capital 19,239 19,177
Share premium account 93 43
Special reserve 308 308
Revaluation reserve 607 607
Profit and loss account 12,285 11,796
Shareholders' Funds - equity 32,532 31,931
interest
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 April 1999
1999 1998
#'000 #'000 #'000 #'000
Net cash (outflow)/inflow from (6,755) 13,964
operating activities
Returns on investments and
servicing of finance
Interest received 313 433
Interest paid (1,597) (1,295)
Interest element of finance
lease rentals and hire (36) (23)
purchase contracts
Net cash outflow from returns
on investments and servicing (1,320) (885)
of finance
Taxation
UK Corporation tax paid (803) (252)
(including advance corporation
tax)
Capital expenditure and
financial investment
Purchase of tangible fixed (4,391) (4,465)
assets
Purchase of fixed asset (349) -
investments
Sale of tangible fixed assets 248 162
Sale of fixed asset 2,061 1,250
investments
Net cash outflow from (2,431) (3,053)
investing activities
Dividends paid to equity (1,537) (957)
shareholders
Cash (outflow)/inflow before
management of liquid resources (12,846) 8,817
and financing
Management of liquid resources
Sale of current asset - 658
investments
Movement in short term cash 742 (974)
deposits
Net cash inflow/(outflow) from
management of liquid resources 742 (316)
Financing
Issue of ordinary shares 112 81
Loan advances 1,600 -
Loan repayments (4,442) (2,034)
Capital element of finance
lease rentals and hire (31) (72)
purchase contracts
Net cash outflow from (2,761) (2,025)
financing
(Decrease)/increase in cash in (14,865) 6,476
the year
NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS
for the year ended 30 April 1999
1.Segment information
(a)Turnover and results
Turnover Operating profit
1999 1998 1999 1998
#'000 #'000 #'000 #'000
Contracting 346,386 434,995 1,877 4,105
Plant hire 14,331 14,655 472 1,165
Commercial property 3,582 900 1,479 721
Housing 41 140 - 58
Group centre - - (146) (30)
Intra-group (6,815) (6,348) ______- ______-
357,525 444,342 3,682 6,019
Net interest (1,493) (857)
Profit on ordinary
activities before 2,189 5,162
taxation
(b)Net assets
1999 1998
#'000 #,000
Contracting 20,647 7,620
Plant hire 9,866 7,875
Commercial property 9,593 12,237
Housing - 17
Group centre (429) (767)
39,677 26,982
Unallocated net (liabilities)/assets (7,145) 4,949
32,532 31,931
The above analysis reflects the segments by which the Group is
managed. All turnover arises from work performed within the
United Kingdom.
1999 1998
#'000 #'000
Unallocated net (liabilities)/assets
comprise:
Net (bank borrowings)/cash at bank (5,284) 7,481
Obligations under finance leases and (150) (181)
hire purchase contracts
Corporation tax (72) (567)
Deferred tax (100) (250)
Dividends payable on equity shares (1,539) (1,534)
(7,145) 4,949
Net assets for each segment represents non-interest bearing
operating assets less non-interest bearing operating liabilities.
2.Taxation
1999 1998
#'000 #'000
United Kingdom corporation tax at 31% (286) (819)
(1998: 31%)
Deferred tax 150 (250)
(136) (1,069)
Adjustment to prior years' tax
provision
Corporation tax (22) _____-
(158) (1,069)
The tax change 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
1999 1998
#'000 #'000
Interim 0.3p per ordinary share (1998 577 574
- 0.3p)
Final proposed 0.5p per ordinary 965 960
share (1998 - 0.5p)
1,542 1,534
The interim dividend was paid on 4 May 1999. Subject to the
approval of shareholders at the Annual General Meeting the final
dividend will be paid on 4 November 1999 to shareholders appearing
on the register at the close of business on 1 October 1999.
4.Earnings per ordinary share
1999 1998
#'000 #'000
Earnings for basic and diluted
earnings per share calculation 2,031 4,093
1999 1998
Thousands Thousands
Weighted average number of shares
used in basic earnings per share 192,322 191,653
calculation
Dilutive effect of options - 852
______ ______
Weighted average number of shares
used in fully diluted earings per 192,322 192, 505
share calculation
The resultant earnings per share figures have been calculated in
accordance with the requirements of Financial Reporting Standard
14: Earnings per Share.
5.Net (bank borrowings)/cash at bank
1999 1998
#'000 #'000
Net (bank borrowings)/cash at bank
comprise:
Cash at bank - on demand 1,020 15,885
- on short term deposit 2,836 3,578
Bank loans and overdrafts:
Due within one year (8,338) -
Due after one year (802) (11,982)
(5,284) 7,481
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 have been filed with the Registrar of Companies. Full
accounts for the year ended 30 April 1999 upon which Deloitte &
Touche have given an unqualified audit report will be filed with
the Registrar of Companies in due course. Neither report
contained statements under Section 237 (2) or (3) of the Companies
Act 1985.
END
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