RNS No 4773a
BANDT PLC
5th June 1998
Bandt plc, a provider of scaffolding and other industrial services
to construction and manufacturing businesses throughout the UK,
today announces preliminary results for the year ended 5 April
1998.
Summary
* Operating profit (before exceptionals) increased by 69% to
#7.1m.
* Profit before tax of #5.4m turnaround from loss in prior
year.
* Strategic developments include the acquisition of Fincham
which significantly strengthens our scope in industrial services
and our general market presence in South East England.
* Dividends increased by 27% to 1.4p.
* Gearing remains low at 12%.
* Basingstoke site sold for #3.3m after year end.
Financial highlights 1998 1997
#000 #000
* Operating profit before exceptional items
7,062 4,188
* Profit before tax 5,398 (4,820)
* Earnings per share pre exceptional items 4.3p 1.7p
* Dividends per ordinary share 1.4p 1.1p
* Gearing 12% 7%
Commenting on the results, Bill Andrews, Bandt's Chairman said:
"It has been an encouraging year for the Group, with good trading
results from continuing activities against the background of
completing the transition from our origins in pipeline and steel
products distribution into an expanding industrial services Group.
We anticipate that the Group will continue to progress in the
current year."
For further information, please contact:
Bandt plc (On 5 June 1998) 0171 253 2252
Richard Wilson, Chief Executive (Thereafter) 01256 477760
Dick Rutter, Finance Director
Ludgate Communications 0171 253 2252
Tim Davis
Sarah Harper
CHAIRMAN'S STATEMENT
It has been an encouraging year for the Group, with good trading
results from continuing activities against the background of
completing the transition from our origins in pipeline and steel
products distribution into an expanding industrial services Group.
Operating profit before exceptional items has increased by 69% to
#7.1m. After exceptional items, profit before tax amounted to
#5.4m compared to last year's loss giving earnings of 3.5p per
share after a continuing low tax charge due primarily to the
utilisation of losses brought forward.
Exceptional items comprise the loss on disposal of Brown & Tawse
Steelstock and final costs relating to the 1996/97 disposals as
previously reported and, following receipt of external
professional advice, provision for contingent liabilities on
leasehold properties.
Operating cash flow of #12.4m (1997 - #6.7m) was strong, hence
after capital expenditure of #7.0m and the acquisition of Fincham,
gearing at the year end stood at 12%, leaving significant headroom
to continue investment in Group development in the industrial
services field. In addition, at the end of June 1998, the sale of
the Basingstoke site will be completed with cash proceeds of
#3.3m.
The Board will recommend to the Annual General Meeting a final
dividend of 1.0p per share (1997 0.8p per share), which, together
with the interim dividend of 0.4p per share already paid, would
bring the total for the year to 1.4p compared to 1.1p last year.
Don McFarlane retired from the Board last December having served
the company as Chairman since 1993. This covered a most difficult
trading period and time of strategic change for the Group
requiring all of his patience and wise counsel. The current
year's trading results are the best tribute that can be paid to
his achievements in bringing Bandt into being in its present form.
We wish Don a very long and happy retirement.
I also extend my thanks to my present Board colleagues, the
management and employees of the Group for their contributions to
our results for 1998. We anticipate that the Group will continue
to progress in the current year given a stable economy in our home
markets, albeit perhaps with more volatile conditions in some
export markets.
W G Andrews
Chairman
4 June 1998
REVIEW OF OPERATIONS
Kwikform: The year has been one of considerable change and
progress at Kwikform under the new managing director, John
Singleton, who took up this role on 1 April 1997. In the second
full year of ownership by the Group, Kwikform's revenues grew by
10.1% to #70.3m and the operating profit rose by 10.2% to #6.1m.
In last year's report a number of key objectives were established
for the year under review and in the event good progress was made
in all areas.
The order for the supply of access systems for building
internal tanks in LNG ships in Korea was completed successfully
and a smaller, follow up order secured despite the economic
difficulties in the region.
Revenues derived from the Kwikstage scaffold system grew by
over 12% in the year, underpinned by investment in stock of #2.8m.
Further growth of over 10% is targeted for the 1998/99 year backed
by ongoing investments in hirestock, training, supervision and
yard facilities.
Revenues in the Kwikhire division grew by 29% during the
year. There was further investment in hirestock, one new branch
was opened in Leeds, and the branches in Bristol, Liverpool and
Nottingham relocated. Organic growth of over 12% is targeted for
the 1998/99 year based on further market acceptance of the Lynx
tower and the introduction of other new products.
The company's leading position in contract scaffolding
services was further enhanced through the creation of a separate
division to focus on the industrial sector, changes in management
within the townwork division, and further investment in stock and
engineering support, particularly for Kwikstage. We invested in a
25% increase in employee training through existing courses whilst
also widening the range of internal courses to be offered in the
future.
The percentage margin on sales (before allocation of group
overhead costs) increased by 0.7%age points in 1997/98 through
improved contract control processes, key management changes,
benchmarking of branch performance, changes in work mix towards
higher margin activities and joint initiatives with customers in
the industrial sector. There is still no real evidence that
market prices have assisted in this improved performance, but the
company did benefit from the mild winter conditions, facilitating
an improved performance in the fourth quarter.
In general terms the market for the company's townwork contract
scaffolding services is reasonably good, and in these areas the
order book is significantly higher than at the beginning of the
year. The outlook for the formwork/falsework division is less
good given the cutbacks in infrastructure spending and delays in
the Channel Tunnel Rail Link project. New products will be
introduced in this division to improve the company's share of the
market, particularly in the supply of panel products, and a
special projects engineering team will be established from
existing resources to focus on more complex customer requirements
and niche market sectors.
Other key objectives for Kwikform during the 1998/99 year will be
to:
Strengthen the company's presence in the industrial sector by
opening new operational bases and by offering multi-discipline
services in conjunction with Fincham.
Strengthen the company's presence in the townwork market
through in-fill acquisitions, particularly in the southern part of
the country.
Reorganise the logistics structure to provide a significantly
more cost effective site service, with some benefits accruing in
1998/99 but mainly in 1999/2000.
Continue ongoing market tests into the opportunities for the
supply of powered access solutions and, if appropriate, invest in
the relevant equipment.
Continue to review opportunities for overseas expansion
initially in Northern Europe including the Benelux countries.
Fincham: Fincham Industrial Services Ltd was purchased on 2
October 1997 for a total consideration of #7.3m, in order to
strengthen the Group's presence in the industrial services sector
in general, and in the south east in particular. The company is a
leading supplier to industrial processing businesses in the south
east of thermal insulation, scaffolding, sheeting and cleaning
services, with over half its revenues derived from term
maintenance contracts.
In the period since the acquisition the company has delivered an
operating profit of #0.7m on sales of #3.3m, and has benefited
from the Group's additional financial resources by reporting
fourth quarter sales over 60% above those for the corresponding
period in the prior year. In the same period the company, managed
by the former owners, has defined a strategic plan which will see
the separate development of each of the key service elements as
well as the provision of multi-discipline services where required.
The combination of additional financial resources and the focussed
service plan has facilitated the growth in business, much of which
is derived from 'blue chip' customers using the company's services
for the first time.
In the year ahead the key objectives for the company will be to:
Grow annualised revenues by over 20% through further market
penetration in the south east.
Make bolt-on acquisitions to strengthen the company's
presence in the industrial services sector.
Establish a trading operation with Kwikform in the north east
to benefit from the complementarity of Kwikform's strength in
scaffolding and Fincham's strength in thermal insulation in
particular.
Bandt Properties: The portfolio of freehold and long leasehold
properties was valued at 5 April 1998 at #14.7m, a net increase of
#1.1m compared with the previous year end due mainly to the
increase in value of the Dundee site following the receipt of
planning permission for change to non-food retail use. As
previously noted the business is a non-core activity and we will
dispose of these properties on an opportunistic basis. We
announced on 1 June 1998 the sale of the long leasehold property
in Basingstoke for #3.3m, marginally above the net book value, and
there are realistic expectations for the disposal over the next
two financial years of properties at Dundee, Aintree, Greenford,
Renfrew and possibly West Gorton, Manchester. At 5 April 1998
these properties were valued at a total of #4.8m.
Also, as noted last year we will seek to maximise the rental
income from these and the other properties in the short to medium
term pending their disposal. Following the sale of the Brown &
Tawse pipeline equipment distribution business in January 1997,
and after a one year rent free period, the purchaser of that
business has entered into 10 year lease arrangements in respect of
the properties at West Horndon and Sheffield in addition to the
existing lease at Cardiff.
During the year under review Bandt Properties generated, prior to
exceptional operating costs, an operating profit of #0.3m on
revenues of #0.7m and will benefit in 1998/99 from an incremental
nine months revenue from the new 10 year leases. Following
receipt of external professional advice, the potential cost of
possible rental gaps and potential dilapidations in respect of its
leasehold properties has been assessed. The provision for such
cost is the principal part of the exceptional operating cost of
#1.0m for vacant property provisions.
REVIEW OF DISCONTINUED OPERATIONS
Brown & Tawse Steelstock: As noted in the interim results
statement, this business was sold to its management on 18 July
1997. The business reported a trading loss of #0.1m during the
period of the Group's ownership in 1997/98. A small loss was
recorded on the sale which is reported under 'exceptional items'
in the Group profit and loss account for the year together with
other final costs relating to the major disposals in 1996/97.
Richard Wilson
Chief Executive
4 June 1998
Consolidated Profit and Loss Account (Unaudited)
for the year ended 5 April 1998
Continuing Discontinued 1998 1997
operations operations #000 #000
Turnover (notes 1 & 2)
Existing Businesses 70,990 3,019 74,009 120,679
Acquisitions 3,316 - 3,316 -
_________________________________ _______
74, 306 3,019 77,325 120,679
================================= ========
Operating profit/(loss)
before exceptional costs
(notes 1 & 2)
Existing Businesses 6,447 (60) 6,387 4,188
Acquisitions 675 - 675 -
_________________________________ ________
Exceptional operating costs 7,122 (60) 7,062 4,188
Vacant property provisions
(note 1) (980) - (980) (1,308)
_________________________________ ________
Exceptional items 6,142 (60) 6,082 2,880
Loss on disposal of businesses
- net tangible assets - (212) (212) (1,892)
- goodwill previously written off
against reserve - - - (4,436)
_________________________________ ________
Profit/)loss) on ordinary activities
before Interest 6,142 (272) 5,870 (3,448)
====================
Interest (payable)/receivable and
similar charges (472) (1,372)
_______ _______
Profit/(loss) on ordinary activities
before tax 5,398 (4,820)
Tax on ordinary activities (537) (412)
________ _______
Profit/(loss) on ordinary activities
after tax 4,861 (5,232)
Dividends (1,956) (1,538)
________ _______
Retained profit/(loss) for the year 2,905 (6,770)
======= ========
Pence/ Pence/
Earnings/(loss) per ordinary share share share
(note 4) 3.5 (3.7)
====== ======
Earnings per ordinary share before
exceptional items (note 4) 4.3 1.7
====== ======
Statement of Total Recognised Gains and Losses
1998 1997
#000 #000
Profit/(loss) on ordinary activities after tax 4,861 (5,232)
Unrealised surplus/(deficit) on revaluation
of properties 649 (39)
_______ _______
Total recognised gains and losses relating
to the year 5,510 (5,271)
======= =======
Consolidated Balance Sheet (Unaudited)
as at 5 April 1998
1998 1997
#000 #000
Fixed assets
Tangible assets 37,376 33,985
Investment in own shares 582 624
_______ _______
37,958 34,609
_______ _______
Current Assets
Stocks 1,881 2,930
Debtors 17,506 19,128
Cash 276 18
_______ _______
19,663 22,076
Creditors due within one year (19,819) (18,491)
_______ _______
Net current (liabilities)/assets (156) 3,585
_______ _______
Total assets less current liabilities 37,802 38,194
_______ _______
Creditors due after one year (2,803) -
Provisions for liabilities and charges (1,856) (1,228)
_______ _______
Net assets 33,143 36,966
======= =======
Capital and reserves
Called up share capital 7,108 7,108
Revaluation reserve 10,338 9,691
Special reserve 27,979 35,356
Profit and loss account (12,282) (15,189)
_______ _______
33,143 36,966
======= =======
Comprising:
Equity shareholders'funds 33,073 36,896
Non-equity shareholders' funds 70 70
_______ _______
33,143 36,966
====== =======
Gearing % 12 7
Reconciliation of movements in shareholders'
funds
Profit/(loss) for the year 4,861 (5,232)
Dividends (1,956) (1,538)
_______ _______
2,905 (6,700)
Other recognised gains and losses
relating to the year 649 (39)
Goodwill transferred to the profit
and loss account on disposal of businesses - 4,436
Goodwill arising on acquisition (7,377) -
_______ _______
Net reduction in funds (3,823) (2,373)
Opening shareholders' funds 36,966 39,339
_______ _______
Closing shareholders' funds 33,143 36,966
======= =======
Consolidated Summary Cash Flow Statement (Unaudited)
for the year ended 5 April 1998
1998 1997
#000 #000
Net cash inflow from operating activities
(note 5) 12,385 6,734
Net cash outflow from returns on
investments and servicing of finance (275) (1,629)
Taxation (888) (279)
Capital expenditure and financial
investment (6,966) (7,886)
Acquisitions and disposals
Sale of businesses 2,920 17,109
Purchase of subsidiaries (see note 2) (2,743) (500)
_______ _______
177 16,609
Equity dividends paid (1,674) (1,535)
_______ _______
Cash inflow before management of
liquid resources and financing 2,759 12,014
Financing
Repayment of loans under bank facility - (13,000)
Repayment of principal under
finance leases (109) (675)
_______ _______
(109) (13,675)
_______ _______
Increase/(decrease) in cash in the period 2,650 (1,661)
======= =======
Notes
1. Profit and loss note
Analysis of the Group's turnover and operating profit by class
of business
1998
Operating Net
Turnover profit/(loss) assets
#000 #000 #000
Continuing activities
Contracting and hire 73,626 6,796 26,451
Property investments 680 (654) 12,561
Central net assets 147
__________________________________
74,306 6,142 39,159
Discontinued activities
Stockholding and distribution 3,019 (60)
__________________________________
Total activities 77,325 6,082 39,159
=======================
Tax and dividends (2,083)
Cash less loan notes and finance leases (3,959)
Net deferred consideration receivable 26
______
Total assets employed 33,143
======
1997
Operating Net
Turnover profit/(loss) assets
#000 #000 #000
Continuing activities
Contracting and hire 63,886 5,556 24,733
Property investments 129 (1,249) 12,257
Central net assets 301
__________________________________
64,015 4,307 37,291
Discontinued activities
Stockholding and distribution 56,664 (1,427) 2,234
__________________________________
Total activities 120,679 2,880 39,525
=======================
Tax and dividends (1,527)
Cash less loan notes and finance leases (2,485)
Net deferred consideration receivable 1,453
______
Total assets employed 36,966
======
The 1997 net assets have been restated primarily to split out
the deferred consideration receivable from operating assets.
The operating loss of the property investments activities in
1998 (and 1997) includes provisions made for future losses on the
leasehold properties. Following receipt of professional external
advice, the provision now includes an estimate for contingent
leasehold property liabilities (in particular likely future losses
when currect sub-leases come to an end, prior to subletting and
potential dilapidation costs) in addition to the provision made
in 1997 for contractual liability when leasehold properties are
sublet at rents below the passing rent or vacant with no rental
income. These costs are shown as 'vacant property provisions',
an exceptional operating cost:-
1998
#000
Vacant property provisions (980)
============
Half year analysis of continuing activities
1998
1st Half 2nd Half Year
#000 #000 #000
Turnover
Contracting and hire 35,616 38,010 73,626
Property investments 252 428 680
______________________________
35,868 38,438 74,306
==============================
Operating profit/(loss)
Contracting and hire 3,168 3,628 6,796
Property investments 66 260 326
Vacant property provision (132) (848) (980)
______________________________
3,102 3,040 6,142
==============================
1997
#000
Vacant property provisions (1,308)
============
Half year analysis of continuing activities
1997
1st Half 2nd Half Year
#000 #000 #000
Turnover
Contracting and hire 32,315 31,571 63,886
Property investments - 129 129
______________________________
32,315 31,700 64,015
==============================
Operating profit/(loss)
Contracting and hire 3,115 2,441 5,556
Property investments - 59 59
Vacant property provision - (1,308) (1,308)
______________________________
3,115 1,192 4,307
==============================
Half year analysis of profits before tax
1998
1st Half 2nd Half Year
#000 #000 #000
Operating profit/(loss)
Continuing activities 3,102 3,040 6,142
Discontinued activities (60) - (60)
______________________________
3,042 3,040 6,082
Exceptional items
Loss on disposal of businesses (200) (12) (212)
Interest (162) (310) (472)
_______________________________
Profit/(loss) before tax 2,680 2,718 5,398
===============================
Half year analysis of profits before tax
1997
1st Half 2nd Half Year
#000 #000 #000
Operating profit/(loss)
Continuing activities 3,115 1,192 4,307
Discontinued activities (880) (547) (1,427)
______________________________
2,235 645 2,880
Exceptional items
Loss on disposal of businesses - (6,328) (6,328)
Interest (798) (574) (1,372)
_______________________________
Profit/(loss) before tax 1,437 (6,257) (4,820)
===============================
2. Acquisition note
The results of the contracting and hire activities include the
following contribution from the acquisition of Fincham Industrial
Services Ltd on 2 October 1997, prior to interest costs of #286,000:-
1998
1st Half 2nd Half Year
#000 #000 #000
Contribution from acquistion
Turnover - 3,316 3,316
======================================
Operating Profit - 675 675
======================================
On 2 October 1997 the Company's subsidiary, Bandt Holdings Ltd,
acquired the whole of the issued share capital of Fincham
Industrial Services ltd for a total condsideration of #7,325,000.
#2,625,000 of the consideration was paid at completion, #300,000
was paid in May 1998 and #4,200,000 was satisfied by the issue of
guaranteed unsecured loan notes which are redeemable in
three equal instalments of #1,400,000 on the first three an
niversaries of completion plus there were costs of #200,000.
#82,000 to the net assets acquired were in the form of cash.
3. Tax note
The Group's tax charge should be reduced by some #4m over the
next four years due primarily to losses brought forward, capital
allowances not claimed and ACT previously written off.
4. Earning per share note
The earnings per share have been calculated on the profit after
tax and preference dividends in each period and on 139,490,965
(1996/97 139,490,965) ordinary shares, being the number of
ordinary shares in issue and ranking for dividend during the
period, excluding those held in the ESOT (1, 265,000 ordinary
shares).
An alternative measure of earning per share, excluding
exceptional items, is set out below:
1998 1997
Pence Pence
per share per share
Earnings per share (net basis) 3.5 (3.7)
Vacant property provisions 0.7 0.9
Loss on disposal of business assets 0.1 1.3
Loss in respect of goodwill previously
written off - 3.2
________ ________
Earnings per share
excluding exceptionals 4.3 1.7
======= ========
5. Cash flow note
1998 1997
Reconciliation of operating profit to
net cash inflow from operating activities #'000 #'000
Operating profit 6,082 2,880
Depreciation on tangible fixed assets 4,757 5,478
Write down of investment in own shares 42 47
Loss/(profit) on disposal of tangible fixed assets 46 (15)
Increase in stocks (211) (630)
Increase in debtors (777) (1,887)
Increase/(decrease) in creditors 1,916 (116)
Increase in provisions for liabilities and charges 530 977
_____ _____
Net cash inflow from operating activities 12,385 6,734
===== =====
Movements
Net debt Cash flow Other non Net debt
1997 cash changes 1998
Analysis of net debt
and movements #'000 #'000 #'000 #'000
Cash in hand, at bank 18 258 - 276
Overdrafts (2,392) 2,392 - -
_____
Increase in cash in the period 2,650
Debt due within one year - - (1,400) (1,400)
Debt due after one year - - (2,800) (2,800)
Finance leases (111) 109 (33) (35)
_____ _____ _____ ______
Total (2,485) 2,759 (4,233) (3,959)
===== ===== ===== =====
1998 1997
Reconciliation of net cash
flow to movement in net debt #'000 #'000
Cash inflow before management of liquid
Resources and financing 2,759 12,014
Loan notes issued upon acquisition (4,200) -
New finance leases (24) (10)
Finance leases transferred on disposals
and (acquisition) (9) 885
_____ _____
Movement in net debt in the period (1,474) 12,889
===== =====
6. Reporting note
This Preliminary Report has been prepared in accordance with the
accounting policies adopted in the latest published accounts and
has been agreed with the company's auditors. The auditors have
not yet completed their audit for the current year.
The figures relating to the full year ended 6 April 1997 have
been extracted from the latest published accounts which have
been delivered to the Registrar of Companies with an unqualified
audit report.
The Preliminary Report was approved by the Board of Directors on
4 June 1998. It is available to the public from this date at
the Registered Office of the Company, Kingsway West, Dundee DD3
8SF or from the Company Secretary at Armstrong Road,
Basingstoke, Hampshire, RG24 8NU. It will also be available
from 8 June 1998, on Bandt's internet site at
www.bandtplc.co.uk.
END
FR FCQCPKDKBPAK
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