RNS No 3701h
BANDT PLC
7 June 1999
BANDT PLC
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 4 April 1999.
HIGHLIGHTS
1999 1998 Change
# #
* Operating profit 7.9m 6.1m +29%
* Profit before tax 7.7m 5.4m +43%
* Earnings per share 5.1p 3.5p +46%
* Dividend per share 1.7p 1.4p +21%
* Gearing ungeared 12% -
Bill Andrews, Chairman, comments:-
"It is pleasing to be able to report another encouraging
year for the Group, with improved profits, earnings and
cash flow and also the completion of the reorganisation
of our continuing activities into two operating
companies, Kwikform focussed on the Construction Sector
and FK Multiservices on the Industrial Sector.
"With this new ability to offer integrated
multidiscipline industrial services packages to our
clients and continuing firm demand from the construction
market for Kwikform, we have entered the new trading year
with confidence."
For further information, please contact:-
Bandt plc
Richard Wilson, Chief Executive On 7 June: 0171 253 2252
Dick Rutter, Finance Director thereafter: 01256 477 760
Ludgate Communications
Tim Davis 0171 253 2252
CHAIRMAN'S STATEMENT
It is pleasing to be able to report another encouraging
year for the Group, with improved profits, earnings and
cash flow and also the completion of the reorganisation
of our continuing activities into two operating
companies, Kwikform focussed on the Construction Sector
and FK Multiservices on the Industrial Sector.
Trading profit increased this year by 10% to #7.9 million
on comparable turnover 5% ahead at #78 million.
Operating profit increased by 29% due mainly to the
absence this year of any charge to increase the vacant
property provision leaving profit before tax and
exceptional items ahead 31% at #7.4 million.
With the added benefits of the exceptional profit arising
from the sale of the Dundee property and the continuing
low tax charge, earnings moved forward significantly to
5.1p per share (1998: 3.5p per share). Operating cash
flow at #12.9 million (1998: #12.4 million) remained
strong. Capital expenditure at #10.5 million (1998: #8.1
million) was largely offset by #7.8 million inflow from
property sales, such that after #3.2 million (1998: #2.7
million) spent on acquisitions the Group had net funds
thereby sustaining its capacity to pursue its growth
strategy.
The Board will recommend to the Annual General Meeting a
final dividend of 1.2p per share (1998: 1.0p per share),
which, together with the interim dividend of 0.5p per
share already paid, would bring the total for the year to
1.7p compared to 1.4p last year. The final dividend will
be paid on 17 August, 1999 to shareholders on the
register at 16 July, 1999.
During the year, Mr Tom Sooke joined the Board bringing
the Non-Executive membership to three. With his broad
financial background I am sure Tom will make an important
contribution to our deliberations whilst improving the
overall balance of the team.
This year, in particular, I wish to thank the whole of
the team in the Group, my Executive Board colleagues, the
management and all employees alike, not only for the hard
work behind this year's results, but also for the special
effort that was required to successfully integrate the
Industrial Services Division of Kwikform with Fincham to
form FK Multiservices which has been launched with such
enthusiasm.
With this new ability to offer integrated multi-
discipline industrial services packages to our clients
and continuing firm demand from the construction market
for Kwikform we have entered the new trading year with
confidence.
W G Andrews
Chairman
4 June 1999
REVIEW OF OPERATIONS
KWIKFORM
Kwikform is a major, nationwide supplier of access
services to the construction and industrial markets
through traditional and system scaffolding products, and
also supplies formwork/falsework solutions, predominantly
for the civil engineering sector, and a range of light
access products for hire and sale.
In its third full year of ownership by the Group,
Kwikform's operating profit prior to Group charges
increased further despite the fact that the prior year
figures benefited from the project in Korea for Daewoo.
This improvement was achieved in a year during which the
construction market as a whole has been satisfactory
although demand from the civil engineering sector fell
back in the second half and is not expected to pick up
again until work on the Channel Tunnel Rail Link
commences.
Much of the progress made during the year arises from
management actions taken to improve specific areas of
performance. Last year's report highlighted a number of
key objectives for the year under review and in most
areas good progress was made as follows:
* In the industrial sector a new operational base was
opened to cover the Midlands from Burton-on-Trent, and
close cooperation with Fincham, backed by extensive
market research, established a service format in the
Teesside area which is the template for the creation of
FK Multiservices as outlined below.
* The company's logistics structure was reviewed in
conjunction with external consultants as the result of
which a small in-house logistics team has been
established to tighten control over the significant spend
in this area and build on the initial savings generated
in the year.
* Coverage of the scaffolding townwork market was
extended by the opening of a depot in Bristol during the
second half of the year, from which a positive
contribution is expected in the current year. Expansion
of coverage through acquisitions proved not to be
successful due to high vendor price expectations but we
are hopeful of progress in this respect in the current
year.
Also in the townwork sector we targeted growth of 10%
in our proprietary 'Kwikstage' system product. In the
event revenues actually grew by over 18% driven by
further investment in equipment, training and
marketing.
* In order to expand the range of products and
services offered to the civil engineering sector, a new
range of formwork panel systems was successfully launched
under the brand names 'Athlete', 'Logo' and 'Trapeze' and
these have been well received by the market. Further
significant investment will be made in the current year
in both existing and new products.
With some confidence returning to the forecasts for the
construction sector as interest rates have been reduced,
the outlook for the company's townwork scaffolding
services is, again, reasonably good with a strong order
book at the year end. The order intake since the year
end has also been good. The outlook for the
formwork/falsework division is largely predicated upon
building on the initial success of the new panel systems
and the level of work to be generated from the Channel
Tunnel Rail Link. In addition, we expect to derive
better returns from our Kwikstage revenues due to
increased experience in the use of the product, and from
other townwork services due to improved work practices.
FINCHAM
Fincham Industrial Services Ltd is a leading supplier to
industrial processing businesses of thermal insulation,
contract scaffolding, sheeting and cleaning services,
with much of its revenue derived from term maintenance
contracts.
In its first full year of ownership by the Group,
Fincham's prorated revenues grew by 47% and its profit
contribution by 17%, the former figure being
substantially in excess of the declared target of 20%.
The profit contribution grew exactly in line with
expectations, reflecting the investment in support costs
as the platform for further growth. The success of the
business in the year was derived from combining the
entrepreneurial flair of the former owners and their key
managers with the resources available within the group, a
formula that will continue to underpin the company's
growth aspirations in the future.
In the year under review we committed to two further
specific objectives and in both there was a considerable
degree of success:
* We committed to making bolt-on acquisitions to
strengthen the company's presence in the industrial
services sector, to which end we invested a total of #3.6
million in purchasing:
- certain assets and liabilities of Brian Willey
Limited which gave us a presence in the south coast
market for industrial painting, shot-blasting and
corrosion proofing
- THK Insulation Limited, a provider of thermal
insulation and scaffolding services in the East Midlands,
together with its subsidiary company, Remflex Covers
Limited, a specialist supplier of insulation covers and
mattresses
- Global Protect Limited, a specialist supplier of
industrial painting, shotblasting and corrosion proofing
services based in the North East
These businesses, purchased in the last quarter of the
financial year, have high quality management teams with
the entrepreneurial flair that characterises the
existing business, and are expected to make an
important contribution in the current year. Due to
their purchase so close to our year end no significant
contribution was made in the financial year under
review.
* We also committed to the establishment of a trading
operation in the North East in conjunction with Kwikform
to benefit from the complementarity of Kwikform's
strength in scaffolding and Fincham's in thermal
insulation in particular.
This joint enterprise has proved to be very successful
with considerable work being won in the last quarter,
bolstered by key new recruitments to add local
knowledge and experience. The medium term objective
for this business unit is to build the credibility of
the range of services being offered to the point at
which multiservice term contracts can be secured.
FK MULTISERVICES
At the beginning of May 1999 the industrial services
division of Kwikform was merged with Fincham Industrial
Services under the name FK Multiservices Limited. The
recently acquired businesses referred to above are being
integrated into the same company so that the group will
have a single brand presence in the industrial sector,
supplying all of the core services to the market
nationwide through the one trading entity.
The establishment of FK Multiservices has been well
received in the market and has been backed by an
appropriate investment in marketing. In this first year
of trading the key objectives for the business will be
to:
- grow revenues by over 20% by building new customer
relationships and developing more business with existing
customers through the provision of the wider range of
services now available
- make further bolt-on acquisitions to develop the
company's geographic coverage and critical mass
- establish a trading operation in the North West to
serve the large industrial base in that region
BANDT PROPERTIES
The small, non-core property portfolio generated an
operating profit of #0.4 million on revenues of #0.9
million, reflecting the benefit of some of the 10 year
leases which commenced in the latter part of the previous
year.
The main contribution of the business, however, was in
the cash generated from property disposals which were
very much in line with the expectations published in this
report last year. The sale of properties at Basingstoke,
Dundee, Aintree, Greenford and Renfrew were completed
during the year, generating net cash proceeds of #7.8
million. We are reasonably confident of generating cash
proceeds of #0.7 million from the sale of the property at
West Gorton, Manchester in the first half of the current
financial year.
As ever, the remaining properties in the portfolio,
currently valued at #6.7 million, will be managed to
maximise cash. They are all occupied, in whole or in
part, by the purchaser of the Brown & Tawse business sold
in January 1997. In terms of that transaction the tenant
has entered into 10 year leases, commencing in January
1998, but with the right to surrender all, or parts, of
the properties until January 2000 subject to giving
notice by October 1999. Once this date has passed we
will explore the possibility of selling these properties.
SUMMARY AND OUTLOOK
The year as a whole has seen a significant improvement in
the performance of the Group. While the second half
result was lower than the equivalent period last year,
due primarily to non-recurring costs and the very mild
winter of 1997/98, the year-end order position in most
activities is strong and there is confidence that further
progress will be made in the new financial year.
Richard Wilson
Chief Executive
4 June 1999
Consolidated Profit and Loss Account(Unaudited)
for the year ended 4 April 1999
1999 1998
#000 #000
Turnover (notes 1 & 2)
Continuing operations 78,389 74,306
Discontinued operations - 3,019
------ ------
78,389 77,325
====== ======
Operating profit before
exceptional costs (notes 1 & 2)
Continuing operations 7,857 7,122
Exceptional operating costs:
Vacant property provisions (note 1) - (980)
------ ------
7,857 6,142
Discontinued operations - (60)
------ ------
Operating profit 7,857 6,082
Exceptional items
Loss on disposal of businesses:
- net tangible assets - (212)
Profit on disposal of fixed assets:
- Sale of investment properties 372 -
------ ------
Profit on ordinary activities
before interest 8,229 5,870
Net interest payable and similar
charges (487) (472)
------ ------
Profit on ordinary activities before tax 7,742 5,398
Tax on ordinary activities (588) (537)
------ ------
Profit on ordinary activities after tax 7,154 4,861
Dividends (2,376) (1,956)
------ ------
Retained profit for the year 4,778 2,905
====== ======
Pence/share Pence/share
Basic/diluted earnings
per ordinary share (note 4) 5.1 3.5
====== ======
Earnings per ordinary share
before exceptional items (note 4) 4.9 4.3
====== ======
Statement of Total Recognised Gains and Losses (Unaudited)
1999 1998
#000 #000
Profit on ordinary activities after tax 7,154 4,861
Unrealised surplus on revaluation of
properties - 649
------ ------
Total recognised gains and losses
relating to the year 7,154 5,510
====== ======
Consolidated Balance Sheet (Unaudited)
as at 4 April 1999
Restated
1999 1998
#000 #000
Fixed assets
Intangible assets 2,910 -
Tangible assets 35,047 37,376
Investment in own shares 574 582
------- -------
38,531 37,958
------- -------
Current assets
Stocks 1,858 1,881
Debtors 26,214 22,506
Cash 5,395 276
------- -------
33,467 24,663
Creditors due within one year (30,650) (24,819)
------- -------
Net current assets/(liabilities) 2,817 (156)
------- -------
------- -------
Total assets less current liabilities 41,348 37,802
------- -------
Creditors due after one year (1,808) (2,803)
Provisions for liabilities and charges (1,640) (1,856)
------- -------
Net assets 37,900 33,143
======= =======
Capital and reserves
Called up share capital 7,109 7,108
Share premium account 3 -
Revaluation reserve 5,660 10,338
Special reserve 27,954 27,979
Profit and loss account (2,826) (12,282)
------- -------
37,900 33,143
======= =======
Comprising :
Equity shareholders' funds 37,830 33,073
Non-equity shareholders' funds 70 70
------- -------
37,900 33,143
======= =======
Gearing % - 12
Reconciliation of movements in shareholders' funds
Profit for the year 7,154 4,861
Dividends (2,376) (1,956)
------- -------
4,778 2,905
Other recognised gains and losses
relating to the year - 649
Issue of ordinary shares 4 -
Goodwill arising on acquisition (25) (7,377)
------- -------
Net addition to/(reduction in) funds 4,757 (3,823)
Opening shareholders' funds 33,143 36,966
------- -------
Closing shareholders' funds 37,900 33,143
====== =======
Consolidated Summary Cash Flow Statement (Unaudited)
for the year ended 4 April 1999
1999 1998
#000 #000
Net cash inflow from operating
activities (note 6) 12,923 12,385
Net cash outflow from returns on
investments and servicing of finance (375) (275)
Taxation (655) (888)
Capital expenditure and financial
investment ------- -------
Capital expenditure (10,509) (8,107)
Fixed asset disposals 8,946 1,141
------- -------
(1,563) (6,966)
Acquisitions and disposals ------- -------
Sale of businesses 300 2,920
Purchase of businesses (note 2) (3,236) (2,743)
------- -------
(2,936) 177
Equity dividends paid (2,092) (1,674)
------- -------
Cash inflow before management of
liquid resources and financing 5,302 2,759
Financing ------- -------
Issue of ordinary shares 4 -
Repayment of principal under
finance leases (187) (109)
(183) (109)
------- -------
Increase in cash in the year 5,119 2,650
======= =======
NOTES
1. Profit and loss
The analysis of the Group's turnover, operating profit
and net assets, by class of business, is set out below:
1999
Operating Net
Turnover profit assets
#000 #000 #000
Continuing activities
Contracting and hire 77,538 7,412 35,282
Property investments 851 445 4,971
Central net (liabilities)
/assets - - (39)
-----------------------------
78,389 7,857 40,214
Discontinued activities
Stockholding and distribution - - -
-----------------------------
Total activities 78,389 7,857 40,214
==================
Tax and dividends (2,568)
Cash less loan notes and finance leases 718
Net deferred consideration (payable)/receivable (464)
------
Total assets employed 37,900
======
Half year analysis of continuing activities
1999
1st Half 2nd Half Year
#000 #000 #000
Turnover
Contracting and hire 38,973 38,565 77,538
Property investments 507 344 851
-----------------------------
39,480 38,909 78,389
=============================
Operating profit/(loss)
Contracting and hire 3,990 3,422 7,412
Property investments 287 158 445
Vacant property provision - - -
-----------------------------
4,277 3,580 7,857
=============================
Half year analysis of profits before tax
1999
1st Half 2nd Half Year
#000 #000 #000
Operating profit/(loss)
Continuing activities 4,277 3,580 7,857
Discontinued activities - - -
-----------------------------
4,277 3,580 7,857
Exceptional items
Loss on disposal of
businesses - - -
Sale of investment
properties - 372 372
Interest (267) (220) (487)
-----------------------------
Profit before tax 4,010 3,732 7,742
=============================
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
(liabilities)/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 (payable)/receivable 26
-------
Total assets employed 33,143
=======
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
=============================
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)
Sale of investment
properties - - -
Interest (162) (310) (472)
-----------------------------
Profit before tax 2,680 2,718 5,398
=============================
Operating profit for 1999 in contracting and hire is
after charging two material items: #353k depreciation
to write down leasehold improvements on one site to
nil, and a credit of #346k in respect of a release of
specific public liability accruals.
2.Acquisitions
The results of the contracting and hire activities
include contributions from the acquisition of the trade
and assets of Brian Willey (Southern) on 27 January
1999, and the purchase of the issued share capital of
THK Insulation Ltd and Remflex Covers Ltd on 1 February
1999, and Global Protect Ltd on 23 February 1999.
Total consideration for these four acquisitions was
#3,566,000 of which #2,271,000 was paid at completion,
#340,000 was paid in April 1999 and a further #150,000
represents deferred consideration which may become
payable dependant on future events. #447,000 was
satisfied by the issue of loan notes which are
redeemable over a period of up to three years from the
anniversaries of the completion dates. There were total
acquisition costs of #358,000, and within the net
assets acquired were bank loans and overdrafts of
#282,000.
3.Taxation
The Group's tax charge should be reduced by #2.5
million over the next three years due to capital
allowances not claimed, general provisions becoming tax
allowable and the recovery of ACT previously written
off.
4.Earnings per share
The earnings per share have been calculated on the
profit after tax and preference dividends in each year
and on 139,506,469 (1997/98 139,490,965) ordinary
shares, being the number of ordinary shares in issue
and ranking for dividend during the year, excluding
those held in the ESOT (1,265,000 ordinary shares).
Diluted earnings per share have been calculated on the
same profit but on 139,761,349 (1997/98 139,630,452)
ordinary shares.
An alternative measure of earnings per share, excluding
exceptional items, is set out below:
1999 1998
Pence Pence
per share per share
Earnings per share (net basis) 5.1 3.5
Vacant property provisions - 0.7
Profit on sale of investment properties (0.2) -
Loss on disposal of business assets - 0.1
------ ------
Earnings per share excluding
exceptional items 4.9 4.3
====== ======
5.Insurance claims
The Group has restated its debtors and creditors for
1998 in respect of recognising the gross liability in
respect of claims received for injuries or accidents
and also showing as a debtor the related amount
recoverable under insurance policies. The impact of
this policy is to increase the figures in the balance
sheet as follows:
1999 1998
#000 #000
Debtors 4,600 5,000
Creditors due within one year (4,600) (5,000)
====== ======
6.Cash flow
Reconciliation of operating profit to net cash inflow
from operating activities
1999 1998
#000 #000
Operating profit 7,857 6,082
Amortisation of goodwill 26 -
Depreciation on tangible fixed assets 5,577 4,757
Write down of investment in own shares 8 42
(Profit)/loss on disposal of tangible
fixed assets (6) 46
Decrease/(increase) in stocks 60 (211)
Increase in debtors (3,052) (777)
Increase in creditors 2,996 1,916
(Decrease)/increase in provisions for
liabilities and charges (543) 530
------ ------
12,923 12,385
====== ======
Analysis of net funds and movements
Net debt Other non Net funds
1998 Cashflow cash changes 1999
#000 #000 #000 #000
Cash in hand,
at bank 276 5,119 5,395
-------
Increase in
cash in the
year 5,119
Debt (4,200) (447) (4,647)
Finance
leases (35) 187 (182) (30)
------- --------------------- -------
Total (3,959) 5,306 (629) 718
======= ===================== =======
Reconciliation of net cash flow to movement in net funds
1999 1998
#000 #000
Cash inflow before management of liquid
resources and financing 5,302 2,759
Loan notes issued upon acquisitions (447) (4,200)
Issue of ordinary shares 4 -
New finance leases - (24)
Finance leases transferred on acquisitions (182) (9)
------- -------
Movement in net debt in the year 4,677 (1,474)
======= =======
7.Reporting
This Preliminary Report has been prepared in accordance
with the accounting policies adopted in the latest
published accounts, except that goodwill arising on
acquisitions after 5 April 1998 is capitalised and
written off over its estimated useful lives of between
five and twenty years, and the restatement of debtors
and creditors as described in note 5. The auditors have
not yet completed their audit for the current year.
The figures relating to the full year ended 5 April
1998 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 1999. It is available to the public
from 7 June 1999 at the Registered Office of the
Company, 191 West George Street, Glasgow, G2 2LB or
from the Company Secretary at Armstrong Road,
Basingstoke, Hampshire, RG24 8NU. It will also be
available from 7 June 1999, on Bandt's internet site at
www.bandtplc.co.uk.
The information given in this preliminary announcement
complies with the requirements of section 251 of the
Companies Act 1985 and regulations made thereunder and
does not constitute statutory accounts within the
meaning of section 240 of that Act.
END
FR CCQCPFDKDNAK
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