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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Base Grp. | LSE:BS. | London | Ordinary Share | GB0000566389 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.04 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS No 8683e BRITISH STEEL PLC 15th June 1998 BRITISH STEEL plc - RESULTS FOR 1997/98 CONTENTS Index Financial Highlights Chairman & Chief Executive's Statement Review of the Year Consolidated Profit and Loss Account Consolidated Balance Sheet Statement of Total Recognised Gains and Losses Reconciliation of Movements in Shareholders' Funds Consolidated Cash Flow Statement Supplementary Information The Consolidated Profit and Loss Account, Consolidated Balance Sheet, Statement of Total Recognised Gains and Losses, Reconciliation of Movements in Shareholders' Funds and the Consolidated Cash Flow Statement have been extracted from the audited accounts, to be delivered to the Registrar of Companies and on which the auditors issued an unqualified report. The Report and Accounts will be mailed to shareholders in late-June 1998 at which time copies will also be available from the Secretary's Office, British Steel plc, 15 Marylebone Road, London NW1 5JD, or by telephoning 0800 484113. British Steel plc Investor & Media Relations 15 Marylebone Road London NW1 5JD Tel +44 (0)171 314 5502 Fax +44 (0) 171 314 5604 FINANCIAL HIGHLIGHTS Profit before tax of #315m Earnings per share of 11.44p Final dividend per share of 7p making 10p for the year Net funds of #446m at the end of the year CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT The Company performed well in achieving pre-tax profits of #315m (1997:#451m), earnings per share of 11.44p (1997:15.22p) and strong operating cash flow, in spite of the adverse influences of the progressive strengthening of sterling and the economic crises in the Far East. The Board is recommending a final dividend of 7p per share which makes a total dividend for the year of 10p per share, the same as last year. The engine room for profit is the Company's UK asset base which again put in a very strong performance with a significant number of new production and efficiency records. Our growing portfolio of distribution businesses also had a good year while the policy of co-ordinating the commercial approaches across the various businesses is beginning to show results. During the year sterling further appreciated against the deutschmark and we estimate this to have reduced Group profits by in excess of #500m, due both to the translation effect and to the fact that German domestic steel prices directly influence those in the rest of Europe. British Steel has no influence over exchange rates and therefore we think it prudent to plan on sterling remaining strong, while also recognising the need to create shareholder value. To this end we have established a target for our businesses of achieving a minimum 15% per annum pre-tax return on net operating assets, averaged over the businesses' economic cycles. Furthermore, in early 1997 we began to implement a three part strategy to restore the competitive advantage that British Steel had in 1995. Firstly, we are streamlining the organisation structures and working practices in order dramatically to improve manpower productivity; secondly, we are creating a more cost effective, reliable and innovative supplier base; and thirdly, we are developing and using information technology more creatively with the objective of becoming indispensable to our customers. Such significant changes will take some three to four years to become fully effective but good progress has already been made. Avesta Sheffield, our 51% owned Swedish stainless steel subsidiary, continued to be badly affected by currency and depressed selling prices. Trico Steel, our 25% owned joint venture in the USA, encountered operational difficulties during the year which means that it is not expected to be fully commissioned until towards the end of this year. Capital expenditure during the year amounted to #404m. The largest project was the continuous annealing line at Port Talbot which is due to be commissioned in July 1998. Our direct reduction iron plant at Mobile in Alabama was successfully commissioned in the second half of the year and is producing good quality product in line with expectations. At Tuscaloosa Steel the working up programme is well advanced and we expect to reach full capacity later this year. With the current economic uncertainty in South East Asia it is unlikely that we will invest in that region in the short term. However, other areas of the world, particularly Europe and North America, could present profitable prospects and we are alert for growth opportunities in steel or steel-related businesses in these regions. During the year the Company purchased 4.6% of its shares for #146m. At the year end, shareholders' funds totalled #4,622m and net cash funds amounted to #446m. The steel trading outlook is complex. The economic crises in South East Asia, Korea and Japan are bound to cause disruption to traditional world steel trade flows, particularly for export-based business. It is still too early to judge the extent of their impact but they will undoubtedly affect the USA and Western Europe. The outlook for steel demand in the UK will rest heavily on the effectiveness and efficiency of our export driven customer base. Needless to say, British Steel will make the most of its opportunities as they unfold. The Company is in good shape, in the process of regaining its competitive position, and will use its wide product range to maximum effect in the market place. SIR BRIAN MOFFAT Chairman & Chief Executive REVIEW OF THE YEAR Group turnover was #6,947m (1997 : #7,224m), a reduction of 4% from the previous year. This reflected the net effect of higher sales volume but lower average revenue per tonne, principally as a result of adverse exchange rate movements. In the UK, sales volume totalled 7.7mt (1997 : 7.5mt), of which 6.8mt (1997 : 6.6mt) were in the Company's main carbon and engineering steel products. Demand for this range of products grew by 5% to 11.9mt, led by increased levels of activity in the UK construction sector. British Steel achieved a market share of 57% (1997 : 58%) as import pressures were felt. These pressures were mainly due to the effects of the strong pound and also resulted in average revenue in the UK falling by 5% to #347 per tonne. Sales volume in the rest of Europe rose to 5.3mt (1997 : 4.8mt) in response to improved market conditions. Sterling's strength against the deutschmark resulted in average revenue being 10% lower, at #448 per tonne, despite the underlying improvement in deutschmark selling prices. Outside Europe, sales volume was 2.6mt (1997 : 2.9mt), with the effect of a higher level of sales in North America being more than offset by a reduction in sales in other markets, primarily relating to the financial crises in South East Asia. Operating costs were #6,682m (1997 : #6,848m), a reduction of 2% from the previous year, despite higher volumes and underlying cost inflation. The reduction in costs mainly reflected benefits from the Company's initiatives to improve manpower productivity and to create a more cost effective supplier base. Further significant savings will be achieved during the next few years. Operating costs included rationalisation and related costs of #43m (1997 : #73m). The manpower productivity programme was the main factor in a net reduction of 2,000 employees during the year. At the year end the total number of employees was 48,400 and, during the first week of April, a further 400 employees left the Company. DIVIDEND PAYMENT For ordinary shareholders, the final dividend of 7p per share is payable on 10 August 1998 to shareholders on the register at close of business on 26 June 1998. For American Depositary Receipt holders, the dividend is payable in US dollars on August 20, 1998 by the Depositary, The Bank of New York, to the ADR holders of record on June 26, 1998 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEAR ENDED 28 MARCH 1998 1998 1997 #m #m GROUP TURNOVER 6,947 7,224 OPERATING COSTS (6,682) (6,848) ------- ------- GROUP OPERATING PROFIT 265 376 Share of operating results of joint ventures and associated undertakings - 15 ------- ------- 265 391 Profit on sale of fixed assets 6 - Profit on disposal of businesses, subsidiaries and associated undertakings 5 18 ------- ------- PROFIT BEFORE INTEREST 276 409 NET INTEREST AND INVESTMENT INCOME Group 41 44 Joint ventures and associated undertakings (2) (2) ------- ------- PROFIT BEFORE TAXATION 315 451 Taxation (82) (144) ------- ------- PROFIT AFTER TAXATION 233 307 Minority interests (7) 3 ------- ------- PROFIT FOR FINANCIAL YEAR 226 310 Dividends (195) (204) ------- ------- PROFIT RETAINED FOR THE YEAR 31 106 ======= ======= EARNINGS PER ORDINARY SHARE 11.44p 15.22p ======= ======= There were no material acquisitions or discontinued activities in 1998. CONSOLIDATED BALANCE SHEET AT 28 MARCH 1998 1998 1997 #m #m FIXED ASSETS Tangible assets 3,335 3,259 Investments in joint ventures 104 104 Investments in associated undertakings 9 8 Other investments and loans 181 194 Own shares 18 - ------- ------- 3,647 3,565 ------- ------- CURRENT ASSETS Stocks 1,222 1,224 Debtors 1,643 1,610 Short term investments 1,043 1,359 Cash at bank and in hand 163 118 ------- ------- 4,071 4,311 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (1,672) (1,705) ------- ------- NET CURRENT ASSETS 2,399 2,606 ------- ------- TOTAL ASSETS LESS CURRENT LIABILITIES 6,046 6,171 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (723) (637) PROVISIONS FOR LIABILITIES AND CHARGES (292) (341) ACCRUALS AND DEFERRED INCOME Regional development and other grants (58) (69) ------- ------- 4,973 5,124 ======= ======= CAPITAL RESERVES Called up share capital 991 1,019 Share premium account 51 17 Capital redemption reserve 47 - Statutory reserve 2,338 2,338 Profit and loss account 1,195 1,383 ------- ------- SHAREHOLDERS' FUNDS - EQUITY INTERESTS 4,622 4,757 MINORITY INTERESTS Equity interests in subsidiary undertakings 351 367 ------- ------- 4,973 5,124 ======= ======= STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE FINANCIAL YEAR ENDED 28 MARCH 1998 Profit for financial year 226 310 Exchange translation differences on foreign currency net investments (29) (81) ------- ------- Total recognised gains relating to the year 197 229 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS FOR THE FINANCIAL YEAR ENDED 28 MARCH 1998 Profit for financial year 226 310 Dividends (195) (204) ------- ------- 31 106 Exchange translation differences on foreign currency net investments (29) (81) Share buyback (146) - New shares issued 19 1 Goodwill arising on consolidation (10) (5) Reversal of goodwill write-off through profit and loss account on disposal - 13 ------- ------- Net (decrease)/increase in shareholders' funds (135) 34 Shareholders' funds at beginning of year 4,757 4,723 ------- ------- Shareholders' funds at end of year 4,622 4,757 ======= ======= CONSOLIDATED CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 28 MARCH 1998 Net cash inflow from operating activities 512 857 Dividends from joint ventures and associated undertakings 6 12 Returns on investments and servicing of finance 36 26 Tax paid (183) (281) Capital expenditure and financial investment (366) (410) Acquisitions and disposals (25) 57 Equity dividends paid (201) (204) ------- ------- CASH (OUTFLOW)/INFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (221) 57 MANAGEMENT OF LIQUID RESOURCES Net sale/(purchase) of short term investments 311 (167) FINANCING Purchase of own shares (146) - Issue of ordinary shares 16 1 Increase in debt 88 78 ------- ------- NET CASH (OUTFLOW)/INFLOW FROM FINANCING ACTIVITIES (42) 79 ------- ------- INCREASE/(DECREASE) IN CASH IN YEAR 48 (31) ======= ======= RECONCILIATION OF NET CASH INFLOW/(OUTFLOW) TO MOVEMENT IN NET FUNDS Increase/(decrease) in cash 48 (31) (Decrease)/increase in liquid resources (311) 167 Increase in debt (88) (78) ------- ------- Change in net funds resulting from cash flows (351) 58 Long term debt acquired (1) - Other non cash items (3) - Effect of foreign exchange rate changes 16 37 ------- ------- Movement in net funds (339) 95 Net funds at beginning of year 785 690 ------- ------- Net funds at end of year 446 785 ======= ======= SUPPLEMENTARY INFORMATION 1998 1997 #m #m 1. GROUP TURNOVER a. BY DESTINATION United Kingdom 3,010 3,111 Rest of Europe 2,687 2,772 North America 654 673 Other areas 596 668 ------- ------- 6,947 7,224 ======= ======= Included in above: Exports from the United Kingdom 2,495 2,722 Sales to associated undertakings 185 370 b. BY PRODUCT GROUPING Uncoated strip products 1,140 1,191 Coated strip products 1,218 1,179 Sections and plates 1,014 1,082 Tubular products 347 418 Wire rod 227 220 Semi-finished carbon steel products 121 140 Engineering steels 528 516 Stainless steel products 1,473 1,581 ------- ------- Total steel industry products (*) 6,068 6,327 Distribution and further processing 779 805 Others 100 92 ------- ------- 6,947 7,224 ======= ======= (*): By destination: United Kingdom 2,662 2,726 Rest of Europe 2,387 2,412 North America 560 582 Other areas 459 607 ------- ------- 6,068 6,327 ======= ======= 1998 1997 mt mt 2. SALES VOLUME a. BY DESTINATION United Kingdom 7.7 7.5 Rest of Europe 5.3 4.8 North America 1.2 1.1 Other areas 1.4 1.8 ------- ------- 15.6 15.2 ======= ======= b. BY PRODUCT GROUPING Uncoated strip products 4.4 4.3 Coated strip products 2.9 2.7 Sections and plates 3.4 3.5 Tubular products 0.9 0.9 Wire rod 1.0 1.0 Semi-finished carbon steel products 0.7 0.7 Engineering steels 1.4 1.2 Stainless steel products 0.9 0.9 ------- ------- 15.6 15.2 ======= ======= 3. OPERATING COSTS #m #m Raw materials and consumables 3,019 2,967 Changes in stock of finished goods and work in progress (26) 66 Employment costs 1,348 1,465 Depreciation (net of grants released) 295 288 Maintenance costs (excluding own labour) 578 573 Other external charges 1,044 1,031 Other operating costs 434 459 Own work capitalised (10) (1) ------- ------- 6,682 6,848 ======= ======= The above costs include rationalisation and related costs of: Redundancy and related costs 18 60 Accelerated depreciation 21 4 Other rationalisation costs 4 9 4. NET INTEREST AND INVESTMENT INCOME Dividends from other fixed asset investments 2 2 Interest receivable 91 90 Interest payable (48) (43) Finance leases (4) (5) Joint ventures (2) (1) Associated undertakings - (1) ------- ------- 39 42 ======= ======= 5. TAXATION UK Corporation tax at 31% (1997:33%) 89 168 Double tax relief (7) (12) Prior year credit (4) (19) Overseas taxes 12 4 UK deferred tax (5) (9) Overseas deferred tax (8) 8 Joint ventures 4 4 Associated undertakings 1 - ------- ------- 82 144 ======= ======= 6. EMPLOYEES number number Average weekly numbers employed: Within UK 40,600 43,400 Overseas 9,400 9,500 ------- ------- 50,000 52,900 ======= ======= Numbers employed at year end: Within UK 39,100 41,000 Overseas 9,300 9,400 ------- ------- 48,400 50,400 ======= ======= 1998 1997 #m #m 7. CAPITAL EXPENDITURE Purchase of tangible fixed assets 396 395 Movement in capital creditors 8 18 ------- ------- 404 413 ======= ======= 8. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES Operating profit 265 376 Depreciation (net of grants released) 295 288 (Increase)/reduction in stocks (16) 67 (Increase)/reduction in debtors (9) 142 Increase/(reduction) in creditors 17 (27) Rationalisation costs provided 22 69 Utilisation of rationalisation provisions (44) (24) Other movements (net) (18) (34) ------- ------- 512 857 ======= ======= 9. ANALYSIS OF NET FUNDS Cash at bank and in hand 163 118 Bank overdrafts and other short term loans (65) (67) Short term investments 1,043 1,359 Long term borrowings (638) (563) Obligations under finance leases (57) (62) ------- ------- 446 785 ======= ======= 10. US GAAP PROFIT FOR FINANCIAL YEAR - UK GAAP 226 310 Adjustments: Amortisation of goodwill (14) (13) Profit on disposal of business and associated undertakings - 9 Interest costs capitalised 27 19 Depreciation of capitalised interest (8) (8) Pension costs (18) 86 Stock-based employee compensation awards (6) (4) Rationalisation costs 14 - Deferred taxation 9 26 Minority interests - (11) ------- ------- PROFIT FOR FINANCIAL YEAR - US GAAP 230 414 ======= ======= EARNINGS PER ADS - US GAAP #1.16 #2.03 ======= ======= DILUTED EARNINGS PER ADS - US GAAP #1.14 #2.00 ======= ======= SHAREHOLDERS' EQUITY - UK GAAP 4,622 4,757 Adjustments: Goodwill 207 212 Interest costs capitalised (net of depreciation) 137 118 Pension costs 103 121 Stock-based employee compensation awards (11) (5) Quest shares held in trust (18) - Rationalisation costs 14 - Deferred taxation (496) (426) Investments in equity securities 31 15 Proposed dividend 137 143 Minority interests 20 20 ------ ------ SHAREHOLDERS' EQUITY - US GAAP 4,746 4,955 ======= ====== END FR FTMFBLLJBBIP
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