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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Birse Grp. | LSE:BIE | London | Ordinary Share | GB0001005684 | ORD 10P |
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% | 14.40 | 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 Number:3341N Birse Group PLC 5 July 2000 Contact: Peter Watson, Chief Executive Telephone: 01652 633222 Martin Budden, Finance Director Birse Group plc Charles Watson/Charles Armitstead Telephone: 020 7831 3113 Financial Dynamics RE-ORGANISED BIRSE REPORTS STRONG RISE IN PROFITS Birse Group plc, the leading UK construction group, today announces preliminary results for the year ended 30 April 2000. These may be summarised as follows: - Operating profit rose to #4.6m (1999: #3.7m) + 26% - Pre-tax profits increased to #4.2m (1999: #2.2m) + 91% - Earnings per ordinary share of 1.7 pence (1999: 1.1 pence) + 55% - Total dividend for the year per ordinary share of 1.0 pence + 25% (1999: 0.8 pence) - #9.5m raised through the successful disposal of Epping investment property and non-core Plant Hire activities - Reorganisation of Birse Construction into 3 divisions focused on core competencies; Civil Engineering, Building and Process Engineering - Strong performance from Building division and Plant Hire Commenting on the results, Chief Executive Peter Watson said: "We have made good progress this year in aligning our core competencies with the needs of our customers. Margins have improved, and there are signs within the construction market that further progress can be made by companies that are successfully generating production efficiencies for customers. Consequently, I am encouraged at the opportunities for further profit growth and the continued generation of shareholder value" PRELIMINARY STATEMENT Results The Group's pre-tax profits rose by 91% to #4.2million (1999: #2.2million). Earnings per ordinary share increased by 55% to 1.7p (1999: 1.1p). Group turnover remained relatively static at #370million (1999: #358million). Birse Construction delivered significantly improved net margins of 0.86% in the year when compared with corresponding margins of 0.5% achieved in 1999. Plant Hire also produced improved results, increasing operating profits to #0.933 million from #0.472 million earned in the previous year. The loss of rental income from properties disposed of has given rise to the lower level of profits produced from the Group's Commercial Property activities. The net interest charge fell from #1.493million in 1999 to #0.523 million in the current year. Average borrowings were reduced as a result of both stronger operational cash flows and the proceeds arising from asset disposals. The Group had a net cash position of #8.8 million at 30 April 2000 (30 April 1999: net debt of #5.3million). The Board is recommending an increased final dividend of 0.625p per ordinary share (1999: 0.5p) making a total dividend for the year up 25% to 1p per ordinary share (1999: 0.8p). Subject to the approval of Shareholders at the Annual General Meeting the final dividend is payable on 2 November 2000 to shareholders appearing on the register at the close of business on 6 October 2000. Dividend cover, at this higher level of dividend, increased to 1.7 times (1999: 1.3 times). Disposals During the year we have pursued vigorously the disposal of those assets that were either generating an unacceptable return with no prospects of improvement, or were not reflective of our core competencies. In June 1999 the Group completed the sale of its investment property at Epping for its book value of #5.1million. On 31 October 1999 BPH completed the disposal of its offshore equipment hire and diesel refurbishment division at Aberdeen for a consideration of #2.5million. BPH was also involved in two further transactions; on 22 February 2000 it completed the sale of its fleet of wheel cleaning units for #340,000 and on 28 April 2000 it disposed of the remainder of its non operated division, along with its site services operations, for a consideration of #1.55million. In the aggregate, the BPH transactions gave rise to a profit on disposal of #77,000. Birse Construction Limited 2000 1999 Turnover Operating Turnover Operating Profit Profit #'000 #'000 #'000 #'0000 Civil Engineering147,817 2,769 138,592 4,027 Building 169,824 2,728 158,373 (2,613) Process Engineering 45,535 (2,359) 49,421 463 363,176 3,138 346,386 1,877 Although turnover increased by 4.8% operating profit increased by 67% to #3.138million. Net margins improved to 0.86% (1999: 0.5%). The improved performance was led by the Building Division which not only benefited from improving market conditions but also from the appointment of a specialist management team led by Martin Peat as Managing Director and the closure of its loss making South West operations in the previous year. On balance conditions in the Civil Engineering market remained relatively stable although a reduction in opportunities was experienced in the regulated sectors. Process Engineering suffered from losses on a small number of industrial projects and a falling demand in the water sector. Furthermore, given the stage that the Water industry has reached relative to its regulatory cycle and the potential restructuring of those regulated activities turnover in the Process Division is likely to be significantly lower in the forthcoming year. Although overheads will be reduced losses in this Division are likely to continue during 2000/2001. The key action taken in the light of this set of circumstances has been to appoint a new Divisional Managing Director in the form of John Ruane. John comes with over twenty years experience much of it in a senior capacity in the Process industry. Order Book At the end of May 2000 secured workload amounted to #306 million (1999: #289million). The fall off in the volume of work available in the Water sector for both Civils and Process Engineering is at present more than offset by improved demand in the Building sector and elsewhere in the Civils market. Re-organisation In my statement accompanying the Group's interim results I said that Birse Construction would be organised into three distinct operating divisions; Civil Engineering (to include Birse Rail), Building and Process Engineering. I am pleased to report that that restructuring was completed in line with the planned timetable and has been fully effective from 1 May 2000. The reorganisation was put in place to address a number of issues:- - Accountability: in its formative years Birse Construction grew by devolving management autonomy to the lowest level possible. I am a firm supporter of this principal and believe that groups should be structured by specialist activity and that the management of those businesses be made responsible for all aspects of operations. Only those activities effecting the integrity of the whole group should be managed centrally. It is my belief that this form of structure allows subsidiary management to be more fully held to account for their performance. - Customer relationships: organising the company into smaller specialist units allows divisional directors more time to dedicate to customers. This more focused approach will lead to a better understanding of customer needs and requirements which as key drivers of any business will lead to improved performance. - Production efficiencies: similarly a concentration upon specialist activities will promote production efficiencies. Each of the three divisions are different businesses with different operational requirements. It is, therefore, essential that construction procedures and practices are allowed to develop separately if efficiencies are to be optimised. The divisional structure will allow us to be more demanding of divisional management. However, it is important that if we are to be more demanding that we are also more supportive. To this extent a team from a leading UK Business School has been engaged to design a director development programme bespoke to Birse Construction. This programme will marry the development needs of each divisional director with the business results that have to be delivered. It is my experience that there are many talented individuals in the construction industry but that often the all round business potential inherent in this talent is neglected due to the emphasis placed upon technical building capabilities. I am determined that this will not happen within Birse and that each of the divisional directors is developed to his/her full potential. It is anticipated that after the first year of implementation of the Birse director development scheme that this programme will form the bedrock of a wider executive education initiative. BPH Equipment 2000 1999 Turnover Operating Turnover Operating Profit Profit #'000 #'000 #'000 #'000 Crawler Cranes3,399 699 2,833 94 Piling 1,061 299 721 129 Equipment Divisions 2,869 (65) 5,291 249 Sold 7,329 933 8,845 472 Although improved prices were obtained in the crane sector and demand improved for piling the increase in profits derives from management concentrating upon the company's core competencies. Prospects for further improvements are, therefore, encouraging. Business Disposals It is pleasing to note that the disposals in this division referred to earlier in my statement were completed within pre-set timescales and in the aggregate were sold for prices ahead of book value. The businesses were sold because they were not generating an acceptable return and under our ownership there was little prospect of improving those returns to the level required. Clearly BPH was not the best parent of those divisions. These are the two fundamental tests that will form the basis of any future expansion; is the return on capital acceptable and is BPH the best parent for the business/activity? Only where the answer to those questions is in the affirmative will opportunities be pursued. Capital Investment Since the year-end six new crawler cranes in the 55-85 tonne range have been purchased for an aggregate consideration of #1.2million. Our recent experience with machines of this quality is that returns on capital in excess of 20% can be achieved. Additional funds are available for further expansion provided that the returns on investment meet our pre-set criteria. Commercial Property 2000 1999 Turnover* Operating Turnover Operating #'000 Profit #'000 Profit #'000 #'000 1,177 1,023 3,582 1,479 * Turnover excludes the proceeds arising from the sale of the Epping investment property. During the year the sale of the Epping investment property was completed for a consideration of #5.1million and three acres of land were sold at Warrington. The fall in profits is caused by the loss of rental income on those investment properties sold in the year and in the previous year. Following the sale of the investment property at Epping the Group's property activities are confined to the optimum realisation of the profit inherent in its Warrington based business park where, at 30 April 2000, 19 acres remained undeveloped. Interest in the site remains high as a result of which sales in the current year are expected to at least match those achieved in 1999/2000. Strategy and Prospects The focus of the Group is to align its core competencies with the needs of its customers. This approach requires a clear understanding of both our own capabilities and our customers' objectives. In pursuit of this strategy Birse Construction has been re-organised into three distinct operating divisions; Civil Engineering (to include Birse Rail), Building and Process Engineering. There are signs beginning to emerge within the Construction market that higher net margins are available. However, it is clear that those higher margins can only be generated through production efficiencies that benefit the customer. BPH's activities now comprise its mainstay crane and piling divisions. Further investment in its crane fleet will facilitate additional profit growth. Cash raised from the sale of the Group's property assets at Warrington will release capital and improve liquidity. Consequently I am encouraged at the opportunities for further profit growth, improved performance and the generation of shareholder value. Peter Watson, Chief Executive 5 July 2000 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 30 April 2000 Note 2000 1999 #'000 #'000 Turnover 1 370,336 357,525 Cost of Sales (345,489) (334,128) Gross Profit 24,847 23,397 Administrative (20,213) (19,715) expenses Operating profit 1 4,634 3,682 Profit on 2 77 - disposal of businesses Net interest (523) (1,493) Profit on 1 4,188 2,189 ordinary activities before taxation Taxation 3 (994) (158) Profit for the 3,194 2,031 financial year Dividends on 4 (1,924) (1,542) equity shares Transferred to 1,270 489 reserves Earnings per 5 1.7p 1.1p ordinary share - basic - diluted 5 1.7p 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 2000 2000 1999 #'000 #'000 Fixed Assets Tangible assets 11,598 16,469 Investments - 5,091 11,598 21,560 Current Assets Stocks 4,406 4,415 Debtors 147,51 125,13 7 7 Investments 2,586 - Cash at bank and 6,201 3,856 in hand 160,71 133,40 0 8 Creditors: Amounts falling due within one year 134,51 117,48 4 8 Net Current Assets 26,196 15,920 Total Assets Less Current 37,794 37,480 Liabilities Creditors: Amounts falling due after (3,727) (4,848) more than one year Provisions for Liabilities and (265) (100) Charges Net Assets 33,802 32,532 Capital and Reserves Called up share 19,239 19,239 capital Share premium 93 93 account Special reserve 308 308 Revaluation 607 607 reserve Profit and loss 13,555 12,285 account Shareholders' Funds - equity 33,802 32,532 interest CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 April 2000 2000 1999 #'000 #'000 #'000 #'000 Net cash inflow/(outflow from operating 8,963 (6,755) activities Returns on investments and servicing of finance Interest 199 313 received Interest (790) (1,597) paid Interest element of finance lease rentals and (24) (36) hire purchase contracts Net cash outflow from returns on investments and (615) (1,320) servicing of finance Taxation UK Corporation (331) (803) tax paid Capital expenditure and financial investment Purchase of tangible fixed assets (1,541) (4,391) Purchase of fixed asset - (349) investments Sale of tangible 252 248 fixed assets Sale of fixed asset 5,008 2,061 investments Net cash inflow/(outflow from investing 3,719 (2,431) activities Disposal of businesses 3,920 - Dividends paid to equity (1,539) (1,537) shareholders Cash inflow/(outflow before management of liquid resources 14,117 (12,846) and financing Management of liquid resources Movement in cash held on short term (2,297) 742 deposits Movement in (2,586) - cash deposits with terms in excess of seven days Net cash (outflow)/in flow from management of liquid (4,883) 742 resources Financing Issue of ordinary - 112 shares Loan - 1,600 advances Loan (9,140) (4,442) repayments Capital element of finance lease rentals and (46) (31) hire purchase contracts Net cash outflow from (9,186) (2,761) financing Increase/ (decrease) in cash in the year 48 (14,865) NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS For the year ended 30 April 2000 1. Segment information (a) Turnover and results Turnover Operating Profit 2000 1999 2000 1999 #'000 #'000 #'000 #'000 (As restated) Contracti 363,176 346,386 3,138 1,877 ng Plant 7,329 8,845 933 472 hire Commercial 1,177 3,582 1,023 1,479 property Housing - 41 - - Group - - (460) (146) centre Intra- (1,346) (1,329) - - group 370,336 357,525 4,634 3,682 Profit on disposal of 77 - businesses Profit before 4,711 3,682 interest Net (523) (1,493) interest Profit on ordinary activities before taxation 4,188 2,189 So as to provide a better indication of the volume of plant hire business undertaken by the Group inter company car hire turnover of #5,689,000 (1999: #5,486,000) has been excluded from both the intra-group and plant hire segments and the prior year figures restated accordingly. This restatement has no effect on reported profits. (b) Net assets 2000 1999 #'000 #'000 Contracting 18,949 20,647 Plant 4,886 9,866 hire Commercial 4,538 9,593 property Housing - - Group (461) (429) centre 27,912 39,677 Unallocated net assets/ (liabilities) 5,890 (7,145) 33,802 32,532 The above analysis reflects the segments by which the Group is managed. All turnover arises from work performed within the United Kingdom. 2000 1999 #'000 #'000 Unallocated net assets/(liabilities) comprise: Net cash at 8,787 (5,284) bank/(bank borrowings) Obligations under (138) (150) finance leases and hire purchase contracts Corporation tax (570) (72) Deferred taxation (265) (100) Dividends payable on (1,924) (1,539) equity shares 5,890 (7,145) Net assets for each segment represents non-interest bearing operating assets less non-interest bearing operating liabilities 2. Disposal of Businesses On 31 October 1999 BPH Equipment Limited completed the sale of its offshore equipment hire and diesel engine refurbishment division based at Aberdeen. On 22 February 2000 it sold that part of its non-operated activities represented by its fleet of wheel cleaning units. On 28 April 2000 it sold the remainder of its non-operated division along with its site services operations. The financial effects of these transactions are summarised below:- 2000 1999 #'000 #'000 Gross 4,390 - consideration Costs of (320) - disposal Net 4,070 - consideration Assets disposed of: Fixed assets (3,893) - Debtors (100) - Profit on disposal of 77 - businesses The net consideration is made up as follows:- Cash received 3,920 - Deferred 150 - consideration 4,070 - In the year ended 30 April 2000 the businesses sold contributed #581,000 to net operating cash flows and utilised #207,000 for capital expenditure. The amount of tax attributable to the profit on disposal is #7,000. 3. Taxation 2000 1999 #'000 #'000 United Kingdom corporation tax at 30% 828 286 (1999: 31%) Deferred tax 165 (150) 993 136 Adjustment to prior years' tax provision Corporation 1 22 tax 994 158 The tax charge for the year is reduced below the expected rate of 30% as a result of timing differences relating to unrelieved losses not previously recognised for deferred tax purposes net of certain expenditure disallowed for corporation tax. These losses relate to the Group's commercial property activities. Unrelieved tax losses available for relief against future profits generated by that business amount to #5.9million. 4. Dividends on equity shares 2000 1999 #'000 #'000 Interim 0.375p per ordinary share (1999 721 577 - 0.3p) Final proposed 0.625p per ordinary 1,203 965 share (1999 - 0.5p) 1,924 1,542 The interim dividend was paid on 4 May 2000. Subject to the approval of shareholders at the Annual General Meeting the final dividend will be paid on 2 November 2000 to shareholders appearing on the register at the close of business on 6 October 2000. 5. Earnings per ordinary share 2000 1999 #'000 #'000 Earnings for basic and diluted 3,194 2,031 earnings per share calculation 2000 1999 Thousands Thousands Weighted average number of shares used in basic earnings 192,390 192,322 per share calculation Dilutive effect of - - options Weighted average number of shares used in diluted earnings per share 192,390 192,322 calculation 6. Net cash at bank/(bank borrowings) 2000 1999 #'000 #'000 Net cash at bank/(bank borrowings) comprise: Cash at bank - 1,068 1,020 on demand - on short term 5,133 2,836 deposit - on deposit with terms in excess of 2,586 - seven days Bank loans and overdrafts: Due within one year - (8,338) Due after one year - (802) 8,787 (5,284) 7. 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 1999 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 2000 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.
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