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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:2609G Birse Group PLC 3 July 2001 PRELIMINARY ANNOUNCEMENT Embargoed until 7.00am 3rd July 2001 Contact: Peter Watson, Chief Executive Telephone: 01652 633222 Martin Budden, Finance Director Birse Group plc Scott Fulton Telephone: 0207 831 3113 Financial Dynamics BIRSE REPORTS STRONG SECOND HALF RECOVERY Birse Group plc today announces preliminary results for the year ended 30 April 2001. These may be summarised as follows:- o Pre-tax profits, before exceptional items, of #4.6million in second half reduce full year pre-exceptional loss to #2.1million (2000: profit of #4.2million). o Exceptional items total #27.7million as exposure to litigation contracts is significantly reduced. o Birse Construction leads improvement in second half. o BPH Equipment increases profit to #1.3million (2000: #933,000). o Rising land prices at Warrington drive up Birse Properties' profits to #2million (2000: #1million). o Record Construction order book; #420million at 31 May 2001 (2000: # 306million). o Net cash at #9.1million (2000: #8.8million). o Dividend maintained at 1p per share. Commenting on the results, Chief Executive Peter Watson said: "An eventful year that began on a negative note has ended positively. The improved performance in the second half led by a strong recovery in Birse Construction combined with record order levels is encouraging. With conditions in each of the sectors in which we operate better than at any time in recent years I believe that we now have a platform for positive progress." PRELIMINARY STATEMENT Results Pre-tax profits, before exceptional operating items, of #4.6million generated in the second half have reduced the loss reported at the interim stage from # 6.7million to #2.1million for the full year (2000: profits of #4.2million). Exceptional operating items amount to #27.7million and accrue from litigation involving Birse Construction mainly in relation to the Priory Meadow Shopping Centre and Lower Rhymney Valley Relief Road projects. Group turnover increased from #370million to #423million. Birse Construction was the main driver behind the improvement in the second half delivering an operating profit before exceptional operating items in that period of #3.2million despite continued losses in its Process Engineering Division of #3.4million. Its full year operating loss before exceptionals of #4.6million (2000: profit of #3.1million) includes a loss of #9.4million attributable to Process Engineering. Plant Hire improved results increasing operating profits to #1.3million from #0.933million earned in the previous year. Favourable market conditions assisted the Group's Commercial Property activities in increasing operating profits to #2million (2000: #1million). The net interest charge fell to #0.159million (2000: #0.523million) reflecting a fall in average net borrowings. At 30 April 2001 the Group had a net cash position of #9.1million including amounts held on deposit as investments (30 April 2000: #8.8million). The Board is recommending a final dividend of 0.625p per ordinary share (2000: 0.625p) maintaining the total dividend for the year at 1p per ordinary share (2000: 1p). Subject to the approval of shareholders at the Annual General Meeting the final dividend is payable on 1 November 2001 to shareholders appearing on the register at the close of business on 5 October 2001. Operational Overview The first half of the year was dominated by the losses accruing from the litigation involving Birse Construction in relation to the Priory Meadow Shopping Centre, Hastings and the Lower Rhymney Valley Relief Road projects. Both projects have been the subject of announcements to the London Stock Exchange and were commented upon in some detail in my interim report. At that time I referred to a number of issues that remained unresolved in respect of the Rhymney Project. I am pleased to report that all outstanding matters in relation to that case have now been settled. Of the seven other contracts which were the subject of arbitration or equivalent proceedings at the half year four have since been resolved. The settlement of these disputes not only reduces risk but also raises cash and most importantly releases management resource that can be assigned to the development of future business rather than dealing with the past. A strong second half performance was based upon each Group Company trading profitably despite continued losses in the Process Engineering Division of Birse Construction. Curtailing losses in that Division is one of my prime objectives for 2001/2002 and I am satisfied that the worst is now behind us in this respect. BPH Equipment increased its operating profits from #933,000 in 2000 to # 1.3million with its Crawler Crane Division leading the way by contributing # 890,000 of that profit. During the year the crawler crane fleet was increased by six machines at a cost of #1.2million. Investment in piling equipment amounted to #350,000. Since the year end further amounts of #500,000 and # 244,000 have been invested in the crawler crane and piling fleets respectively. I consider that improving the quality of our fleets is the best way to take advantage of increasing demand and thereby optimise the performance of the business. Substantially increasing the size of those fleets will only happen when a simultaneous increase in market share is secured. Land sales at Warrington continue to complete at an accelerating rate with just over eight acres sold in the year compared with two and a half acres in 1999/2000. Prices secured for this land have also been increasing. Activities and results continue to flow from our guiding strategy of aligning core competencies with the needs of customers. Understanding our customers combined with a focus on these competencies will generate future growth and improved results. The re-organisation of Birse Construction into three distinct operating divisions instigated from 1 May 2000 is now embedded in operations. We are beginning to see some of the benefits anticipated from specialisation. As a result of getting closer to our markets and having a better understanding of our customers the Divisions have created specialist capabilities. Within the Civil Engineering Division we have Birse Rail and a dedicated London Underground operation. The Building Division has specialist sub divisions for logistics and sports stadia. In addition Ian Russell has been recruited as director responsible for Hotels and Leisure. These initiatives provide even greater impetus in developing the standard of market knowledge and understanding of customers' needs that our business requires. At the appropriate time I intend to progress further the Divisional re-organisation by establishing the three businesses as independent corporate entities. Incorporation will provide further autonomy, a platform for expansion and a framework within which more challenges can be made of divisional directors thereby increasing the pace of development of their businesses. Birse Construction Limited 2001 2000 Turnover Operating Turnover Operating (loss)/profit* profit/(loss) #'000 #'000 #'000 #'000 Civil Engineering 168,646 826 147,817 2,769 Building 221,626 3,941 169,824 2,728 Process Engineering 24,647 (9,374) 45,535 (2,359) 414,919 (4,607) 363,176 3,138 Analysed between:- First Half 190,383 (7,776) 176,287 1,713 Second Half 224,536 3,169 186,889 1,425 414,919 (4,607) 363,176 3,138 * Before exceptional operating items. The strong second half performance was led by the Building Division. Increased turnover giving rise to a more efficient recovery of overheads and the absence of loss making contracts were the main reasons for the improvement. Performance in the Civil Engineering Division was held back by low margins on some of its larger contracts. The rate of losses incurred by the Process Engineering Division slowed down in the second half. However, the full benefit of the actions taken to turnaround that business will not be seen until a critical mass of turnover is secured. Given the investment planned for the rail and London Underground networks and with the capital budgets of a number of Government Departments set to increase, more infrastructure opportunities should be available to the Civil Engineering Division in the year ahead particularly bearing in mind the present low level of new build spend in the Water sector. Any uplift in investment in this sector should be of even more benefit to the Process Engineering Division. An expansion of opportunities will allow each business to concentrate on the type of project where historically superior margins have been available. Favourable conditions in the property development market and the shortage of suitable industrial and office space have fuelled an increase in business in the Building sector. We have not detected any signs that these positive features are likely to change in 2001/2002. Order Book At the end of May 2001 secured workload stood at #420million (2000: # 306million). Amounts Recoverable on Contracts At the interim stage it was reported that Birse Construction had seven old contracts that remained the subject of arbitration or equivalent proceedings. I am pleased to report that four of these cases have reached a negotiated settlement. Furthermore, all of the outstanding matters in relation to the Rhymney project have now been resolved. Whilst a negotiated settlement is not always possible if the company's commercial interests are to be upheld I still favour strongly this approach. We are now close to the point where this legacy from the past will be well and truly behind us. The exceptional operating losses of #27.7million represent the losses incurred in relation to the Hastings and Rhymney projects together with the un-recovered costs in relation to the four settlements negotiated since the half year and a net realisable value provision. Plant Hire 2001 2000 Turnover Operating Turnover Operating profit profit #'000 #'000 #'000 #'000 Crawler Cranes 3,554 890 3,399 699 Piling Equipment 1,077 443 1,061 299 Divisions Sold - - 2,869 (65) 4,631 1,333 7,329 933 Analysed between:- First Half 2,467 717 4,405 627 Second Half 2,164 616 2,924 306 4,631 1,333 7,329 933 Traditionally second half performance deteriorates compared with the first half due to the reduction of available hires in and around the Christmas and New Year industry holiday period. The results achieved in the year represent a 26.0% return on average capital employed compared with 12.6% in 1999/2000. This reflects the benefits arising from the concentration upon the company's mainstay crawler crane and piling operations. Demand for piling equipment was particularly strong in the early part of the year. Good utilisation has been achieved on the six new crawler cranes acquired part way through this year and on the ten acquired last year. We will continue the policy of improving the quality of the fleet so as to minimise downtimes, maximise utilisations and therefore optimise returns in busier periods. With effect from 1 May 2001 the Group's internal site accommodation hire division has been set up as an independent operation trading as The Cabin Company Limited. In future periods its results will be reported as part of the plant hire sector. Commercial Property 2001 2000 Turnover Operating Turnover Operating profit profit #'000 #'000 #'000 #'000 4,409 1,965 1,177 1,023 Analysed between:- First Half 1,696 793 1,177 401 Second Half 2,713 1,172 - 622 4,409 1,965 1,177 1,023 Reported turnover represents the aggregate of the initial consideration on land sales transacted in the year and contingent consideration in respect of earlier completions. All turnover relates to the Group's Warrington site. During the year 8.2 acres of land were sold (2000: 2.5 acres) for a total initial consideration of #3million (2000: #615,000). Contingent consideration crystallising in the year amounted to #1.409million (2000: #562,000). As at 30 April 2001 there remains ten acres of land to be sold. Outlook An eventful year that began on a negative note has ended positively. The improved performance in the second half led by a strong recovery in Construction combined with record order levels is encouraging. The conditions in each of the sectors in which we operate are better than at any time in recent years. Many of our major operational problems are behind us. I believe that we now have a platform for positive progress. Peter Watson, Chief Executive 3 July 2001 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the Year Ended 30 April 2001 Before Exceptional 2001 2000 Exceptional Items Total (Restated) Items Note #'000 #'000 #'000 #'000 Turnover 1 423,423 - 423,423 370,336 Cost of sales: Ordinary trading (403,963) -(403,963)(345,489) Exceptional operating 3 items - (27,663) (27,663) - (403,963) (27,663)(431,626)(345,489) Gross (loss)/profit 19,460 (27,663) (8,203) 24,847 Administrative expenses (21,371) (20,213) Operating (loss)/profit 1 (29,574) 4,634 Profit on disposal of businesses 4 - 77 Net interest (159) (523) (Loss)/profit on ordinary activities before taxation (29,733) 4,188 Taxation 5 3,525 (1,076) (Loss)/profit for the financial (26,208) 3,112 year Dividends on equity shares 6 (1,924) (1,924) (Withdrawn from)/transferred to reserves (28,132) 1,188 (Loss)/earnings per ordinary share basic 7 (13.6)p 1.6p diluted 7 (13.8)p 1.6p - before exceptional items basic 7 0.2p 1.6p diluted 7 0.2p 1.6p 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 2001 2001 2000 (Restated) #'000 #'000 Fixed Assets Tangible assets 12,241 11,598 Current Assets Stocks 2,714 4,406 Debtors 127,789 147,517 Investments 3,743 2,586 Cash at bank and in hand 6,890 6,201 141,136 160,710 Creditors: Amounts falling due within one year 142,461 134,514 Net Current (Liabilities)/Assets (1,325) 26,196 Total Assets Less Current Liabilities 10,916 37,794 Creditors: Amounts falling due after more than one year (5,156) (3,727) Provisions for Liabilities and Charges - (175) Net Assets 5,760 33,892 Capital and Reserves Called up share capital 19,239 19,239 Share premium account 93 93 Special reserve 308 308 Revaluation reserve 607 607 Profit and loss account (14,487) 13,645 Shareholders' Funds - equity interest 5,760 33,892 CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 April 2001 2001 2001 2000 2000 #'000 #'000 #'000 #'000 Net cash inflow from operating activities 5,591 8,963 Returns on investments and servicing of finance Interest received 281 199 Interest paid (457) (790) Interest element of finance lease rentals and hire purchase contracts (18) (24) Net cash outflow from returns on investments and servicing of finance (194) (615) Taxation UK Corporation tax paid (90) (331) Capital expenditure and financial investment Purchase of tangible fixed assets (2,653) (1,541) Increase in current asset investments (1,000) - Sale of tangible fixed assets 522 252 Sale of fixed asset investments - 5,008 Net cash (outflow)/inflow from investing activities (3,131) 3,719 Disposal of businesses 150 3,920 Dividends paid to equity shareholders (1,924) (1,539) Cash inflow before management of liquid resources and financing 402 14,117 Management of liquid resources Movement in cash held on short term deposits (7,375) (2,297) Movement in cash deposits with terms in excess of seven days (157) (2,586) Net cash outflow from management of liquid resources (7,532) (4,883) Financing Loan advances 1,200 - Loan repayments (700) (9,140) Capital element of finance lease rentals and hire purchase contracts (56) (46) Net cash inflow/(outflow) from financing 444 (9,186) (Decrease)/increase in cash in the year (6,686) 48 NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS For the year ended 30 April 2001 1. Segment Information (a) Turnover and results: Turnover Operating (loss)/ profit 2001 2000 2001 2000 #'000 #'000 #'000 #'000 Contracting 414,919 363,176 (4,607) 3,138 Plant hire 4,631 7,329 1,333 933 Commercial property 4,409 1,177 1,965 1,023 Group centre - - (602) (460) Intra-Group (536) (1,346) - - 423,423 370,336 (1,911) 4,634 Exceptional operating items - Contracting (27,663) - Operating (loss)/profit (29,574) 4,634 Profit on disposal of businesses - 77 (Loss)/profit before interest (29,574) 4,711 Net interest (159) (523) (Loss)/profit on ordinary activities (29,733) 4,188 before taxation (b) Net assets: 2001 2000 #'000 #'000 Contracting (15,378) 18,949 Plant hire 5,364 4,886 Commercial property 5,515 4,538 Group centre (522) (461) (5,021) 27,912 Unallocated net assets 10,781 5,980 5,760 33,892 The above analysis reflects the segments by which the Group is managed. All turnover arises from work performed within the United Kingdom. 2001 2000 #'000 #'000 Unallocated net assets comprise: Current asset investments 3,743 2,586 Net cash at bank 6,390 6,201 Obligations under finance leases and hire purchase contracts (298) (138) Corporation tax 240 (570) Deferred taxation 2,630 (175) Dividends payable on equity shares (1,924) (1,924) 10,781 5,980 Net assets for each segment represents non-interest bearing operating assets less non-interest bearing operating liabilities. 2. Prior Year Adjustment The adoption of Financial Reporting Standard ("FRS") 19 'Deferred Tax' has resulted in the comparatives being restated as follows: Deferred Shareholders' Taxation Funds #'000 #'000 2000 as previously reported (265) 33,802 Adoption of FRS 19 90 90 2000 as restated (175) 33,892 The effects on the profit and loss account in the current and previous years arising from the adoption of FRS 19 are as follows:- 2001 2000 #'000 #'000 Deferred taxation credit/(charge) 2,630 (82) Other than as described above the consolidated profit and loss account, balance sheet and cash flow statement have been prepared on the basis of the accounting policies set out in the Group's accounts for the year ended 30 April 2000. 3. Exceptional Operating Items Exceptional operating items comprise non-recoverable costs arising in relation to the following projects in respect of which Birse Construction Limited issued proceedings for the recovery of amounts due under the respective contracts. 2001 2000 #'000 #'000 Lower Rhymney Valley Relief Road 7,500 - Priory Meadow Shopping Centre, Hastings 16,000 - Other 4,163 - 27,663 - In the case of the Rhymney contract the losses are largely in consequence of the level of award made by the arbitrator and in the case of the Hastings contract the losses arise as a direct result of the settlement made by the parties. The loss on the other contracts represents the financial effect of settlement and includes a net realisable value provision of #755,000 in respect of those cases awaiting settlement. The amount of the tax credit for the year attributable to these exceptional losses is #1,000,000. 4. 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 2001 2000 below: #'000 #'000 Gross consideration - 4,390 Costs of disposal - (320) Net consideration - 4,070 Assets disposed of: Fixed assets - (3,893) Debtors - (100) Profit on disposal of businesses - 77 The net consideration is made up as follows: Cash received - 3,920 Deferred consideration - 150 - 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 of #77,000 was #7,000. The deferred consideration of #150,000 was received in the year ended 30 April 2001. 5. Taxation 2001 2000 #'000 #'000 Corporation Tax United Kingdom corporation tax at 30% on (losses)/ profits of the year 720 (828) Under provision for prior years - (1) 720 (829) Deferred Tax Timing differences, origination and reversal 1,775 (247) Adjustments to estimated recoverable amounts of deferred tax assets arising in previous years' 1,030 - 2,805 (247) Tax on (loss)/profit on ordinary activities 3,525 (1,076) The tax credit for the year is below the expected rate of 30% - the differences are explained below: 2001 2000 #'000 #'000 (Loss)/profit on ordinary activities before tax (29,733) 4,188 Expected tax credit/(charge) at 30% 8,920 (1,256) Expenses not deductible for tax purposes (216) (234) Tax losses for which no deferred tax asset recognised (5,228) 377 Overseas earnings not subject to tax 49 38 Adjustment to previous years' tax charge - (1) _____ ______ Tax credit/(charge) on (loss)/profit on ordinary activities 3,525 (1,076) Deferred taxation Deferred tax liability at 1 May 2000 (175) Profit and loss account 2,805 Deferred tax asset at 30 April 2001 2,630 The amounts of deferred taxation assets/(liabilities) provided and unprovided in the accounts at the rate of 30% (2000: 30%) are:- Provided Unprovided 2001 2000 2001 2000 #'000 #'000 #'000 #'000 Tax losses 2,630 - 6,230 - Timing differences relating to Birse - (75) (130) (90) Insurance Capital allowances - (150) 1,025 300 Other short term timing differences - 50 - - 2,630 (175) 7,125 210 The deferred tax asset recognised is based upon the estimated tax losses of the relevant businesses that can be relieved in the foreseeable future after taking into account the historical performance of those businesses. 6. Dividends on equity shares 2001 2000 #'000 #'000 Interim: 0.375p per ordinary share (2000: 0.375p) 721 721 Final proposed: 0.625p per ordinary share (2000: 0.625p) 1,203 1,203 1,924 1,924 7. (Loss)/earnings per ordinary share 2001 2000 #'000 #'000 The calculation of (loss)/earnings per ordinary share is based on: (Loss)/earnings for basic and diluted (loss)/earnings per ordinary share calculation (26,208) 3,112 Exceptional items 27,663 (77) Tax on exceptional items (1,000) 7 _______ _______ Earnings before exceptional items per ordinary share 455 3,042 calculation 2001 2000 Thousands Thousands Weighted average number of shares used in basic earnings per ordinary share calculation 192,390 192,390 Dilutive effect of options (2,470) - Weighted average number of shares used in diluted earnings per ordinary share calculation 189,920 192,390 8. Net cash at bank 2001 2000 #'000 #'000 Net cash at bank comprises: Cash at bank on demand (5,618) 1,068 on short term deposit 12,508 5,133 on deposit with terms in excess of 2,743 2,586 seven days Bank loans: Due within one year (400) - Due after one year (100) - 9,133 8,787 9. Debtors; uncertainty relating to amounts recoverable on contracts Included in debtors is an aggregate value of #6.7million attributable to contractual amounts relating to three contracts which are the subject of arbitration or equivalent proceedings. In consequence of the losses suffered on the Hastings and Rhymney contracts (see Note 3) the Directors have re-considered the recoverability of the amounts attributable to these and other old contracts. Whilst the Directors believe that they are justified in concluding that these amounts will be realised, the Directors acknowledge that there remains uncertainty. However, it is not possible to quantify the effects. 10. 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 2000 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 2001 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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