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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:1036Y Birse Group PLC 3 July 2002 Date: Embargoed until 7.00am 3rd July 2002 Contact: Peter Watson, Chairman Telephone: 01652 633222 Martin Budden, Group Managing Director Heather Appleford, Group Finance Director Birse Group plc Scott Fulton Telephone: 0207 831 3113 Financial Dynamics BIRSE GROUP plc - PRELIMINARY ANNOUNCEMENT Birse Group plc, the construction, plant hire and property group today announces preliminary results for the year ended 30 April 2002. These may be summarised as follows:- Pre-tax profits of £6.7million (2001: loss of £29.7million). Exceptional credit of £1.5million (2001: exceptional operating losses of £27.7million). Pre-tax profits of £5.2million before exceptional item (2001: Pre-tax loss of £2.1million). Improvement led by Birse Construction - operating profit of £2.4million (2001: loss of £5.3million before exceptional operating items). Plant Hire increases profit to £2.4million (2001: £2million). Record Construction order book; £470million at 31 May 2002 (2001: £420million). Net cash at £12.7million (2001: £9.1million). Dividend 1p per share (2001: 1p per share). "The turnaround in Birse's results this year has been particularly pleasing after the difficult period in the previous year. With our main markets expected to remain steady, Birse is well positioned to progress further." M Budden P G Watson CHAIRMAN'S STATEMENT Results Pre-tax profits of £6.7million compare with pre-tax losses of £29.7million incurred in 2000/2001. The former figure has benefited from an exceptional credit of £1.5million relating to the sale of Birse Homes Limited in 1995; the comparative figure is after charging exceptional contract losses of £27.7million. Eliminating the effects of these non-recurrring items gives rise to a pre-tax pre exceptional profit of £5.2million in the year under review compared with a corresponding loss of £2.1million in the preceding year. The improved Group performance is mirrored in the performance of Birse Construction. That company delivered an operating profit of £2.4million compared with an operating loss before exceptionals of £5.3million in 2000/2001. A reduction of operating profit in its Building Division was more than offset by an increase in profits in its Civil Engineering business (2001/2002 operating profit of £4.9million; 2000/2001 operating profit £528,000). There was also a significant reduction in the losses incurred by its Process Engineering Division. In the previous year that business produced an operating loss of £9.5million compared with £2.7million in the current year of which £2.2million was incurred in the first half. These results reflect the considerable progress made in turning round that operation. Plant Hire improved results for the third year running increasing operating profits to £2.4million from £2million. The Group's Commercial Property activities reported an operating profit of £762,000 (2000/2001: £2million) reflecting a more selective approach to sales with a view to optimising returns. The exceptional credit of £1.5million relates to the disposal of Birse Homes Limited. The sale of that company was completed in 1995 on terms involving deferred consideration dependent upon the satisfaction of certain conditions. Those conditions were satisfied in the second half of the year giving rise to a cash receipt net of related costs of the amount in question in April 2002. The net interest credit of £179,000 (2000/2001: charge of £159,000) reflects the trend established by the Group over the last six years of managing a reduction of its net borrowings. At 30 April 2002 the Group had a net cash position of £12.7million including amounts held on deposit as investments (30 April 2001: £9.1million). Dividend The Board is recommending a final dividend of 0.625p per ordinary share (2001: 0.625p) maintaining the total dividend for the year at 1p per ordinary share (2001: 1p). Subject to the approval of shareholders at the Annual General Meeting the final dividend is payable on 1 November 2002 to shareholders appearing on the register at the close of business on 4 October 2002. The Board On 16 August 2001 the Board announced the retirement of Peter Birse and the consequent appointments of myself as Chairman, Martin Budden as Group Managing Director and Heather Appleford as Group Finance Director. At the same time John Elders, the Managing Director of Birse Construction Limited, left the Group. David Goose subsequently left the Group with effect from 28 May 2002. It would be remiss of me not to pay tribute to Peter upon his retirement. Peter founded the Group some thirty years ago and oversaw its development from those humble beginnings to flotation in 1989. His energy, integrity, professionalism and entrepreneurial spirit are values that are embedded in the business today. He can be rightly proud of his achievements as we are proud of the business that still bears his name. On 23 April 2002 the Group's team of Non Executive Directors reverted to three in number following the appointment of David Cotterill. David brings with him extensive experience at senior levels in various engineering businesses. He is currently a Non-Executive Director of British Vita plc and was formerly Chief Executive of Renold plc and a Director of Senior Engineering Group plc. Outlook At the end of 2001 it was reported that we had a platform for positive progress. Evidence of further progress was reported at the half year despite uncertainties emerging in relation to the macro economic picture and the future of Railtrack. By and large those uncertainties have diminished as a result of which there is no reason to expect any significant change in the Group's main markets. The Group is, therefore, in a position to progress further particularly given the turnaround of results achieved in the year under review. GROUP MANAGING DIRECTOR'S REVIEW AND REVIEW OF OPERATIONS Overview Following a difficult 2001 it was important that the Group returned to profitability in 2002 and more particularly that Birse Construction delivered a profit. Fundamental to the turnaround of that company was a turnaround of its Process Engineering Division. Operating losses incurred by that business in 2000/2001 amounted to £9.5million. Losses have been reduced to £2.7million in the present year with the business effectively performing at break-even level in the last quarter. More importantly that business is now run by a competent and professional management team and has blue-chip customers willing to award it work. More detailed commentary upon the performance of Birse Construction is provided below. Suffice to say that its Civil Engineering Division produced a strong performance while market conditions proved very demanding in relation to its Building Division. BPH Equipment's operating profit fell from £1.3million to £1.1million after a strong performance from its hydraulic crane fleet was more than absorbed by a fall in demand for mechanical crawler cranes. It remains a priority for the business that the quality of its hire fleet is improved by investing new money in hydraulic cranes whilst at the same time reducing the number of mechanical machines in its portfolio. Investment in hydraulic cranes in the year amounted to £0.5 million whilst disposals of mechanical machines amounted to four in number. Overall the results of the Plant Hire sector increased due to a strong performance from The Cabin Company Limited, the Group's site accommodation hire business. Operating profits increased to £1.3million from £716,000 achieved in 2000/2001. Land sales at Warrington fell due to the more selective approach adopted with a view to optimising prices and maximising future development opportunities. During the year five acres of land adjacent to the existing site were acquired. Opportunities to add further to our Warrington landbank will only be exploited where value opportunities are clearly visible. Warrington remains the Group's only development site. The Group's activities are now structured around three areas of operation, Construction, Plant Hire and Commercial Property Development. In addition each central service function has been set up on the basis of a supplier/customer relationship with the operations it services. Not only does this structure engender a focus on the customer attitude which is a fundamental requirement of all our businesses but it also allows us to incubate potential new trading ventures. This was the model adopted with regard to The Cabin Company Limited which for the first three years of its life traded as the Group's internal Site Accommodation Division. Now established as an independent operating unit, it is trading with customers external to the Group. We will remain alert for opportunities to repeat this model albeit on a selective basis. Further alignment of the Group's organisational structure with its strategic objectives was achieved in the year with the incorporation on 30 April 2002 of the various operating businesses which previously comprised the trading divisions of Birse Construction. As a result the Construction Division now has independent corporate entities dedicated to civil engineering, rail, London Underground, build, stadia, process and water engineering. Each of these businesses has its own board of directors focused upon specific customers and markets delivering products aligned with core competencies in a safe manner all in tandem with a business unit strategy aimed at either creating or maintaining a competitive advantage. It is a fundamental value of this Group that all its business is undertaken in a manner that protects the safety of everyone associated with our operations whether they be customers, suppliers or our own staff. Having surpassed all previous achievements in 2001 with the accreditation of twelve gold awards and one silver award from the Royal Society for the Prevention of Accidents this record was broken again in 2002 with the allocation of thirteen gold awards. Whilst we are rightly proud of our achievements resulting in these awards we cannot be satisfied until all accidents are eliminated from our operations. This will involve not only appropriate management at a functional level but also the strategic intent and commitment from top management and the embedding of an attitude in all our staff, customers and supplier colleagues that one accident is one too many. Birse Construction Limited 2002 2001 Turnover Operating Turnover Operating profit/(loss) (loss)/profit* £'000 £'000 £'000 £'000 Civil Engineering 214,868 4,888 168,646 528 Building 246,127 269 221,626 3,643 Process Engineering 20,837 (2,745) 24,647 (9,494) 481,832 2,412 414,919 (5,323) Analysed between:- First Half 244,263 154 190,383 (8,085) Second Half 237,569 2,258 224,536 2,762 481,832 2,412 414,919 (5,323) * Before exceptional operating items. The Civil Engineering Division comprises Birse Rail Limited, Birse Metro Limited (a dedicated London Underground business) and Birse Civils Limited. Its strong profit performance derives from buoyant demand from the rail and infrastructure markets and a more effective performance by management. Market demand remains relatively strong and with the water sector expected to place orders at a higher aggregate value than in the year under review 2002/2003 should see demand increase. However, a feature of a number of market sectors has been for major customers to bundle together projects that previously would have been let as individual contracts under one framework type arrangement. These arrangements thereby produce somewhat of an 'all or nothing' situation in terms of job awards. It is, therefore, important that we are competitive under these new customer procurement practices. The results reported by the Building Division were depressed because of poor returns on two of its larger projects and a negative contribution of £335,000 in relation to an under priced contract. Furthermore, this division experienced a fall off in the level of enquiries from around the end of September and had difficulties with matching operational resources and capabilities with activity levels particularly in the South where it has clearly been over-stretched. Whilst enquiry levels outside the sports stadia sector have returned to pre September levels prices remain tight. Considerable uncertainty exists in relation to the stadia market directly consequent upon the well documented financial problems in the football industry. Given this uncertainty, the low margins available generally, the impact of falling enquiries in the middle of the year (this will effect adversely workload in 2002/2003) and resource allocation issues this Division is expected to trade at a loss in 2002/2003 despite the mitigating actions of management. By any standard the results achieved by the Process Engineering Division indicate a material turnaround of operations. Further evidence that this business has established credibility with the market place was provided following the award and successful completion of a small number of major contracts from blue-chip customers in the water industry. With this sector about to increase significantly its capital and maintenance spend market conditions should continue to improve. With Birse Construction facing relatively strong demand in each of its areas of operations managing resources will be a challenge facing management that has not had to be dealt with in the immediate past. It will be essential that we remain selective if we are to meet the requirements of our customers. It is only through meeting those requirements that results will improve. Order Book At the end of May 2002 secured workload stood at £470 million (2001: £420million). Amounts Recoverable on Contracts Included in debtors at 30 April 2002 is an aggregate value of £6.2 million (2001: £6.7million) attributable to two (2001: three) contracts which remain the subject of arbitration or equivalent proceedings. The case settled in the year was resolved by way of negotiation. The two outstanding cases at this point in time remain subjects of due process. Consequently as described in Note 8 to this announcement recoverability of value remains uncertain. Plant Hire 2002 2001 Turnover Operating Turnover Operating profit profit £'000 £'000 £'000 £'000 Crawler Cranes 3,508 849 3,554 890 Piling Equipment 942 259 1,077 443 Site Accommodation 4,142 1,277 1,263 716 8,592 2,385 5,894 2,049 Analysed between:- First Half 4,157 1,215 3,104 1,026 Second Half 4,435 1,170 2,790 1,023 8,592 2,385 5,894 2,049 With effect from 1 May 2001 the Group's internal Site Accommodation Division was incorporated and commenced trading as an independent operating unit under the name of The Cabin Company Limited. All comparative figures have been restated on a pro-forma basis as though The Cabin Company Limited had operated independently from 1 May 2000. During the second half of the year The Cabin Company commenced trading with its first external customers. Whilst operational efficiencies still remain to be secured the Company's longer term growth in profits will only be achieved if it is successful in serving the external market. To support this expansion capital expenditure of £2million for the forthcoming year has been approved. Upon the departure of David Goose from the Group, Graham Booth was appointed Managing Director of BPH Equipment. Graham, aged 55, has been in plant hire all his working life and had been Operations Director of BPH since 1989. The Crawler Cranes and Piling Equipment operations continue to trade as divisions of BPH. The downward trend in demand for mechanical crawler cranes continued albeit it at a faster rate than anticipated thereby depressing performance compared with the previous year. With this worsening trend we are accelerating our medium term objective to build a fleet comprising exclusively of hydraulic machines. The Piling business suffered from a lack of orders for its larger hammers. Given that these assets tend to be employed on major construction projects the increased number of those contracts expected in future years should benefit BPH. Commercial Property 2002 2001 Turnover Operating Turnover Operating profit profit £'000 £'000 £'000 £'000 1,217 762 4,409 1,965 Analysed between:- First Half - 114 1,696 793 Second Half 1,217 648 2,713 1,172 1,217 762 4,409 1,965 Reported turnover represents the aggregate of the initial consideration on land sales transacted in the year and contingent consideration in respect of earlier completions. During the year 1.4 acres of land were sold (2001: 8.2acres) for an initial consideration of £0.6million (2001: £3million). Although more sales could have been achieved in the circumstances this would have had the effect of either depressing future prices or restricting the development potential of the remaining land. Contingent consideration crystallising in the year amounted to £0.6million (2001: £1.4million). Following the purchase of an additional five acres of land there remains 14 acres of land to be sold or developed. CONSOLIDATED PROFIT AND LOSS ACCOUNT For the Year Ended 30 April 2002 2002 2001 Note £'000 £'000 Turnover 1 487,238 423,423 Cost of sales: Ordinary trading (458,773) (403,963) Exceptional operating items 2 - (27,663) (458,773) (431,626) Gross profit/(loss) 28,465 (8,203) Administrative expenses (23,414) (21,371) Operating profit/(loss) 1 5,051 (29,574) Profit on disposal of subsidiary undertaking 3 1,499 - Net interest 179 (159) Profit/(loss) on ordinary activities before taxation 1 6,729 (29,733) Taxation 4 (400) 3,525 Profit/(loss) for the financial year 6,329 (26,208) Dividends on equity shares 5 (1,924) (1,924) Transferred to/(withdrawn from) reserves 4,405 (28,132) Earnings/(loss) per ordinary share - basic 6 3.3p (13.6)p - diluted 6 3.3p (13.8)p - before exceptional items - basic 6 2.5p 0.2p - diluted 6 2.5p 0.2p The above figures relate exclusively to continuing operations except for the profit on disposal of subsidiary undertaking (Note 3). 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 2002 2002 2001 £'000 £'000 Fixed Assets Tangible assets 14,187 12,241 Current Assets Stocks 3,246 2,714 Debtors 146,712 127,789 Investments 3,814 3,743 Cash at bank and in hand 10,482 6,890 164,254 141,136 Creditors: Amounts falling due within one year 161,667 142,461 Net Current Assets/(Liabilities) 2,587 (1,325) Total Assets Less Current Liabilities 16,774 10,916 Creditors: Amounts falling due after more than one year (6,055) (5,156) Provisions for Liabilities and Charges (554) - Net Assets 10,165 5,760 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 (10,082) (14,487) Shareholders' Funds - equity interest 10,165 5,760 CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 April 2002 2002 2002 2001 2001 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 7,419 5,591 Returns on investments and servicing of finance Interest received 468 281 Interest paid (259) (457) Interest element of finance lease rentals and hire purchase contracts (42) (18) Net cash inflow/(outflow) from returns on investments and servicing of finance 167 (194) Taxation UK Corporation tax received/(paid) 2 (90) Capital expenditure and financial investment Purchase of tangible fixed assets (4,072) (2,653) Increase in current asset investments - (1,000) Sale of tangible fixed assets 618 522 Net cash outflow from investing activities (3,454) (3,131) Disposal of subsidiary undertaking 1,499 - Disposal of businesses - 150 Dividends paid to equity shareholders (1,924) (1,924) Cash inflow before management of liquid resources and financing 3,709 402 Management of liquid resources Movement in cash held on short term deposits 12,508 (7,375) Movement in cash deposits with terms in excess of seven days (71) (157) Net cash inflow/(outflow) from management of liquid resources 12,437 (7,532) Financing Loan advances 478 1,200 Loan repayments (400) (700) Capital element of finance lease rentals and hire purchase contracts (124) (56) Net cash (outflow)/inflow from financing (46) 444 Increase/(decrease) in cash in the year 16,100 (6,686) NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS For the year ended 30 April 2002 Segment Information (a) Turnover and results: Turnover Operating profit/(loss) 2002 2001 2002 2001 £'000 £'000 £'000 £'000 (As (As restated) restated) Contracting 481,832 414,919 2,412 (5,323) Plant hire 8,592 5,894 2,385 2,049 Commercial property 1,217 4,409 762 1,965 Group centre - - (508) (602) Intra-group (4,403) (1,799) - - 487,238 423,423 5,051 (1,911) Exceptional operating items - Contracting - (27,663) Operating profit/(loss) 5,051 (29,574) Profit on disposal of subsidiary undertaking 1,499 - Profit/(loss) before interest 6,550 (29,574) Net interest 179 (159) Profit/(loss) on ordinary activities before taxation 6,729 (29,733) (b) Net assets: 2002 2001 £'000 £'000 (As restated) Contracting (18,386) (16,179) Plant hire 7,936 6,165 Commercial property 7,318 5,515 Group centre (567) (522) (3,699) (5,021) Unallocated net assets 13,864 10,781 10,165 5,760 The above analysis reflects the segments by which the Group is managed. All turnover arises from work performed within the United Kingdom. 2002 2001 £'000 £'000 Unallocated net assets comprise: Current asset investments 3,814 3,743 Net cash at bank 9,904 6,390 Obligations under finance leases and hire (398) (298) purchase contracts Corporation tax 238 240 Deferred taxation 2,230 2,630 Dividends payable on equity shares (1,924) (1,924) 13,864 10,781 Net assets for each segment represents non-interest bearing operating assets less non-interest bearing operating liabilities. With effect from 1 May 2001 the Group's internal site accommodation hire division was incorporated as an independent operation trading under the name of The Cabin Company Limited. Its results are reported as part of the plant hire sector with prior period results restated accordingly. The adjustments made to the segmental analysis are summarised below:- Turnover Operating Net profit/(loss) Assets £'000 £'000 £'000 Contracting - (716) (801) Plant hire 1,263 716 801 Intra-group (1,263) - - - - - 2. Exceptional Operating Items 2002 2001 £'000 £'000 Losses on contracts subject to litigation - 27,663 The amount of the tax (charge)/credit for the year attributable to these exceptional losses is nil (2001: £1,000,000). 3. Profit on disposal of subsidiary undertaking On 24 April 1995 the Company sold its entire shareholding in Birse Homes Limited. During the year, under the terms of the sale agreement the Company received deferred consideration net of related costs of £1,499,000. There are no further amounts due under the terms of this sale agreement. There is no tax charge in respect of this exceptional receipt 4. Taxation 2002 2001 £'000 £'000 Corporation Tax United Kingdom corporation tax at 30% on profits/(losses) of the year - 720 Under provision for prior years - - - 720 Deferred Tax Timing differences, origination and reversal (1,014) 1,775 Adjustments to estimated recoverable amounts of deferred tax assets arising in previous years' 614 1,030 (400) 2,805 Tax (charge)/credit on profit/(loss) on ordinary activities (400) 3,525 The corporation tax (charge)/credit for the year is below the expected rate of 30% - the differences are explained below: 2002 2001 £'000 £'000 Profit/(loss) on ordinary activities before tax 6,729 (29,733) Expected corporation tax (charge)/credit at 30% (2,019) 8,920 Expenses not deductible for tax purposes (149) (216) Tax losses 2,452 (7,858) Capital allowances in excess of depreciation 615 (175) Exceptional tax free item 450 - Other timing differences ( 1,349) 49 Current year corporation tax (charge)/credit - 720 Deferred taxation Asset Liability Net £'000 £'000 £'000 At 1 May 2001 2,630 - 2,630 Profit and loss account 154 (554) (400) At 30 April 2002 2,784 (554) 2,230 The amounts of deferred taxation assets/(liabilities) provided and unprovided in the accounts at the rate of 30% (2001: 30%) are:- Provided Unprovided 2002 2001 2002 2001 £'000 £'000 £'000 £'000 Tax losses 790 2,630 5,620 6,230 Timing differences relating to Birse Insurance - - - (130) Capital allowances 206 - 55 1,025 Other short term timing differences 1,234 - - - 2,230 2,630 5,675 7,125 The deferred tax assets recognised are based either upon the estimated tax losses of the relevant businesses that can be relieved or upon those timing differences that will reverse in the foreseeable future after taking into account the historical performance of those businesses. 5. Dividends on equity shares 2002 2001 £'000 £'000 Interim: 0.375p per ordinary share (2001: 0.375p) 721 721 Final proposed: 0.625p per ordinary share (2001: 0.625p) 1,203 1,203 1,924 1,924 The interim dividend was paid on 3 May 2002. Subject to the approval of shareholders at the Annual General Meeting the final dividend will be paid on 1 November 2002 to shareholders appearing on the register at the close of business on 4 October 2002. 6. Earnings/(loss) per ordinary share 2002 2001 £'000 £'000 The calculation of earnings/(loss) per ordinary share is based on: Earnings/(loss) for basic and diluted earnings/(loss) per ordinary share calculation 6,329 (26,208) Exceptional items ( 1,499) 27,663 Tax on exceptional items - (1,000) Earnings before exceptional items per ordinary share calculation 4,830 455 2002 2001 Thousands Thousands Weighted average number of shares used in basic earnings per ordinary share 192,390 192,390 calculation Dilutive effect of options - (2,470) Weighted average number of shares used in diluted earnings per ordinary share calculation 192,390 189,920 7. Net cash at bank 2002 2001 £'000 £'000 Net cash at bank comprises: Cash at bank - on demand 10,482 (5,618) - on short term deposit - 12,508 - on deposit with terms in excess of seven days 2,814 2,743 Bank loans: Due within one year (378) (400) Due after one year (200) (100) 12,718 9,133 8. Debtors; uncertainty relating to amounts recoverable on contracts Included in debtors is an aggregate value of £6.2million (2001: £6.7million) attributable to contractual amounts relating to two (2001: three) contracts which are the subject of arbitration or equivalent proceedings. In consequence of the losses suffered on contracts subject to litigation in the previous year (see Note 2) the Directors have reconsidered 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. 9. 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 2001 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 2002 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. This information is provided by RNS The company news service from the London Stock Exchange
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