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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 | |
---|---|---|---|---|---|---|---|---|---|---|
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:6087A Birse Group PLC 08 July 2004 Date: Embargoed until 7.00am 8th July 2004 Contact: Peter Watson, Chairman Telephone: 01302 768 078 Martin Budden, Group Managing Director Heather Craven, Group Finance Director Birse Group plc Sally Lewis Telephone: 0207 831 3113 Financial Dynamics BIRSE GROUP plc - PRELIMINARY ANNOUNCEMENT Birse Group plc, the construction and plant hire group today announces preliminary results for the year ended 30 April 2004. Financial Highlights:- * Pre-tax profits increased to #2.0million (2003: #1.2million). * Pre-tax pre-exceptional profits #6.6million (2003: #6.7million). * Net cash at #9.5million (2003: #12.8million). * Total dividend 1p per share (2003: 1p per share). Operational Highlights:- * Progress in core businesses maintained. Excluding effect of curtailed property development activities (2004: #207,000, 2003: #3million) core businesses deliver #6.4million pre-tax pre-exceptional profit compared with #3.7million in 2003. * Construction leads the way with pre-exceptional operating profit at #4.4million (2003: #490,000). * Although uncertainties remain in respect of the re-shaping of Birse Build the de-risking of the Group continues with reduced exposure to highly competitive build markets. * Plant Hire delivers #2.5million operating profit (2003: #3.6million) despite reduction in intra-group site accommodation hire opportunities. * Results delivered in spite of distraction of Citibank Adjudication. Adjudication award and related costs give rise to #4.6million exceptional operating charge but short term uncertainties removed. * Solid Construction order book (excluding build markets) totalling #400million at 31 May 2004 (31 May 2003: #259million). "With a greater proportion of its activities focused upon its markets of choice the Group is in a position to continue to improve its underlying performance." M Budden P G Watson CHAIRMAN'S STATEMENT Results Pre-tax profits totalling #2.0million compare with #1.2million achieved in 2002/ 2003. The former figure is after charging an exceptional operating item of #4.6million relating to the Citibank Adjudication; the comparative figure is after charging an exceptional operating item of #5.5million. Eliminating the effects of these one off costs gives rise to a pre-tax pre exceptional profit of #6.6million in the year under review compared with a corresponding profit of #6.7million in the preceding year. Given that the 2002/2003 figure incorporates a contribution of #3million from the Group's curtailed Commercial Property activities the result for the year is indicative of the positive progress made by its core businesses. Birse Construction led the way reporting a pre-exceptional operating profit of #4.4million (2002/2003: #490,000). A strong second half performance from its Civil Engineering business led to full year results increasing from #7.3million to #12.6million at the operating profit level. Birse Process delivered its first profitable full year result at #493,000 (2002/2003 operating loss of #352,000) since its turnaround was initiated. Birse Build as expected suffered significant pre-exceptional losses at #8.7million (2002/2003 operating loss of #6.4million) as it continues to downsize with a view to reducing its exposure to the less profitable sectors of the market. The Cabin Company, the Group's site accommodation business also suffered at the expense of Birse Build's shrinkage which is the main factor behind the fall in operating profits from Plant Hire from #3.6million in 2002/2003 to the #2.5million delivered in 2003/2004. As reported previously following the sale in the previous year of the remaining land at its Warrington site the Group's Commercial Property returns are insignificant (#207,000 operating profit in 2003/2004 compared with #3million in 2002/2003). The Group Centre costs of #521,000 (2002/2003: cost of #479,000) reflect the re-positioning of the Head Office function within the Group's corporate structure. The #4.6million exceptional operating item relates to the Citibank Adjudication. Details of this adjudication were published in the Group's half year statement. In summary, the adjudication was to determine on an interim basis Citibank's claim for approximately #16million and Birse Construction's claim for approximately #14million. By way of a decision published on 24 February 2004 the adjudicator determined that Birse Construction should pay Citibank approximately #2.1million. The exceptional operating item referred to comprises that award together with the ongoing costs associated with defending the action. Details of the adjudicator's decision were announced to the Stock Exchange at start of business on 25 February 2004. As stated in that announcement the adjudicator's decision awarded only a fraction of the amount claimed by Citibank and removed a high degree of uncertainty hanging over the business at that time. It is important to emphasise however that the adjudication was an interim decision only and that litigation with Citibank continues as more fully explained in the Review of Operations. The small net interest charge (2002/2003: credit of #98,000) reflects mainly the negative impact upon cash flows resulting from the working capital effects of reducing the level of turnover undertaken by Birse Build and the costs relating to the Citibank Adjudication. At 30 April 2004 the Group had a net cash position of #9.5million including amounts held on deposit as investments (30 April 2003: #12.8million). Dividend The Board is recommending a final dividend of 0.625p per ordinary share (2002/ 2003: 0.625p) maintaining the total dividend for the year at 1p per ordinary share. Subject to the approval of shareholders at the Annual General Meeting the final dividend is payable on 1 November 2004 to shareholders appearing on the register at the close of business on 1 October 2004. Outlook At the half year it was reported that the Group was in a good position to progress further from the solid platform established over the last two years, that its main markets remained steady and that assuming a satisfactory outcome in relation to the Citibank Adjudication that further progress in the underlying performance of the Group would continue. Litigation issues still remain to be resolved in respect of Citibank but the adjudicator's decision has removed the uncertainties to which the business was exposed at that time in respect of that matter. Although uncertainties will remain for the Group in respect of the Build business the Group's withdrawal from the loss making sectors of that market is expected to be substantially completed in the current year. Therefore with a greater proportion of its activities focused upon its markets of choice the Group is in a position to continue to improve its underlying performance. GROUP MANAGING DIRECTOR'S REVIEW AND REVIEW OF OPERATIONS Overview In a year when senior management had the distraction of the Citibank Adjudication it is encouraging that the Group's core businesses continued collectively to make positive progress. It is a reflection of their quality and a credit to the directors and management now leading those subsidiaries that progress could be made in these circumstances. We have stated in the past that it is the development of these autonomous businesses and the managers who run them that will drive forward Group performance, and it is encouraging to see evidence of that development in underlying profits. In the year under review pre-tax pre-exceptional profits amounted to #6.6million compared with #6.7million in 2002/2003. However the results in the prior year include a #3million contribution from property development activities compared with #207,000 in 2003/2004. That #3million profit arose from the sale of all of the remaining land at Warrington, the Group's only development site, signalling the end of the Group's involvement in property development. Excluding the effects of the contribution from these curtailed activities gives rise to a #6.4million pre-tax pre-exceptional profit in 2003/2004 compared with #3.7million in the previous year, reflecting the progress made in the core businesses. That progress was led by Birse Construction Limited reporting a pre-exceptional operating profit of #4.4million up from #490,000 in 2002/2003. A strong performance from its Civil Engineering business (operating profit of #12.6million; 2002/2003 #7.3million) combined with a return to profitability in its Process Engineering subsidiary (operating profit of #493,000: 2002/2003 loss of #352,000) offset the expected pre-exceptional losses of #8.7million (2002/ 2003 loss of #6.4million) incurred by Birse Build Limited. The Group's exposure to the very competitive Build market continued to reduce as turnover fell from #196million in 2002/2003 to #110million in 2003/2004. Further reductions will occur in the current year. This contraction of Build turnover adversely affected the Group's site accommodation business particularly in the second half. The pace at which intra-group build hire business was lost exceeded the pace at which replacement hires could be secured from the external market. This change in sales mix is the main factor behind the fall in Plant Hire profits from #3.6million in the previous year to the #2.5million operating profit now reported. However, with customers external to the Group representing a growing forty four percent of aggregate site accommodation hire turnover prospects for a recovery in 2004/2005 are realistic. The conclusion of the Citibank Adjudication gave rise to the exceptional operating item of #4.6million. A more detailed narrative upon the current status of that dispute is provided subsequently. It is important to emphasize that the adjudication was an interim decision only. Unless a final negotiated resolution can be reached with the customer concerned, which is our preferred option, litigation of a longer term nature will continue into the foreseeable future. The Group has always had at its core its fundamental value that all business should be undertaken in a manner that protects the safety of everyone associated with our operations whether this be our customers, suppliers or our own staff. As we have repeatedly stated our attitude is that one accident is one too many. Consequently we will continue supporting our supply chain through training and audits with a view to achieving alignment with our own practice, processes and compliance procedures. In addition we are starting to turn our attentions to the behavioural aspects of safety management and in the coming year are likely to be pioneering the application of leading edge practices adopted in this area by other industries. It is now some three years ago that we embarked upon directing the Group in accordance with our determined strategy which simply stated is to:- "Leverage a group of construction related autonomous businesses each focused on the customer and its core competencies, operating safely and self funded run by directors who think and behave like owners." This strategic intent has driven many changes. The Group structure has moved from a centrally controlled organisation to one based around autonomous subsidiaries run by directors empowered to make decisions best for their own business albeit within clear lines of accountability. Competencies have been identified and matched with market opportunities. Customers are now put first. Systematic management procedures ensure that this happens. Director and management development and succession is embedded in each subsidiary business. However strategy is ten percent design and ninety percent implementation. There remains much implementation to do and therefore much more potential to realise given that businesses and particularly construction led groups do not become transformed overnight. Financial results have improved (despite the ongoing problems with the Group's Build subsidiary and exceptional charges mainly relating to legacy contracts). It is however the determined application of our strategy that is reducing materially the Group's exposure to the loss making Build market and decreasing the risk of future exceptional charges emerging from current activities. Whilst there will always be challenges to overcome it is in the knowledge of our advancements to date combined with the emerging improvement in the delivery of results that lead us to view the future with increasing optimism. CONSTRUCTION 2004 2003 Turnover Operating profit* Turnover Operating profit* #'000 #'000 #'000 #'000 Civil Engineering 241,388 12,601 246,232 7,272 Building 109,583 (8,719) 195,602 (6,430) Process Engineering 60,629 493 27,838 (352) 411,600 4,375 469,672 490 Analysed between:- First Half 197,647 301 245,980 11 Second Half 213,953 4,074 223,692 479 411,600 4,375 469,672 490 * Before exceptional operating item. Civil Engineering Birse Rail Limited, Birse Metro Limited (a dedicated London Underground business) and Birse Civils Limited collectively comprise the Civil Engineering Division. At the half year stage we reported that the performance of Civil Engineering had been held back by market factors and that results in the second half were therefore expected to advance. This proved to be the case as major enhancement projects within Birse Rail and Government projects under the early contractor involvement protocol commenced pushing operating profits in the second six months of 2003/2004 to #8.1million compared with #4.5million in the first six months. Birse Civils Limited continues to adapt to a market place where customers are becoming increasingly sophisticated and more demanding of the contractor, not only at the project delivery level but also at a business level. Customers require a contractor to align with their own business objectives and deliver projects in a corresponding manner. Assessment and qualification procedures are structured accordingly. The Highways Agency's audit of a self assessed capability process compiled by way of a specifically designed contractor assessment toolkit ("CAT") is indicative of the leading edge procurement techniques now employed. It is our view that increasing customer demands create opportunity. To pursue such opportunities Birse Civils Limited has strengthened its senior management team through the internal appointment of Mark Farrah to the role of corporate development director and the recruitment of Gary Wright. Gary was a leading visionary with the Highways Agency in developing and promoting the CAT procurement techniques. The flow of work within Birse Rail's market remains unpredictable particularly in relation to enhancement projects. Whilst its order book for the first half of the current year is solid thereafter indications are that the industry will focus on the renewal of long term structures framework arrangements. Birse Rail will be seeking to secure a renewal of its framework in the Midlands Region of Network Rail as well as targeting awards in respect of other regions. Significant management resources will be dedicated to winning this work given the long term nature (five to ten years) of the contracts concerned. It is important for the business that its high levels of customer service are maintained and that it is not deflected away from its customer first approach whilst competing for these long term awards. At the interim stage it was reported that Birse Metro had suffered from a lack of market opportunities since the private public partnerships took over responsibility for the maintenance of large parts of the London Underground infrastructure. Although its order book remains at a low point the last three months has seen an upsurge in enquiries. By reference to historic trends this should produce an upturn in work in the second six months of the current year in line with our expectations. However, Birse Metro is still faced not only with the challenge of securing projects but also with the task of delivering operating margins under different contract arrangements from those previously adopted by London Underground. Building We continue to reduce turnover in this division (2003/2004 #110million: 2002/ 2003 #196million) as we pursue our withdrawal from the market mainly the property developer led sectors, where Birse Build is unable to generate reliable returns. Further contraction of activities will occur in the current year. We will focus the remaining business substantially upon the local authority education sector, where customer preference is to procure by way of value added principles as opposed to the lowest cost option. To support this market driven focus we have transferred Birse Build's head office to the North West from Northampton and closed its Midlands and Southern regional operations. By the end of the 2004/2005 financial year monthly turnover in the restructured business is expected to be in the region of #3million with a cost base to match. However the costs associated with this reorganisation, combined with the work out to completion of low margin and other legacy contracts in the Midlands and the South lead us to conclude that Birse Build will continue to incur material losses in 2004/2005. Until therefore those legacy issues have been resolved and the re-shaping of the business completed there is further uncertainty for the Group over the performance of the Build business. On the other hand the positive impact upon the Group's risk profile has and will continue to occur as turnover falls. In the last five years the Group has incurred exceptional operating losses relating to legacy contracts undertaken by the Build business amounting in the aggregate to around #30million. Not one of these contracts was awarded in the last three years the period during which we have pursued our downsizing policy. Process Engineering In contrast to Birse Build our Process Engineering business continues to flourish to the extent where it can now regard itself as having put its turnaround behind it. Turnover increased by #33million giving rise to an operating profit of #493,000. The figures however understate the transformation of this company. It is now a truly engineering led customer focused business that operates in sectors where delivery is critical. Blue chip customers have repeatedly engaged the business in situations that have been high risk to their own operations. Birse Process is therefore well placed to pursue market opportunities particularly in its specialist area of odour control systems where there are encouraging signs that this market may increase substantially in size. Although its activity levels may fall in 2004/2005 because of the cyclical impact of regulatory price reviews within the UK Water Industry the company's longer terms prospects are very encouraging. Order Book At the end of May 2004 secured workload on a consolidated basis stood at #467million (31 May 2003: #382million). Excluding Build orders secured workload at the same date was #400million (31 May 2003: #259million) which further illustrates the progress made by our core construction business. Amounts Recoverable on Contracts Included in debtors at 30 April 2004 is an aggregate value, before provisions, of #7.1million (2003: #5.5million) attributable to two (2003: two) contracts which at that time remained the subject of arbitration or equivalent proceedings. As described in Note 7 in respect of those contracts recoverability of value remains uncertain. Citibank Adjudication In the Group's interim statement we reported that in late November 2003 CIB Properties Limited, a Citibank Group company, referred to adjudication matters relating to the termination of the contract for construction services for its new data centre facility at Riverdale, Lewisham. We further reported that the adjudication would determine on an interim basis Citibank's claim for approximately #16million and Birse's claim for approximately #14million and that adjudication is a process that is uncertain. By way of a decision published late into the evening on 24 February 2004 the adjudicator determined that Birse Construction should pay Citibank approximately #2.1million which together with the costs of defending this action comprise the #4.6million exceptional operating item now reported. Further details of the adjudicator's decision were published by way of a Stock Exchange announcement at start of business on 25 February 2004. That announcement also stated that the adjudicator's decision was open to challenge but only by reference to arbitration or litigation. That challenge has been lodged with the Technology and Construction Court giving rise to a litigation action which is unlikely to lead to a final hearing before the 2005/2006 financial year with a decision thereafter. The Board of Birse Group plc has been advised that it has realistic prospects in the litigation of reducing the award made by the adjudicator in the adjudication. We also await the enforcement of the adjudication award by the same court. Enforcement of the award has been challenged largely on the grounds of fairness and natural justice. A decision is expected at the end of July 2004. Payment of the #2.1million to Citibank is withheld pending that decision. It is the costs associated with these ongoing actions that has increased the costs of defending the adjudication over and above the indications contained within the related Stock Exchange announcement. Costs incurred into the future, where appropriate, will continue to be written off and charged as exceptional operating items. We stress however that regardless of the formal legal and associated proceedings our preferred option is to secure a negotiated full and final settlement. To this extent a dialogue is ongoing with Citibank. However this case has a number of highly complex features. Whilst settlement is the preferred approach we must be aware of the consequences of these complexities and respectful of the issues that they raise for Citibank. It is therefore important that we continue to take actions that we consider best protect the position of the Group. PLANT HIRE 2004 2003 Turnover Operating profit Turnover Operating profit #'000 #'000 #'000 #'000 Crawler Cranes 4,183 1,480 3,797 1,364 Piling Equipment 612 172 883 388 Site Accommodation 4,793 884 4,692 1,815 9,588 2,536 9,372 3,567 Analysed between:- First Half 5,021 1,708 4,500 1,703 Second Half 4,567 828 4,872 1,864 9,588 2,536 9,372 3,567 The Crawler Crane and Piling Equipment operations trade as divisions of BPH Equipment Limited, and our Site Accommodation business operates as The Cabin Company Limited. Crawler Cranes and Piling Equipment The high demand for the heavier weight mechanical cranes experienced in the first half of the year subsided in the second half. Demand for the more modern hydraulic cranes in contrast although solid in the first half moved forward in the second six months. Overall this enabled crawler cranes to increase profits by #116,000. Return on capital employed improved from the twenty three percent experienced in the prior year to twenty four percent. The trend of shrinking market opportunities for mechanical cranes and greater scope for their hydraulic counter-parts is expected to continue. We, therefore, continue to structure our investment plans accordingly. The objective is to balance asset disposals with acquisitions whilst at the same time improving the return on capital employed. Whilst piling returns fell compared to 2002/2003 BPH still retains a pre-eminent position in the marine engineering sector. This is the sector that also presents the best opportunities for combined crawler crane and piling hammer hires. BPH remains the only operator in the market able to supply this combination. The piling market is a mature market serviced by a small number of hirers. We have yet to make a final decision as to how growth can be best achieved in this sector. Until a final decision is reached capital expenditure will be limited to essential replacement items. Site Accommodation Intra-group sales fell by almost #1million in the year, mainly in the second half and primarily in relation to Birse Build. Sales to customers external to the Group increased by broadly the same amount. Sales to external customers in the aggregate amounted to #2.1million (2002/2003: #1.1million) representing forty four percent of total turnover (2002/2003: twenty three percent). The change in sales mix had a detrimental impact on margins. Firstly transport costs were adversely affected in that more one-way load trips were undertaken the effect of which was to increase costs by around #200,000. Secondly the external market does not purchase add on services at the same rate as intra-group customers. The focus for 2004/2005 given the changing mix of external and internal customers will be to secure more efficient transport programming and to develop the external market beyond pure asset hires. Both areas are viewed as a natural progression for what is a fledgling business. COMMERCIAL PROPERTY 2004 2003 Turnover Operating profit Turnover Operating profit #'000 #'000 #'000 #'000 305 207 7,953 3,025 Analysed between:- First Half - - - - Second Half 305 207 7,953 3,025 305 207 7,953 3,025 Turnover and profit in the year reflects the crystallisation of contingent consideration arising in respect of contracted sales in prior years. Following the sale of all of the company's remaining land in 2002/2003 returns from this aspect of the Group's activities will continue to be insignificant being restricted exclusively to the type of income recognised in the year under review. CONSOLIDATED PROFIT AND LOSS ACCOUNT For the Year Ended 30 April 2004 2004 2003 #'000 #'000 Note Turnover 1 417,355 483,312 Cost of sales: Ordinary trading (384,140) (446,614) Exceptional operating item 2 (4,600) (5,500) (388,740) (452,114) Gross profit 28,615 31,198 Administrative expenses (26,618) (30,095) Operating profit 1 1,997 1,103 Net interest (36) 98 Profit on ordinary activities before taxation 1 1,961 1,201 Taxation 3 912 (230) Profit for the financial year 2,873 971 Dividends on equity shares 4 (1,924) (1,924) Transferred to/(withdrawn from) reserves 949 (953) Earnings per ordinary share - basic 5 1.5p 0.5p - diluted 5 1.5p 0.5p - before exceptional items - basic 5 3.2p 2.5p - diluted 5 3.2p 2.5p 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 2004 2004 2003 Note #'000 #'000 Fixed Assets Tangible assets 16,285 16,703 Current Assets Debtors 7 139,180 134,736 Investments 8,620 5,121 Cash at bank and in hand 9,171 12,232 156,971 152,089 Creditors: Amounts falling due within one year 154,574 150,212 Net Current Assets 2,397 1,877 Total Assets Less Current Liabilities 18,682 18,580 Creditors: Amounts falling due after more than one year (8,521) (9,368) Net Assets 10,161 9,212 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 (10,086) (11,035) Shareholders' Funds - equity interest 10,161 9,212 CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 April 2004 2004 2004 2003 2003 #'000 #'000 #'000 #'000 Net cash inflow from operating activities 5,936 7,662 Returns on investments and servicing of finance Interest received 206 347 Interest paid (185) (253) Interest element of finance lease rentals and hire purchase contracts (57) (44) Net cash (outflow)/inflow from returns on investments and servicing of finance (36) 50 Taxation UK Corporation tax (paid)/received (58) 243 Capital expenditure and financial investment Purchase of tangible fixed assets (3,841) (5,162) Increase in current asset investments (3,374) (1,640) Sale of tangible fixed assets 183 904 Net cash outflow from investment activities (7,032) (5,898) Dividends paid to equity shareholders (1,924) (1,924) Cash (outflow)/inflow before management of liquid resources and financing (3,114) 133 Management of liquid resources Movements in cash deposits with terms in excess of seven days (125) 333 Net cash (outflow)/inflow from management of liquid resources (125) 333 Financing Loan advances 1,224 1,983 Loan repayments (901) (617) Capital element of finance lease rentals and hire purchase contracts (145) (82) Net cash inflow from financing 178 1,284 (Decrease)/increase in cash in the year (3,061) 1,750 NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS For the year ended 30 April 2004 1. Segment information (a) Turnover and results: Turnover Operating profit 2004 2003 2004 2003 #'000 #'000 #'000 #'000 (As restated) Contracting 411,600 469,672 4,375 490 Plant Hire 9,588 9,372 2,536 3,567 Commercial Property 305 7,953 207 3,025 Group Centre - - (521) (479) Intra-group (4,138) (3,685) - - 417,355 483,312 6,597 6,603 Exceptional operating item - Contracting (4,600) (5,500) Operating profit 1,997 1,103 Net interest (36) 98 Profit on ordinary activities before taxation 1,961 1,201 (b) Net assets: 2004 2003 #'000 #'000 Contracting (19,207) (23,884) Plant Hire 11,978 11,416 Commercial Property 1,383 6,520 Group Centre (210) (4) (6,056) (5,952) Unallocated net assets 16,217 15,164 10,161 9,212 The above analysis reflects the segments by which the Group is managed. All turnover arises from work performed within the United Kingdom. 2004 2003 #'000 #'000 Unallocated net assets comprise: Current asset investments 8,620 5,121 Cash at bank and bank loans 6,904 10,288 Obligations under finance leases and hire purchase contracts (348) (316) Corporation tax (40) (53) Deferred taxation 3,005 2,048 Dividends payable on equity shares (1,924) (1,924) 16,217 15,164 Cash at bank excludes bank deposits with terms in excess of seven days. Those balances are included as current asset investments. Net assets for each segment represents non-interest bearing operating assets less non-interest bearing operating liabilities. From 1 May 2003 Group Centre includes certain central costs that were previously recharged to operating companies. The adjustments made to the comparative segmental analysis are summarised below:- Operating profit #'000 Contracting 812 Plant Hire 203 Group Centre (1,015) - 2. Exceptional operating items 2004 2003 #'000 #'000 Adjudication costs (4,600) - Bad debt in respect of Leicester City plc and its subsidiaries - (5,500) (4,600) (5,500) Adjudication costs comprise a provision of #2.1million in respect of the adjudicator's award in the Citibank Adjudication together with the related legal and associated costs of #2.5million. The tax credits attributable to these exceptional items are #1,380,000 (2003: #1,650,000). 3. Taxation 2004 2003 #'000 #'000 Corporation tax United Kingdom corporation tax at 30% on profits of the year (40) - Under provision for prior years (5) (48) (45) (48) Deferred tax Timing differences, origination and reversal 964 (420) Adjustments to estimated recoverable amounts of deferred tax assets arising in previous years (7) 238 957 (182) Tax credit/(charge) on profit on ordinary activities 912 (230) The corporation tax charge for the year is below the expected rate of 30% - the differences are explained below: 2004 2003 #'000 #'000 Profit on ordinary activities before tax 1,961 1,201 Expected tax charge at 30% (588) (360) Expenses not deductible for tax purposes (128) (155) Tax losses 432 790 Capital allowances in excess of depreciation (782) (180) Other timing differences 1,026 (95) Current year corporation tax (40) - Deferred taxation #'000 At 1 May 2003 2,048 Profit and loss account 957 At 30 April 2004 3,005 The amounts of deferred taxation assets provided and unprovided in the accounts at the rate of 30% (2003: 30%) are: - Provided Unprovided 2004 2003 2004 2003 #'000 #'000 #'000 #'000 Tax losses 1,500 360 4,043 5,185 Capital allowances 1,324 545 - - Other short term timing differences 181 1,143 - - 3,005 2,048 4,043 5,185 The deferred tax assets recognised are based upon an estimate of timing differences that will reverse in the foreseeable future after taking into account the historical performance of group businesses. 4. Dividends on equity shares 2004 2003 #'000 #'000 Interim: 0.375p per ordinary share (2003: 0.375p) 721 721 Final proposed: 0.625p per ordinary share (2003: 0.625p) 1,203 1,203 1,924 1,924 The interim dividend was paid on 5 May 2004. Subject to the approval of shareholders at the Annual General Meeting the final dividend will be paid on 1 November 2004 to shareholders appearing on the register at the close of business on 1 October 2004. 2004 2003 5. Earnings per ordinary share #'000 #'000 The calculation of earnings per ordinary share is based on: Earnings for basic and diluted earnings per ordinary share calculation 2,873 971 Exceptional item 4,600 5,500 Tax on exceptional item (1,380) (1,650) Earnings before exceptional item per ordinary share calculation 6,093 4,821 2004 2003 Thousands Thousands Weighted average number of shares used in basic earnings per ordinary share calculation 192,390 192,390 Dilutive effect of options - - Weighted average number of shares used in diluted earnings per ordinary share calculation 192,390 192,390 6. Net cash at bank 2004 2003 #'000 #'000 Net cash at bank comprises: Cash at bank - on demand 9,171 12,232 - on deposit with terms in excess of seven days 2,606 2,481 Bank loans: Due within one year (1,013) (772) Due after one year (1,254) (1,172) 9,510 12,769 7. Debtors; uncertainty relating to amounts recoverable on contracts Included in debtors is an aggregate value, before provisions, of #7.1million (2003: #5.5million) attributable to contractual amounts relating to two (2003: two) contracts which at that time remained the subject of arbitration or equivalent proceedings. In consequence of the losses suffered on contracts subject to litigation in previous years 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. 8. 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 2003 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 2004 upon which Deloitte & Touche LLP 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 END FR UUUAGMUPCGQM
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