Intnl Tool & Supply - Final Results

RNS No 4381k
INTERNATIONAL TOOL & SUPPLY
15th July 1997

 
SUMMARY OF INTERNATIONAL TOOL & SUPPLY plc (ITS)
YEAR END RESULTS, 31 MARCH 1997
 
Financial results for International Tool & Supply plc (ITS) were
today announced for the year ended 31 March, 1997.
 
The main elements are summarised below:-
 
-  Net profit of $1.2 million ($1.2 million to March 1996)
 
-  Turnover increased to $64.8 million ($36.3 million to March 
   1996)
 
-  80 million new Ordinary Shares of 5p each at par and 20     
   million warrants issued in a Placing with open offer
 
-  The proceeds of this Placing to the Company, net of expenses, 
   were approximately $6.0 million
 
The Way Forward:
 
In his annual statement (full text attached) the Chairman of ITS
made clear that the Company has now completed a two year
rationalisation programme that has led to improvement in overall
Group performance, largely from reorganisation of the Group into
four distinct operating divisions.
 
The way forward during the coming year will be to focus on
strategic alliances, alignment of core businesses and strategic
acquisitions.  These activities are designed to move the Group
from a period of incremental growth to a more dominant position
in the market.  It may require additional capital, and the
Group's ability to raise the necessary capital is fully supported
by its operational integrity and the market opportunities.
 
Chairman of ITS, Howard Wolf:
 
"The base we have built and upon which we plan to grow a
significantly higher level of activity in the marketplace is
structured to reflect and result in a corresponding increase in
shareholder value."
 

For further information, please contact:
 
Kendal Gladys, Chief Executive: 001 713 961 8000

CHAIRMAN'S STATEMENT
 
Financial results for International Tool & Supply plc were today
announced for the year ended 31 March 1997.  The Company reported
a net profit of $1.2 million compared with a profit of $1.2
million in the same period last year.  This year's results
included a $2.1 million gain on the redemption of $3.0 million
of the Company's Convertible Loan Notes for approximately 31% of
their nominal value.
 
Turnover for the year increased to $64.8 million from $36.3
million in the prior year.  The increase in the current year was
primarily attributable to a low margin supply contract with a
large Russian production association.  Administrative expenses
increased approximately 27% for the year, largely as a result of
expenses relating to the H-O-H and ABASCO acquisitions.
 
During the year the Company issued 80 million new Ordinary Shares
of 5p each at par and 20 million warrants in a Placing with open
offer.  Proceeds to the Company net of expenses, were
approximately $6.0 million.
 
I am pleased to report that your Company closed its year with a 
strong balance sheet reflecting a significant cash position, a
healthy level of working capital and limited long term debt.
 
AT THE CROSSROADS
 
The management has orchestrated significant operational and
managerial changes over the last two years resulting in a decided
improvement in overall group performance.  However, this
improvement has been proportional to dedicated resources. 
Through the reorganisation and defining period, the capital base
has been limited and it should be recognised that the
opportunities for significant growth and expansion have been
relatively small.
 
This strategy has allowed for logical lines of incremental
development.  However, the dynamics of the group have now shifted
and the group is now in an excellent position to take advantage
of opportunities in the market place.
 
THE STRATEGY
 
The Focus
 
In order to take full advantage of the Group's recognised
credibility and reach the next level of critical mass, we intend
in the coming year to seize on the numerous opportunities 
currently available as well as expand our presence and product
lines in an increasing number of geographic areas.  Taking
advantage of these opportunities and implementing these
strategies may require additional capital.
 
Our ability to raise the increased capital required is totally
supported by our operational integrity and the complementary
opportunities in the marketplace.
 
The next level of critical mass will focus on strategic
alliances, alignment of core businesses and strategic
acquisitions, all designed to move the Group from incremental
growth to a significantly bigger presence in the marketplace.
 
Economic Characteristics:
 
ITS, through its operating divisions, is in a position to operate
as an international distributor and marketer offering
complementary products and services as an integrated service
company.
 
Through our acquisition of H-O-H, previously our exclusive
manufacturer, we have improved the cost effectiveness and overall
long term benefits to the group by adding a manufacturing
facility to our base.
 
Through this acquisition we have expanded Engineered Systems into
a full manufacturing and fabrication division while adding water
treatment as a supplementary product line.  This acquisition and
its integration into our business provides additional expansion
opportunities.
 
Additional placement and acquisition of physical facilities
throughout the World, as with incineration services, in the
Middle East and West Africa are long term investments offering
quick returns.
 
The opening of our facilities in Venezuela has come at an
excellent time.  The recent Third Bidding Round is not only
representative of the energy sector's direction in Venezuela and
South America but is indicative of the ever expanding need for
consolidated services, product representation, alliances, all of
which are strengths of ITS.
 
Industry Trends:
 
Outsourcing drives the need for getting closer to the customer
with effective sales representation.  ITS has added staff
specifically dedicated to Outside Sales/Procurement.  We will
continue to actively promote ITS outsourcing services.
 
The addition of a highly profitable venture in West Africa and 
an order for incineration services in the Middle East demonstrate
the need to meet the growing regulatory requirements placed on
the industrial and energy sector in developing countries.
 
In the area of new product development, the Self Tensioning
Screen ("STS") project reflects our ability to create and market
economically attractive alternatives to existing technology.
 
Shareholder Value:
 
We have consistently expressed our commitment to building
shareholder value and adhered to shareholder requirements.
 
It has been and will continue to be the ultimate standard by
which we evaluate our performance.  The base we have built and
upon which we plan to grow a significantly higher level of
activity in the marketplace is structured to reflect and result
in a corresponding increase in shareholder value over the next
few years.
 
Consolidated Profit & Loss Account
For the year ended 31 March 1997
 
                                                1997    1996
                                           Unaudited Audited
                                                $000    $000
                                                ----    ----
 
Turnover
Continuing Operations                         64,763   36,315
 
Cost of Sales                                (56,437) (30,080)
                                              ------   ------
Gross Profit                                   8,326    6,235
Administration                                (9,353)  (7,328)
Write back of provisions                           -    1,355
                                              ------   ------
Operating (Loss)/Profit
Continuing Operations                         (1,027)  (1,093)
Discontinued Operations                            0    1,355
                                              ------   ------
                                              (1,027)     262
 
Exceptional Items
Profit on disposal of tangible
fixed assets                                     150       93
Profit on disposal of discontinued
operations                                         0      266
                                              ------   ------
(Loss)/Profit on ordinary activities
before Interest                                 (877)     621
Interest receivable and similar income           293      724
Profit on redemption of Loan Notes             2,059        0
Interest payable and similar charges            (213)    (455)
                                               -----    -----
Profit on ordinary activities
before Taxation                                1,262      890
Tax on profit and ordinary activities           (114)     358
                                               -----    -----
Profit on ordinary activities after
taxation                                       1,148    1,248
Minority interests                                 9      (26)
                                               -----    -----
Retained profit for the financial year         1,157    1,222
                                               =====    =====
Earnings per ordinary share (i)
(cents per share)                                0.7      0.8
 
Notes:
 
(i)  Earnings per Ordinary Share is calculated on the profit for
the financial year and is based on the weighted average number of
shares in issue for each of the reference periods.
 
(ii)  Continuing operations include an acquisition during the year
whose results cannot be accurately determined.  It is estimated
that the acquired company contributed $6.1 million to turnover in
1997 and operating profit of approximately $NIL.
 
(iii)  The currency of the primary economic environment in which
the Group operates and generates its net cash flow is US dollars
and therefore this preliminary statement is prepared  in US
dollars.
 
(iv)  Copies of this announcement are available at the Company's
principal UK office: Unit 2 Sun Alliance Industrial Park, Minto
Avenue, Altens, Aberdeen AB12 3JZ.
 
(v)  The financial information above does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act
1985.  The 1996 comparative balances have been extracted from the
1996 annual report, which has been filed with the Registrar of
Companies and upon which the auditors gave an unqualified opinion.

Consolidated Balance Sheet
31 March 1997
 
                                              1997     1996
                                         Unaudited  Audited
                                              $000     $000
                                              ----     ----
 
Intangible Assets                              200        -
Investments                                    344      344
Tangible Assets                              3,470    1,870
                                             -----    -----
                                             4,014    2,214
 
Current Assets
Stocks                                       4,049    2,142
Debtors
- due within one year                       13,353    9,870
- due after one year                         1,500    1,500
Cash at bank and in hand                     8,068    6,618
                                            ------   ------
                                            26,970   20,130
 
Creditors: Amounts falling due 
within one year                            (15,308)  (9,328)
                                           --------  -------
 
Net Current Assets                          11,662   10,802
 
Total Assets less current liabilities       15,676   13,016
 
Creditors: Amounts falling due
after more than one year                    (1,197)  (3,633)
 
                                            ------   -------
 
Net Assets                                  14,479    9,383
                                            ======    ======
Capital and Reserves
Called-up share capital                     19,760   12,718
Share premium account                        5,750   25,057
Other reserves                              (8,458)  (5,983)
Profit and Loss account                     (2,573) (22,418)
 
Shareholders' funds (all equity)            14,479    9,374
 
Minority Interests (all equity)                  0        9
                                            ------   ------
Total Capital Reserves                      14,479    9,383
                                            ======   ======


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