RHL.L Regulatory News (RHL)

24 Mar 2005 10:41

Booth Industries Group PLC24 March 2005 BOOTH INDUSTRIES GROUP PLC RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2004 CHAIRMAN'S STATEMENT Results Group turnover for the year to 30 September 2004, which arose only in ourcontinuing businesses, was £27.4m (2003: £43.8m, including £12.0m fromdiscontinued). Whilst further activity growth was shown by Booth IndustriesLimited ("BIL") in the year, reductions were seen in the other businesses,especially in Jordan Projects Limited ("JP") as a result of the completion ofthe programme to withdraw from unsuitable markets. The year's operating result, before exceptional gains, was a loss of £28,000,representing a very significant turnaround (2003: £677,000 loss). With theexception of Jordan Manufacturing Limited ("JM"), for reasons reported at theinterim stage, all of our businesses contributed to that improvement. After a further exceptional gain of £846,000 on the disposal of OaklandElevators Limited ("OEL") (2003: exceptional gain £3.9m), net profit after taxfor the year was £609,000 (2003: £2.98m). Financial Position At 30 September 2004 net assets had improved to £6.0m (2003: £5.4m). As all ofour assets are tangible, this represents a net tangible asset value per share inissue of 45.3p (2003: 40.7p). During the year cash balances declined by some £3.1m; the greater portion ofthis decline occurred in the first half of the year, for the reasons outlined inlast year's annual report. Subsequent to that, shareholders were advised in theinterim report that a programme to fund the deficit in the group's pensionscheme had been agreed; this involves annual payments over fifteen years,beginning at £250,000 per annum and rising at 3% per annum thereafter. The cashposition was maintained in the second half, after allowing for the payment ofthe special dividend declared in respect of 2004. Gearing, net of cash, at theyear-end amounted to 17% (2003: nil). Since the year-end, the deferredconsideration earned in respect of OEL (£865,000 before expenses) has beenreceived. This helped to restore the gearing position and we are seekingfurther, substantial improvements as we proceed with actions to resolve contractvalue disputes with a small number of JP's former customers. We have alreadyreported that it is more difficult to reach agreement on final contract valueswith clients in the absence of potential, ongoing relationships; whilst only asmall number of contracts now remain in dispute these do represent a sizeableinvestment in working capital. JP has found it increasingly necessary to abandonattempts at negotiated settlements and, instead, to follow the more formalprocesses of dispute resolution. Inevitably, this will protract the realisationof funds invested in these contracts and could reduce our ability to maximisethe outcome of final account values. The convertible loan stock issued by the group in 2002 (in connection with theacquisition of the Jordan businesses) represents most of the group's debt, andthis must be repaid by March 2007 if not converted. There are no indicationsthat the stockholders intend to convert and, in the absence of that, we mustexpect to fund repayment. The terms of the stock are such that it becomes moreexpensive to service the nearer it reaches maturity. As a first step towardsretiring this debt, and reducing servicing costs, a partial redemption of£500,000 was made earlier this month. Dividend Dividend recommendations by the board are made in the light of group operatingresults and the availability of cash surplus to our requirements. Despite a verystrong improvement, our continuing activities did not make a profit this year.In recognition of that, and our need to prepare for the redemption of theconvertible loan stock, the payment of a dividend is not recommended this year(2003: special dividend, 5p per share). Employees In the previous year our employees worked hard to set out a foundation forimprovement. It is as a result of that foundation and their continued commitmentthroughout this year that we are able to report a significant advance inoperating performance and I must record our appreciation of that. International Financial Reporting Standards ("IFRS") The group will be required to report for the first time under IFRS for the yearending 30 September 2008. The implications for this are under review. Review of the Year The results for the year show the progress made in refining our remainingoperating businesses and moving them towards stable profitability. On aconsolidated basis we are reporting a turnaround in operating profit of some£650,000, which has brought us almost to a break-even position. Within that, tovarying degrees, BIL, Jordan Nuclear Limited ("JN") and CHB-Jordan EngineeringLimited ("CHB-J") all showed improvements; JM, however, suffered an adversechange at operating level of some £400,000. BIL returned a year of solid growth: it lifted its turnover level by some 15%and, through careful margin and cost control, translated this into a significantimprovement in operating profit. The division has continued to benefit fromdeveloping its technical expertise in blast- and fire-resistant door, wall andwindow systems to serve onshore applications in addition to its traditional,offshore market. In particular, important successes in supplying its products torail and road tunnel infrastructure projects have been achieved by the division.Taking these sectors together with BIL's security related products, almost 40%of turnover is now derived from other than offshore markets. JN is the brand through which we are concentrating our activities in seeking outopportunities to serve the nuclear industry's onsite needs, particularly in theareas of decommissioning and decontamination. Following its launch in the earlypart of the year, we are satisfied by the level of interest that JN has alreadyestablished, and by its ability to secure work in what we see as an excitingmarketplace in the United Kingdom. JN is supported by JP in the delivery ofcustomers' requirements. In the course of this year JM was seriously affected by the abrupt cessation ofdemand for flasks used in the transportation of spent nuclear fuel forreprocessing. JM has been the lead supplier of this type of equipment forseveral years. Whilst it was recognised that demand would in any event declinerapidly from late 2005 onwards, the suddenness of the cessation (which includedthe cancellation of orders upon which work was in progress) did not allow JM tocarry out orderly plans it had in place to move it towards alternative markets.Employee severance costs, compounded by an inability to recover overhead costsgenerally during a period of very low activity levels, resulted in a loss forthe year by JM. As announced in our last report, a decision was taken to withdraw JP fromindustry sectors which it was not able to serve profitably. Since then, itsoperational activities have been redirected towards being almost solely insupport of JN, where its core skills are more appropriately dedicated. This hasresulted in a satisfactory operating profit being earned for the year underreview, which we regard as a considerable achievement when viewed against a lossof some £900,000 in 2002-3. Following the effort to turn around the ongoingoperations of JP, considerable resource continues to be applied to closing outJP's financial positions on some of the unsuitable contracts it previouslyundertook. For CHB-J, the year saw a reduction in our clients' expenditures on maintenance,repair and upgrade work, with a corresponding decline in turnover for thedivision - however, the proportion of shut-down work won during the yearincreased. This type of work tends to be more labour-intensive than routinemaintenance and upgrades and offers higher margins. Accordingly, CHB-J was ableto deliver a slightly improved result at operating level despite lower activity. Prospects We believe that we are entering the current year on a firmer footing for ourprincipal operating businesses. Both BIL and JN have continued to secureimportant new contracts, which not only support our expectations from thesebusinesses but also represent further consolidation in the markets they aretargeting. Whilst we see CHB-J's marketplace as continuing to be challenging forthe remainder of the year we expect it to perform satisfactorily. The programmeto secure alternative work for JM, which to some degree has necessitated alowering of margins, is progressing and it is experiencing an improvement in itsorder book. D N AblettChairman 24 March 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 30 September 2004 2004 2003 £000 £000 TurnoverContinuing operations 27,442 31,727Discontinued operations - 12,049 ---------- ---------- 27,442 43,776Cost of sales (27,470) (44,517) Total operating loss (28) (677)Continuing operationsDiscontinued operations - (64) ---------- ---------- (28) (741) Exceptional itemsProfit on disposal of discontinued operations 846 3,887 Net interest payable (212) (396) ---------- ----------Profit on ordinary activities before taxation 606 2,750 Tax on profit on ordinary activities 3 230 ---------- ----------Profit on ordinary activities after tax 609 2,980 Dividend on equity shares - (668) ---------- ----------Profit for the financial year transferred to reserves 609 2,312 ========== ========== Earnings per share- basic 4.56p 22.32p- diluted 4.30p 17.69p CONSOLIDATED BALANCE SHEET As at 30 September 2004 2004 2003 £000 £000Fixed assetsTangible assets 1,511 1,664 -------- -------- Current assetsStocks 187 184Debtors 12,182 11,201Cash at bank 1,190 4,293 -------- -------- 13,559 15,678Creditors - amounts falling due within one year (7,044) (9,780) -------- -------- Net current assets 6,515 5,898 -------- -------- Total assets less current liabilities 8,026 7,562Creditors - amounts falling due after more than one year(including convertible loan stock) (1,979) (2,124) -------- -------- 6,047 5,438 ======== ========Capital and reservesCalled-up share capital 3,338 3,338 ReservesShare premium 578 578Merger reserve 294 294Profit and loss account 1,837 1,228 -------- --------Equity shareholders' funds 6,047 5,438 ======== ======== CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 September 2004 2004 2003 £000 £000 £000 £000Cash outflow from operatingactivities (1,380) (336) Returns on investments and servicing offinanceInterest paid (137) (317)Interest received 43 -Interest element of finance leaserentals (7) (101) (7) (324) -------- ------- TaxationUK Corporation tax paid - - Capital expenditure and financialinvestmentPurchase of tangible fixed assets (88) (277)Proceeds from disposals of tangiblefixed assets 10 (78) 8 (269) -------- ------- Disposal and acquisitionDisposal of Oakland Elevators Limited:Repayment following agreement ofcompletion accounts plus costs (630) -Cash proceeds - 6,800Pension scheme payment - (630) (760) 6,040 -------- ------- DividendsEquity dividends paid (668) - ------- -------Net cash (outflow)/inflow beforefinancing (2,857) 5,111 FinancingFinance leases (18) (37)Loan stock payments (28) -Medium term loan repayments (200) (246) (200) (237) -------- ------- ------- ------- (Decrease)/increase in cash for theyear (3,103) 4,874 ======= ======= NOTES TO THE FINANCIAL STATEMENTS 1. Reconciliation of movement in shareholders' funds 2004 2003 £000 £000Profit for the year 609 2,312 ---------- --------Net movement in shareholders' funds 609 2,312 Opening shareholders' funds 5,438 3,126 ---------- --------Closing shareholders' funds 6,047 5,438 ========== ======== 2. Reconciliation of operating loss to netcash outflow from operating activities 2004 2003 £000 £000Operating loss (28) (741)Depreciation charge 228 388Amortisation of goodwill and release of negative goodwill - (63)Loss/(profit) on sale of tangible fixed assets 3 (5)(Increase)/decrease in stock (3) 56Increase in debtors (113) (131)(Decrease)/increase in creditors (1,467) 160 ---------- -------- (1,380) (336) ========== ======== 3. Reconciliation of net cash flow to movement in net (debt)/funds 2004 2003 £000 £000(Decrease)/increase in cash in the year (3,103) 4,874Cash outflow from decrease in debt and lease financing 246 237 ---------- --------Change in net (debt)/funds arising from cash flows (2,857) 5,111 New finance leases - (25)Loan stock (111) (72) ---------- --------Decrease in net (debt)/funds during the year (2,968) 5,014Opening net funds/(debt) at 1 October 1,935 (3,079) ---------- --------Closing net (debt)/funds at 30 September (1,033) 1,935 ========== ======== 4. General Information The financial information above for the years ended 30 September 2004 and 2003,in respect of which the accounting policies are consistent, does not constitutethe statutory financial statements for those years. The 2004 financialstatements, upon which the auditors issued an unqualified opinion, have not yetbeen delivered to the Registrar. The 2003 financial statements have beendelivered to the Registrar and included the auditors' report which wasunqualified and did not contain a statement either under sections 237(2) or 237(3) of the Companies Act 1985. The annual report and accounts for the year ended30 September 2004 will be posted to shareholders. Copies will be available fromthe company's registered office, P O Box 50, Nelson Street, Bolton, BL3 2AP. This information is provided by RNS The company news service from the London Stock Exchange