RHL.L Regulatory News (RHL)

22 Feb 2006 07:01

Booth Industries Group PLC22 February 2006 For Immediate Release 22 February 2006 BOOTH INDUSTRIES GROUP PLC ("Booth", "the Company" or "the Group") PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 Booth Industries Group PLC, the specialist engineering support services companytoday announces its preliminary results for the year ended 30 September 2005. Key Points •Operating performance of the Group during the year was mixed •Turnover before exceptional items flat at £27.9 million (2004: £27.4 million) •Operating loss before exceptional items of £263,000 (2004: loss of £28,000) •Provision at the year end against two legacy contracts, undertaken by Jordan Projects during 2002 resulting in a loss after tax of £3.7 million. •Strong cash performance throughout the year with cash generated from operating activities at £206,000 resulting in gearing of only 3% (2004: 15%) •New management has been appointed with David Jackson taking the role of Chairman and Chief Executive and a detailed strategic review of the Group's operations has been completed •Prospects for the business going forward are encouraging David Jackson, Chairman of Booth, commenting on the preliminary results said; "I am encouraged by the Group's prospects in manufacturing and contracting inthe nuclear industry and by continued solid demand and performance of BoothIndustries Limited in the oil, gas, defence and tunnel infrastructure sectors. Ilook forward to reporting an improved performance in 2005/6." For further details please contact:Booth Industries Group PLC Tel: +44 (0) 116 271 2713David Jackson, Chairman and Chief ExecutiveChris Lewis-Jones, Group Finance DirectorSimon Foster, Corporate Development Director Buchanan Communications Tel: +44 (0) 20 7466 5000Tim Anderson / Isabel Podda / James Strong BOOTH INDUSTRIES GROUP PLC RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 CHAIRMAN'S STATEMENT Introduction It is now five months since I was appointed Chairman and Chief Executive andalong with my new management team we have completed a detailed strategic reviewof the Group's operations. I have spent time at our operating subsidiaries withour senior management gaining a thorough understanding of both the challengesbut more importantly the future market opportunities that the Group cancapitalise on. The Group consists of niche engineering service businesses operating on aninternational basis. We operate with global clients in markets that have growthin the short, medium and long term. Our principal markets include: Nuclear Oil and Gas Defence, Safety and Security Transport Infrastructure I am encouraged by the Group's prospects in manufacturing and contracting in thenuclear industry and by continued solid demand and performance of BoothIndustries Limited in the oil, gas, defence and tunnel infrastructure sectors. I will expand on the Group's prospects later in my statement. Trading Results Trading on ordinary activities for the year ended 30 September 2005 produced anoperating loss before exceptional items of £263k on turnover of £27.9 million(2004: £28k loss on £27.4 million). After exceptional items detailed below,interest and taxation the loss carried to reserves is £3.7 million (2004: £609kprofit after crediting a further profit on disposal of Oakland Elevators Limitedof £846k). The impact of the loss on net assets has been mitigated by a revaluation surplusof our freehold and long leasehold properties of £1.0 million at the balancesheet date. The majority of this revaluation has been treated as a prior yearadjustment. Exceptional Item The results for the year are materially affected by the treatment of two legacycontracts at the year end. We have reviewed these contracts which wereundertaken by Jordan Projects during 2002 and provided for the amounts nowconsidered irrecoverable. We continue to progress discussions for a negotiatedsettlement rather than expose the Company to further extensive legal andprofessional costs in the pursuit of an arbitrated settlement. Review of the Year The overall operating performance of the business was mixed with the highlightbeing an improved contribution from Booth Industries Limited, the Group'sspecialist designer and manufacturer of door and wall systems, whilst the majordisappointment was the continued loss at Jordan Manufacturing Limited, ourstainless steel fabrication operation. Booth Industries Limited is a solidly run and solidly performing business.Turnover in 2005 was marginally down on 2004 but improved margins and tight costcontrol resulted in an improved operating profit. Jordan Nuclear Limited is beginning to find its feet as an independentcontractor with turnover in nuclear up by 10% on 2004. The major contractundertaken in the year was the completion of the MA 1 Cell contract atSellafield which totalled £7 million over a two year period. CHB-Jordan Engineering Limited saw turnover increase by 16% year on year.Margins fell due to the mix of work and the decision taken at Group level toabandon project engineering activity. Tight overhead control enabled thisbusiness to return to operating profit. A major operating loss was made in Jordan Manufacturing Limited as the businessfailed to recover from the loss of the contract to supply vessels for thetransportation of spent nuclear fuel referred to in last year's statement. Theaward of the first tranche of the Sellafield Product Residue Store ("SPRS")contract at Sellafield should enable this business to return to profit in 2005/6. Financial Position The Group has remained cash positive throughout the year and gearing at the yearend stood at 3% (2004: 15% adjusted for property revaluation). Cash generatedfrom operating activities was £206,000, after absorbing £738,000 into thedefence of legacy contracts, and reflected the robust management of workingcapital. In order to give the business more flexibility in its cash management we havesecured £3.0 million of senior debt facilities with Bank of Scotland Corporatewho will become the Group's bankers. In light of the positive cash generation in the year, the Board has given noticeto redeem on 17 March 2006 a further £500,000 of outstanding unsecuredconvertible loan stock at par plus accrued redemption premium and interest fromexisting cash resources. Dividend In line with last year, the Board has decided not to recommend a dividend forthe year ended 30 September 2005, however we will return to a dividend paymentas soon as sustainable trading profits are achieved. Trading Prospects The prospects for the business going forward are most encouraging. Theunderperformance in recent years can be attributed to many factors includinglegacy contract issues, unforeseen order cancellations in manufacturing, highcentral and divisional costs relative to the scale of business and a limitedfocus in certain operating subsidiaries. To a large extent we believe theseissues have been addressed and I look forward to reporting an improvedperformance in 2005/6. We are fortunate that trading opportunities for the operating subsidiaries arecurrently buoyant and we anticipate turnover growth in the current year ofapproximately 30% enabling the Group as currently structured to return tooperating profit. We are also working on ways of restructuring the Group toimprove operational and financial efficiency and reduce the impact of centralcosts which will be more evident in 2006/7. The principal opportunities that will enhance trading activity this year andnext are: (i) Booth Industries continues to diversify away from itstraditional offshore oil and gas market. The business is now recognised as aspecialist designer and manufacturer of blast walls and blast, security andtunnel doors. The threat of worldwide terrorism and safety incidents such as the huge fire atBuncefield provide Booth with increasing opportunities. The business through itsdesign innovation has created new and growing markets in flood defence, nuclearand tunnel infrastructure. Most notably the business is benefiting from majortunnel works undertaken in the Channel Tunnel Rail Link and at Dublin Port. (ii) Jordan Nuclear, the Group's nuclear mechanical installationand asset maintenance business, has grown over recent years. The creation of theNuclear Decommissioning Authority ("NDA") in April 2005 has resulted in changesin the procurement strategy of our principal client with a main driver toconsolidate its supply chain. This change has resulted in some short-termworkflow issues which we expect to reverse as we progress through the year. The current level of tendering for nuclear infrastructure projects and ongoingmaintenance framework contracts from 2007 is significant with the Group in astrong position to bring together the efficiency, innovation and quality ofdelivery of both nuclear plant manufacture (see below) and installation. Whilst Jordan Nuclear has been recognised historically as a Sellafield focusedbusiness, recent strategy has resulted in contract successes elsewhere includingat Trawsfynnd, Wales which has allowed further investment by the business onsite. This geographical expansion will be accelerated during the year withadditional efforts to develop the Defence Estates market. (iii) CHB-Jordan Engineering's principal focus will be to extendthe current geographical base of facilities management and maintenance contractsto the oil, gas and petro-chemical industries. With greater returns being made by our principal global petro-chemical clientsin the past twelve months, which are allowing them a greater degree ofinvestment for the future, we have decided to extend our offering going forwardto project engineering where we consider our expertise can create additionalmargin opportunity. We will of course, consider the business risk inre-introducing this policy. (iv) Jordan Manufacturing is participating in the first majorconstruction contract to be let by British Nuclear Group ("BNG") since theformation of the NDA. We have received a £3 million enabling works contract onthe new £118 million SPRS facility at Sellafield. We are the preferred bidder for the balance of the manufacturing order whichwould total a further £6 million over the next eighteen months. This highprofile contract gives Jordan Manufacturing a unique position in the market forbespoke design and manufacture of engineered solutions to the nuclear industry.The business is also well placed to benefit from future NDA capital anddecommissioning projects that have already been identified and announced and areexpected from 2007. Whilst opportunities in the nuclear market are buoyant, the business continuesto diversify with successes in the specialist stainless steel processengineering and architectural markets. Change of Name To avoid confusion between Booth Industries Group PLC and its subsidiary BoothIndustries Limited we will propose a change of name for the Group at the AGM toRedhall Group PLC. Staff The quality of staff across the Group is strong and I believe that theintroduction of more autonomy within the management of the trading subsidiariesand the introduction of a growth strategy within the Group will bear fruit inthe form of improved trading performance. Morale is high and expectations ofreward for performance will be honoured. I am grateful to the staff for theirready acceptance of the new management team. David JacksonChairman & Chief Executive 22 February 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTYear ended 30 September 2005 Before Exceptional Total Exceptional items items 2005 2005 2005 2004 £000 £000 £000 £000 Turnover 27,899 (3,326) 24,573 27,442 Cost of sales (28,162) - (28,162) (27,470) ---------- --------- ------- -------Total operating loss (263) (3,326) (3,589) (28) ---------- --------- ------- ------- Profit on sale ofland 148 - 148 -Profit on disposalof discontinuedoperations - - - 846 Net interest payable (143) - (143) (212) ---------- --------- ------- -------(Loss)/profit onordinary activitiesbefore taxation (258) (3,326) (3,584) 606 Tax on (loss)/profiton ordinaryactivities (78) - (78) 3 ---------- --------- ------- -------(Loss)/profit onordinary activitiesafter taxtransferred toreserves (336) (3,326) (3,662) 609 ========== ========= ======= ======= (Loss)/earnings per share - basic (2.52)p (24.90)p (27.42)p 4.56p - diluted (2.52)p (24.90)p (27.42)p 4.30p CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESYear ended 30 September 2005 2005 2004 £000 £000 (Loss)/profit for the financial year (3,662) 609 Surplus on revaluation of properties 14 - --------- ---------Total recognised (losses)/gains relating to the year (3,648) 609 ========= Prior year adjustment 1,019 ---------Total recognised loss since the last annual report (2,629) ========= CONSOLIDATED BALANCE SHEETAs at 30 September 2005 Restated 2005 2004 £000 £000Fixed assetsTangible assets 2,444 2,530Investments in subsidiary undertakings - - --------- -------- 2,444 2,530 --------- --------Current assets Stocks 184 187Debtors 8,045 12,182Cash at bank 1,442 1,190 --------- -------- 9,671 13,559Creditors - amounts falling due within one year (7,307) (7,044) --------- --------Net current assets 2,364 6,515 --------- -------- Total assets less current liabilities 4,808 9,045 Creditors - amounts falling due after more than one year(including convertible loan stock) (1,390) (1,979) --------- --------Net assets 3,418 7,066 ========= ======== Capital and reserves Called-up share capital 3,338 3,338Share premium account 578 578Merger reserve 294 294Revaluation reserve 1,033 1,019Profit and loss account (1,825) 1,837 --------- --------Equity shareholders' funds 3,418 7,066 ========= ======== CONSOLIDATED CASH FLOW STATEMENT Year ended 30 September 2005 2005 2004 £000 £000 £000 £000Cash inflow/(outflow) from operatingactivities 206 (1,380) Returns on investments and servicingof financeInterest paid (185) (137)Interest received 48 43Interest element of finance leaserentals (1) (138) (7) (101) ------- ------- Taxation UK corporation tax paid - - Capital expenditure and financialinvestmentPurchase of tangible fixed assets (200) (88)Proceeds from disposals of tangiblefixed assets 277 77 10 (78) ------- ------- Disposal Disposal of Oakland ElevatorsLimited: Cash proceeds 846 - Repayment following agreement ofcompletion accounts plus costs - (630) ------- ------- 846 (630) DividendsEquity dividends paid - (668) ------- -------Net cash inflow/(outflow) beforefinancing 991 (2,857) Financing Finance lease repayments (11) (18)Loan stock repayments (528) (28)Medium term loan repayments (200) (739) (200) (246) ------- ------- ------- ------- Increase/(decrease) in cash in the 252 (3,103)year ======= ======= NOTES TO THE FINANCIAL STATEMENTS 1. Exceptional items The exceptional items relate to the treatment of two legacy contracts at theyear end. The Directors have reviewed these contracts which were undertaken byJordan Projects during 2002 and provided for the amounts now consideredirrecoverable. The Directors continue to progress discussions for a negotiatedsettlement rather than expose the Company to further extensive legal andprofessional costs in the pursuit of an arbitrated settlement. The impact of theexceptional items in the year was a cash outflow of £738,000 and it had noeffect on the tax charge. 2. Reconciliation of movement in shareholders' funds Restated 2005 2004 £000 £000 (Loss)/profit for the year (3,662) 609 Surplus on revaluation 14 - --------- --------- Net movement in shareholders' funds (3,648) 609 Opening shareholders' funds (see below) 7,066 6,457 --------- --------- Closing shareholders' funds 3,418 7,066 ========= ========= Group: Opening shareholders' funds originally £6,047,000 before prior yearadjustment of £1,019,000. Company: Opening shareholders' funds originally £7,906,000 before prior yearadjustment of £588,000. 3. Reconciliation of operating loss to net cash inflow/(outflow) from operating activities 2005 2004 £000 £000 Operating loss (3,589) (28) Depreciation charge 191 228 (Profit)/loss on sale of tangible fixed assets (3) 3 Decrease/(increase) in stock 3 (3) Decrease/(increase) in debtors 3,194 (113) Increase/(decrease) in creditors 410 (1,467) -------- --------- Net cash inflow/(outflow) 206 (1,380) ======== ========= 4. Reconciliation of net cash flow to movement in net debt 2005 2004 £000 £000 Increase/(decrease) in cash in the year 252 (3,103) Cash outflow from decrease in debt and lease financing 739 246 --------- -------- Change in net debt arising from cash flows 991 (2,857) New finance leases (16) - Loan stock (30) (111) --------- -------- Decrease/(increase) in net debt during the year 945 (2,968) Opening net (debt)/funds at 1 October (1,033) 1,935 --------- -------- Closing net debt at 30 September (88) (1,033) ========= ======== 5. General Information The financial information above for the years ended 30 September 2005 and 2004,in respect of which the accounting policies are consistent except for therevaluation of long leasehold and freehold land and buildings (which have beentreated as a prior year adjustment), does not constitute the statutory financialstatements for those years. The 2005 financial statements, upon which theauditors issued an unqualified opinion, have not yet been delivered to theRegistrar. The 2004 financial statements have been delivered to the Registrarand included the auditors' report which was unqualified and did not contain astatement either under sections 237(2) or 237(3) of the Companies Act 1985. Theannual report and accounts for the year ended 30 September 2005 will be postedto shareholders. Copies will be available from the 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