Final Results
18 Mars 2008 - 8:01AM
UK Regulatory
RNS Number:2995Q
Chieftain Group PLC
18 March 2008
PRELIMINARY RESULTS 2007
Chieftain Group plc ("Chieftain" or the "Group"), the industrial and engineering
support services Group, announces its preliminary results for the year ended 31
December 2007.
Highlights
* Turnover rose by 39% to �46 million (2006: �33 million)
* Pre-tax profits increased by 40% to �2.1 million (2006: �1.5 million)
* Basic earnings per share up 47% at 17.16p (2006: 11.66p)
* Biggest ever order book totalling �69 million
* Strong cash position - �5.3 million at year end
* Final dividend per share of 4.5p (2006: 3.0p) - up 50%
Bill Taylor, Chief Executive of Chieftain, said: "This has been an outstanding
year for Chieftain with the Group achieving record results. The Board's strategy
to develop the business through its core skills is proving very successful and
we are continuing to win high quality long term contracts. Having already
secured clear visibility of the order book, I believe that the Group is in great
shape to capitalise further on the excellent opportunities which are presenting
themselves."
For further information, please contact:
Chieftain Group plc Tel: 0191 263 5544
Bill Taylor, Chief Executive www.chieftaingroup.co.uk
Stan Elliott, Finance Director
Brewin Dolphin Investment Banking Tel: 0845 270 8610
Andrew Emmott
Rawlings Financial PR Limited Tel: 01756 770 376
Catriona Valentine
Keeley Clarke
CHAIRMAN'S STATEMENT
At the beginning of 2005 we decided to target work in the engineering services
sector, a natural extension of our engineering fabrication business. What a wise
decision this has proved to be. In the past three years our turnover has
tripled, our pre tax profit has tripled and our order book has quadrupled. That
momentum has carried forward into 2008.
Our results for the reporting year of 2007 can be summarised as follows:
* Turnover �46 million (2006 - �33 million)
* Pre tax profit �2.1 million (2006 - �1.5 million)
* Cash at year end �5.3 million (2006 - �3.8 million)
* Basic earnings per share 17.16p (2006 - 11.66p)
* Recommended total dividend per share 7p (2006 - 5p)
* Order book �69 million (2006 - �68 million)
Dividend
The Board is again demonstrating its confidence in the future profitable
expansion of the Group by maintaining its progressive dividend policy and
recommending an increased final dividend of 4.5p per share (2006 - 3.0p). This
brings the total dividend for 2007 to 7.0p per share which represents an
increase of 40% over the 2006 comparative of 5.0p. The dividend cover is 2.3 x
compared with 2.4 x in 2006.
Financial Overview
Our activities generated a cash inflow of �1.6 million during the year which,
after the outlay of �0.23 million for the purchase of Kevin Lloyd Limited, a
capital expenditure of �0.47 million, and paid dividends of �0.48 million,
served to further enhance our very healthy cash position to a net balance of
�5.3 million against �3.8 million the year previous. It was not necessary to
make use of any of our bank overdraft facility at any time during the reporting
year.
Operating Review
In 2007, our core businesses continued to be Engineering and Outfitting, both of
which have exceeded our expectations since the interim results announced in
August 2007.
The Engineering division provides asset maintenance in the process and energy
sectors on long term contracts; supplies general and pipework fabrication to the
offshore oil and gas, process and energy industry; and provides skilled manpower
to clients engaged in engineering projects around the world.
The Outfitting division is one of the UK's leaders in the supply of insulation,
scaffolding, painting and architectural services to sea-going vessels for
merchant and warship fleets and oil and gas offshore platforms.
The Group retains a small environmental management business, principally for
local authorities in Northern Ireland.
Engineering
This sector of the Group's business has been highly successful during the year
and a major contributor to Group profits. The term maintenance contracts were
very efficiently managed and we were successful in securing one additional
contract increasing our portfolio to seven. We are also tendering for defined
project work and are very hopeful of securing some major work in the near
future.
Shop fabrication work was a somewhat mixed bag with our general fabrication
business experiencing an extremely busy year and pipework fabrication unable to
secure sufficient work to fill its facilities to full capacity. We do however
see the general fabrication department continuing at its present level of output
and that we will succeed in increasing the utilisation of the pipework facility
capacity.
There has been a strong demand for our manpower supply services. A significant
proportion of this was for the supply of British skilled tradesmen to Norway. We
have recently joined an engineering cluster which will serve to promote the
Group's services in the Scandinavian oil and gas sector. To further strengthen
our position we have appointed a resident Norwegian agent.
We acquired the assets of Bringover Limited in the latter part of 2006. This
wholly owned subsidiary is a turbine, compressor, valve and generator
maintenance provider. We moved this operation into larger premises on Teesside
which now also provides the operational centre for all our Teesside activities.
This relocation has been much appreciated by our international clients based in
the area.
We acquired Kevin Lloyd Limited this year primarily as a vehicle to promote our
services in the steelworks on Teesside. Unfortunately the steelworks owner
decided to take their maintenance services 'in-house' and the majority of the
Kevin Lloyd Limited employees were transferred into the employment of the
steelworks. We therefore decided to cease further trading under the Kevin Lloyd
Limited banner. Whilst Kevin Lloyd Limited shows a small operating loss for the
year, this is more than offset by a substantial exceptional profit on the
acquisition.
Environmental Services
This is now a relatively small part of the overall business of the Group. We
explained in a previous statement that it is now a very mature activity in the
UK. We have however retained the expertise in the Group and continue to service
this market primarily in Northern Ireland.
Outfitting
The Group continues to trade in one of the longest established sectors of its
business, the outfitting of sea going vessels for both the merchant and warship
fleets and oil and gas offshore platforms for the North Sea and elsewhere. The
warship business is underpinned by a long term contract for work on the Astute
class submarines being built by BAE in Barrow-in-Furness. We have been advised
by BAE of its intention to extend its alliance contract with us to include
Astute Boat 4. We continue to cooperate with the lead yards by providing tenders
for sections of the work on the two aircraft carriers being built for the Royal
Navy. These contracts will be placed during 2008.
Due to the increase in the value of oil and gas we are now witnessing an
increase in activity for equipment to be built for exploration and production in
this sector which could benefit the Group during 2008.
Outlook
We look forward to the immediate future and the medium to long term future with
great confidence. We believe we are in the right markets at the right time and
with the financial and management resources to take advantage of opportunities
which will come our way.
Our key end markets are marine, power, oil and gas and process plant; all of
which have provided proven opportunity for growth in 2007 and continue to do so
in 2008. Our strategy is based around the delivery of a core group of skills to
long-term clients in our established markets. We have built an excellent
reputation for delivering these vital engineering and industrial services, and
this is backed up by the results.
We entered 2008 with an order book at a record �69 million, giving us a strong
view of prospects for 2008 and well into 2009, and in some cases well beyond
that. In addition, we are presently involved with a series of major projects,
which if successful would boost forward order value and visibility even further.
I would like thank all our staff and the executive board for their hard work and
achievements in 2007.
P Wardle
Chairman
18 March 2008
Consolidated Income Statement
For the year ended 31 December 2007
Continuing
operations Acquisitions Total Total
Note 2007 2007 2007 2006
�'000 �'000 �'000 �'000
________ ________ _______ _______
Revenue 44,268 1,559 45,827 32,902
Cost of sales (37,568) (1,327) (38,895) (27,271)
________ ________ _______ _______
Gross profit 6,700 232 6,932 5,631
Administrative expenses (4,961) (237) (5,198) (4,236)
________ ________ _______ _______
Operating profit/(loss)
before exceptional items 1,739 (5) 1,734 1,395
Exceptional items 1 237 -
_______ _______
Operating profit 1,971 1,395
Finance income 111 95
Finance costs (5) (16)
_______ _______
Profit before income tax 2,077 1,474
Income tax expense (574) (454)
_______ _______
Profit for the year attributable
to equity holders 1,503 1,020
======= =======
Earnings per share for profit
attributable to the equity
holders of the company during
the year
- basic 2 17.16p 11.66p
======= =======
- diluted 2 16.99p 11.63p
======= =======
Dividends per share 3 5.50p 4.25p
======= =======
Consolidated Statement of Recognised Income
and Expense for the year ended 31 December 2007
2007 2006
�'000 �'000
_______ _______
Revaluation of property plant and equipment 410 -
Impact of revaluation on deferred tax (115) -
_______ _______
Net income recognised directly in equity 295 -
Profit for the year attributable to equity
holders 1,503 1,020
_______ _______
Total recognised income for the year 1,798 1,020
======= =======
Consolidated Balance Sheet
As at 31 December 2007
2007 2006
�'000 �'000 �'000 �'000
________ ________ _______ _______
Assets
Non-current assets
Property, plant and equipment 1,627 982
Intangible assets 25 25
Deferred tax assets 117 70
________ _______
1,769 1,077
Current assets
Inventories 968 708
Trade and other receivables 4,444 3,312
Cash and cash equivalents 5,335 3,772
________ _______
10,747 7,792
________ _______
Total assets 12,516 8,869
________ _______
Liabilities
Non-current liabilities
Borrowings (1) (5)
Deferred tax liabilities (115) -
________ _______
(116) (5)
Current liabilities
Trade and other payables (7,463) (5,337)
Current tax liabilities (511) (421)
Borrowings (7) (46)
________ _______
(7,981) (5,804)
________ _______
Total liabilities (8,097) (5,809)
________ _______
Net assets 4,419 3,060
======== =======
Equity
Capital and reserves attributable to
equity holders of the Company
Share capital 438 438
Share premium 429 429
Other reserves 293 -
Retained earnings 3,259 2,193
________ _______
Total equity 4,419 3,060
======== =======
Consolidated Cash Flow Statement
For the year ended 31 December 2007
2007 2006
�'000 �'000
_______ _______
Cash flows from operating activities
Cash generated from operations 3,076 2,593
Interest paid (2) (8)
Interest received 111 95
Interest element of finance lease rental payments (3) (8)
Income tax paid (533) (160)
_______ _______
Net cash generated from operating activities 2,649 2,512
_______ _______
Cash flows from investing activities
Acquisition of subsidiary net of cash acquired (123) (211)
Purchases of property, plant and equipment (PPE) (471) (252)
Proceeds from sale of PPE 38 3
_______ _______
Net cash used in investing activities (556) (460)
_______ _______
Cash flows from financing activities
Proceeds from issuance of ordinary shares (net) - 11
Repayments of borrowings (48) (64)
Dividends paid to company's shareholders (482) (372)
_______ _______
Net cash used in financing activities (530) (425)
_______ _______
Net increase in cash, cash equivalents 1,563 1,627
_______ _______
Cash and cash equivalents
At 1 January 3,722 2,145
_______ _______
Cash and cash equivalents
At 31 December 5,335 3,772
======= =======
Notes
1 Exceptional Items
On 2 March 2007 the Group acquired 100% of the share capital of Kevin Lloyd
Limited, an engineering business based on Teesside.
Details of net assets acquired and goodwill are as follows:-
�'000
_______
Cash paid 200
Direct costs relating to the acquisition 29
_______
Total purchase consideration 229
Fair value of net assets acquired 466
_______
Excess recognised in profit and loss 237
=======
2 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable
to equity holders of the company by the weighed average number of ordinary
shares during the year.
2007 2006
�'000 �'000
_______ _______
Profit attributable to equity holders of the
company 1,503 1,020
_______ _______
Weighted average number of ordinary shares in
issue (thousands) 8,759 8,748
_______ _______
Basic earnings per share (p per share) 17.16 11.66
======= =======
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares : share options. For the share options, a
calculation is done to determine the number of shares that could have been
acquired at fair value (determined as the average annual market share price
of the company's shares) based on the monetary value of the subscription
rights attached to outstanding share options. The number of shares
calculated as above is compared with the number of shares that would have
been issued assuming the exercise of the share options.
2007 2006
�'000 �'000
_______ _______
Profit attributable to equity holders of the company 1,503 1,020
_______ _______
Weighted average number of ordinary shares in issue
(thousands) 8,759 8,748
Adjustments for:
- share options (thousands) 89 20
_______ _______
Weighted average number of ordinary shares for
diluted earnings per share (thousands) 8,848 8,768
======= =======
Diluted earnings per share (p per share) 16.99 11.63
======= =======
3 Dividends paid
2007 2006
�'000 �'000
_______ _______
Ordinary - interim paid 2.5p (2006 - 2.00p) 219 175
- final paid 3.00p (2006 - 2.25p) 263 197
_______ _______
482 372
_______ _______
In addition the Directors are proposing a final dividend in respect of the
financial year ending 31 December 2007 of 4.5p per ordinary share which
will absorb an estimated �394,000 of equity holders' funds. If approved at
the Annual General Meeting it will be paid on 30 May 2008 to those
shareholders on the Company's register on 28 March 2008.
4 The financial information set out above does not constitute the Group's
statutory accounts for the year ended 31 December 2007. While the financial
information included in this preliminary announcement has been computed in
accordance with International Financial Reporting Standards, this
announcement itself does not contain sufficient information to comply with
International Financial Reporting Standards. The Group expect to publish
full financial statements that comply with International Financial
Reporting Standards in April 2008.
The financial information for the year ended 31 December 2006 is derived
(after adjustments for International Financial Reporting Standards) from
the latest statutory accounts, which have been delivered to the Registrar
of Companies. The Report of the auditors on those filed accounts was
unqualified and did not contain a statement under section 237 of the
Companies Act 1985.
The results for the year ended 31 December 2007 have been prepared on the
basis of the accounting policies under International Financial Reporting
Standards applicable at 31 December 2007.
The statutory accounts for the year ended 31 December 2007 will be
delivered to the Registrar of Companies in due course.
5 The annual report and accounts will be posted to shareholders shortly and
thereafter copies of the report and accounts will be available from the
Secretary, Chieftain Group plc, Chieftain House, White Street, Walker,
Newcastle upon Tyne, NE6 3PJ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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