RNS Number : 6887C
Chieftain Group PLC
04 September 2008
INTERIM RESULTS 2008
Chieftain Group plc ("Chieftain" or the "Group"), the engineering services group, is pleased to announce its interim results for the six
months to 30 June 2008.
Highlights
* Operating profit before exceptional items �984,000 (2007: �760,000) - up 29%
* Earnings per share before exceptional items to 8.68p (2007: 6.38p) - up 36%
* Turnover up at �22.8 million (2007: �21.6 million) - up 6%
* Interim dividend per share raised to 3.3p (2007: 2.5p) - up 32%
* Strong cash position maintained - �4.3 million at period end
* Malcolm Oliver appointed as Deputy Chief Executive
Engineering
* Largest pipework contract ever secured by the Group for a major oil and gas project - additional
contract anticipated before year end
Outfitting
* Long term contract for Royal Navy's Astute submarines continues
Bill Taylor, Chief Executive of Chieftain, said: "Another cracking set of results! During the period we have won an exciting pipework
fabrication and erection contract, the largest ever for the Group, and are hopeful of winning a second similar contract before the year end.
The markets in which we operate, oil and gas and marine, have ensured that we are unaffected by uncertainties in the wider economy and
continue to witness strong demand from this sector. Long term contracts and a strong order book mean we remain confident for the Group's
prospects."
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
Sean Wyndham-Quin
Rawlings Financial PR Limited Tel: 01653 618 016
Catriona Valentine www.rawlingsfinancial.co.uk
Keeley Clarke
CHAIRMAN'S STATEMENT
In the year to 31 December 2007, I reported that the Group had continued to grow significantly with increases in both revenue and profit
and that we had built a considerable head of steam to carry us firmly into 2008. It, therefore, gives me great pleasure to announce
excellent interim results for the six months to 30 June 2008, which have exceeded all our expectations.
We have not been affected by the widely reported global 'credit crunch', nor by the consequential downturn in general economic activity
and we do not expect it to have any impact on the Group in the foreseeable future. Chieftain's end markets in oil and gas, petrochemicals,
marine and defence, power and plant are all demanding outsourced engineering expertise and look set to continue to do so. Chieftain's long
standing relationships and reputation in these fields should continue to provide opportunities for the Group, throughout challenging
conditions in the wider economy.
The results reveal increased levels of activity in the Group's main operations. Operating profit before exceptionals rose by 29% to
�984,000 (2007: �760,000), reflecting an improved margin of 4.3% (2007: 3.5%) on increased revenue of �22.8 million (2007: �21.6 million).
Earnings per share, as reported, rose to 8.68p (2007: 8.25p), an increase of 5.2% with earnings per share before exceptional items for the
period under review improving significantly at 8.68p (2007: 6.38p) - up 36%.
Cash at the period end was �4.3 million, compared with �5.3 million at the year end. The Group's balance sheet, therefore, remains
robust and the banking facility was not required at any time during the reporting period.
Dividend
The Board has declared an increased interim dividend of 3.3p per share (2007: 2.5p), up 32%. The dividend will be paid on 3 October 2008
to shareholders on the register on 12 September 2008.
Operating Review
The engineering sector of the Group performed exceptionally well with our term maintenance contracts providing a consistent level of
revenue. The Group is placing more emphasis on fixed project work and, as reported in April, we secured a major contract for the fabrication
and fitting of pipework for an oil and gas project, which is the largest contract ever secured by the Group in this sector. We are hopeful
of winning a second similar contract from the same client before the end of the year.
We have recently recruited a marketing consultant to promote the Group's interests in major capital projects, which is consistent with
our previously identified strategy for the Group.
Our general shop fabrication business operated at near full capacity during the period under review and we expect this to continue
throughout the full year. Its primary products are for the power generation industry. Our pipe fabrication facility was focused fully on the
completion of a number of successful contracts. It will now concentrate on the production of pipework for the major contract mentioned
above.
Resource Management activities experienced reduced demand in H1 2008 but the Board believes that this will improve in the latter part of
the year.
Our outfitting business includes the Astute class submarines. This is the latest class of submarine being built for the Royal Navy.
These are long term contracts and the Group is proud to be associated with this prestigious Government work. We are currently tendering for
work on the two new aircraft carriers for the Royal Navy, which were recently announced by the Government. These are also long term projects
and the first carrier is not expected to go into service until 2014. Any contracts work won by Chieftain, would not, therefore, be expected
to commence until around 2010.
The Environmental Services business in Northern Ireland performed well and provides a solid contribution to the Group.
Board changes
In April, we were very pleased to announce the appointment of Malcolm Oliver to the newly created position of Deputy Chief Executive.
Malcolm has served as an executive director on the Board for the past three years, primarily responsible for the expansion of Group
activities into the mechanical services field. His extended role now includes a more direct role in shaping the strategy of the entire
Group.
Outlook
We continue to look forward with confidence to continuing significant expansion of the Group's activities. Chieftain has skills which
are in strong demand from end users which are very active and the outlook for the Group is very positive. This demand is tangible and is
evidenced in the contract wins we have reported in the recent years and an order book of �69 million, which gives excellent visibility for
the current year and well into 2009.
I congratulate the Board and all our dedicated staff across the Group on their outstanding achievements and wish them all continued
success.
P Wardle
Chairman
3 September 2008
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 2008 30 June 2007 31 Dec 2007
�'000 �'000 �'000
Continuing operations
Revenue 22,773 21,564 45,827
Cost of sales (19,297) (18,316) (38,895)
Gross profit 3,476 3,248 6,932
Administrative expenses (2,492) (2,488) (5,198)
Operating profit before exceptional 984 760 1,734
items
Exceptional items - 237 237
Operating profit 984 997 1,971
Finance income 87 58 111
Finance costs (1) (8) (5)
Profit before income tax 1,070 1,047 2,077
Income tax expense (310) (325) (574)
Profit for the period attributable 760 722 1,503
to equity holders
Earnings per share
Basic 8.68p 8.25p 17.16p
Diluted 8.58p 8.16p 16.99p
Dividends per share 3.30p 2.50p 5.50p
CONSOLIDATED STATEMENT OF
RECOGNISED INCOME AND EXPENSE �'000 �'000 �'000
Revaluation of property, plant and - - 410
equipment
Impact of revaluation on deferred - - (115)
tax
Net income recognised directly in - - 295
equity
Profit for the period attributable 760 722 1,503
to equity holders
Total recognised income for the
period
attributable to equity holders 760 722 1,798
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 2008 30 June 2007 31 Dec 2007
�'000 �'000 �'000 �'000 �'000 �'000
Assets
Non-current assets
Property, plant and equipment 1,600 1,133 1,627
Intangible assets 25 23 25
Deferred tax asset 117 70 117
1,742 1,226 1,769
Current assets
Inventories 616 1,816 968
Trade and other receivables 4,883 5,104 4,444
Cash and cash equivalents 4,331 3,058 5,335
9,830 9,978 10,747
Total assets 11,572 11,204 12,516
Liabilities
Non-current liabilities
Borrowings - (5) (1)
Deferred tax liabilities (115) - (115)
(115) (5) (116)
Current liabilities
Trade and other payables (6,197) (6,920) (7,463)
Current tax liabilities (462) (727) (511)
Borrowings - (20) (7)
(6,659) (7,667) (7,981)
Total liabilities (6,774) (7,672) (8,097)
Net assets 4,798 3,532 4,419
Equity
Capital and reserves
attributable to equity
holders of the Company
Share capital 438 438 438
Share premium 429 429 429
Other reserves 293 - 293
Retained earnings 3,638 2,665 3,259
Total equity 4,798 3,532 4,419
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
�'000 �'000 �'000
Balance at 1 January 4,419 3,060 3,060
Profit for the period 760 722 1,503
Dividends paid (394) (263) (482)
Employee share schemes 13 13 26
Deferred tax re employee share - - 17
schemes
Building revaluation - - 293
Depreciation transfer - - 2
Balance at the end of the 4,798 3,532 4,419
period
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 2008 30 June 2007 31 Dec 2007
�'000 �'000 �'000 �'000 �'000 �'000
Cash flows from operating
activities
Cash (used in)/generated from (247) (99) 3,076
operations
Interest paid - (6) (2)
Interest received 87 58 111
Interest element of finance (1) (2) (3)
lease rental payments
Income tax paid (359) (19) (533)
Net cash (used in)/generated
from
operating activities (520) (68) 2,649
Cash flows from investing
activities
Acquisition of subsidiary, net - (123) (123)
of cash acquired
Purchase of property, plant (104) (245) (471)
and equipment
Proceeds from sale of
property, plant
and equipment 22 12 38
Net cash used in investing (82) (356) (556)
activities
Cash flow from financing
activities
Repayment of borrowings (8) (27) (48)
Dividends paid to equity (394) (263) (482)
holders
Net cash used in financing (402) (290) (530)
activities
Net changes in cash and cash (1,004) (714) 1,563
equivalents
Cash and cash equivalents at
the beginning
of the period 5,335 3,772 3,772
Cash and cash equivalents at
the end of
the period 4,331 3,058 5,335
NOTES
1. Group accounting policies
1.1 General information
Chieftain Group plc ("the Company") and its subsidiaries (together "the Group") is a limited liability Company incorporated and
domiciled in the UK. The address of its registered office is Chieftain House, White Street, Walker, Newcastle upon Tyne, NE6 3PJ.
These interim financial results do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985.
Statutory accounts for the year ended 31 December 2007 were approved by the Board of Directors on 18 March 2008 and delivered to the
Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under Section 237 of the Companies Act 1985.
The Group half-yearly financial information was approved for issue by the Board of Directors on 3 September 2008.
1.2 Basis of preparation and accounting policies
The interim financial information for the six months ended 30 June 2008 has been prepared in accordance with the Listing Rules of the
Financial Services Authority where applicable. The accounting policies adopted are consistent with those of the annual financial statements
for the year ended 31 December 2007, as described in those annual financial statements with the exception of the following:
Tax on income in the interim period is accrued using the tax rate that would be applicable to expected total annual earnings.
2. Segmental information
The unaudited segment results for the six months ended 30 June 2008 are as follows:
Engineering Environmental Outfitting Group
�'000 �'000 �'000 �'000
Revenue - continuing 17,182 401 5,190 22,773
operations
Segment operating profit 708 49 227 984
Finance income 87
Finance costs (1)
Profit before income tax 1,070
The unaudited segment results for the six months ended 30 June 2007 are as follows:
Engineering Environmental Outfitting Group
�'000 �'000 �'000 �'000
Revenue - continuing 17,662 670 3,232 21,564
operations
Segment operating profit 677 (43) 126 760
Exceptional items 237
Finance income 58
Finance costs (8)
Profit before income tax 1,047
3. Earnings per share
Basic earnings per share is based upon the unaudited profit on ordinary activities after taxation and 8,758,500 (2007 - 8,758,500)
ordinary shares (the weighted average number of shares in issue during the period).
Diluted earnings per share is based upon the unaudited profit on ordinary activities after taxation and 8,858,552 (2007 - 8,852,015)
ordinary shares (the weighted average number of shares in issue during the period plus the weighted average number of dilutive options in
issue during the period. Dilutive options are the difference between the number of shares that would have been issued at the option price
and the number of shares that would have been issued at fair value).
4. Dividends
The interim dividend is payable on 3rd October 2008 to those shareholders on the Company's register on 12th September 2008.
The total cost of the interim dividend is �289,030 (2007 - �218,962) based on 8,758,500 ordinary shares in issue (2007 - 8,758,500).
5. Distribution to shareholders
The interim report is being sent to all shareholders and will be available to the public on the Group's website
(www.chieftaingroup.co.uk) and from the Group's registered office, 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
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