RNS No 7308k
GALL THOMSON ENVIRONMENTAL PLC
1st July 1997
GALL THOMSON ENVIRONMENTAL PLC
Preliminary announcement of results for the year ended 31 March 1997
GALL THOMSON DECLARES MAIDEN DIVIDEND
Gall Thomson announces its first annual results since joining AIM in August
1996.
Pro forma operating profit #2,295,000 (1996 - #2,310,000)
Pro forma earnings per share 4.9p (1996 - 5.0p)
Cashflow from operating activities #2,722,000 net cash at year end
#1,588,000
Maiden dividend of 1.25p per ordinary share
Continued expansion of geographical areas of operation
Increased product range at both Gall Thomson and Survey Equipment
Services
Commenting chairman John Evans said:
"The Group has successfully settled into its stride and we look forward to the
future with confidence."
For more information please contact:
John Evans, Chairman, Gall Thomson Environmental plc 0171 490 3788
Andrew McDonald, Marshall Securities Limited 0171 490 3788
Note to Editors:
Gall Thomson Environmental plc joined AIM on 13 August 1996. The Group
comprises Gall Thomson, the world's leading supplier of marine breakaway
couplings, and Survey Equipment Services, which rents, sells and supplies
specialist marine navigation and survey equipment primarily to the oil and gas
industry from its base in Houston, Texas.
CHAIRMAN'S STATEMENT AND OPERATING AND FINANCIAL REVIEW
I am pleased to present the first annual results of Gall Thomson Environmental
plc following its flotation in August 1996. We have started confidently in our
new status and both the companies within the Group have formed a close working
relationship. The Group has settled successfully into its stride and the
Directors look forward to the future with confidence. I would also like to
take this opportunity to thank shareholders for their support.
In order to provide a meaningful comparison we have published as part of the
financial statements the trading results of the merged group for the twelve
months to 31 March 1996, whereas the previous published results of the Company
were for the eight months to 31 March 1996. In the following paragraphs any
comments on the preceding period are for the comparable twelve month period.
Group sales for the year were #5,805,000 against #5,923,000 in the previous
twelve month period. The depreciation of the US dollar against sterling from
$1.53 at 31 March 1996 to $1.63 at 31 March 1997 reduced the sterling value of
sales by #160,000. As indicated in my interim report, the sales of Gall
Thomson did not benefit from major completed orders such as those which
positively affected 1996. This was partly offset by the improved sales of
Survey Equipment Services.
Operating profit and profit before tax for the year were #2,028,000 (1996 -
#1,447,000) and #2,069,000 (1996 - #1,332,000) respectively. Depreciation of
the US dollar reduced the sterling value of the profit before tax by #42,000.
Reported earnings per share were 4.4p (1996 - 2.9p); however the results were
affected by non-trading items comprising amortisation of goodwill, management
charges from the former parent companies and merger and reconstruction costs.
The underlying trading performance as shown by the operating profit on a pro
forma basis, which excludes these items, was #2,295,000 (1996 - #2,310,000)
and pro forma earnings per share were 4.9p (1996 - 5.0p).
The Group continues to generate strong positive cash flow. Cash flow from
operating activities was #2,722,000 (1996 - #2,158,000). Cash at bank and in
hand at the end of the year was #1,588,000, an increase of #1,415,000 over
last year.
I am pleased to report that High Court approval was obtained for the
cancellation of the share premium account thereby creating (together with the
merger reserve) a reserve sufficient to write off the balance of goodwill.
Dividend
The Directors stated their intention to pay a single dividend in July of each
year in the prospectus. The Board are pleased to recommend a dividend of 1.25p
per share payable on 31 July 1997 to shareholders on the register on 11 July
1997.
Gall Thomson
The marine breakaway coupling company based in Great Yarmouth has further
increased its areas of operation to include Portugal, Spain, Ireland, Libya,
Ghana, Chile and Equatorial Guinea. There has also been increased interest
expressed from the former Soviet Union and the Far East. The sales and
operating margins for Gall Thomson were reduced from the previous year.
However, given the fluctuating nature of the major contracts, it is pleasing
to note that the underlying trend is still consistent with previous periods.
An example of the fluctuating nature is the award in December 1996 of the
largest single order (#835,000) to be awarded to Gall Thomson. The bulk of
this order, which was received from the Brazilian Oil Company Petrobas, will
be completed during the 1997/98 trading year.
The results for the year showed operating profit of #1,642,000 (1996 -
#1,912,000) arising on a turnover of #3,358,000 (1996 - #3,569,000).
Survey Equipment Services (formerly Oceonics Inc.)
The survey equipment rental and sales business based in Houston, Texas has
continued to perform well, reflecting the high level of oil and gas related
activity in the Gulf of Mexico. The previously reported Breton Sound project
continued well into the second half of 1996/97. Survey Equipment Services
(SES) is currently involved with the Holly Beach project, another large
contract, which commenced in April 1997.
The results for the year showed an increased operating profit of #794,000
against #531,000 for 1996. This was on a slightly increased turnover when
compared to the equivalent period of 1996. Operating margin rose from 22% to
32% reflecting the effect of the mix of business whilst maintaining tight
control of overheads. During the year, SES has for the first time carried out
work in Venezuela on an equipment sale and installation support project for a
major seismic contractor. SES is continuing its policy of increasing its asset
base to ensure the quality of service is maintained and has invested #448,000
in new plant for rental. As a result of the increased level of activities, SES
is moving to new larger offices within the Houston area which will allow it to
accommodate the increased range of services and the DTS business described
below.
New Developments
At the time of the placing we indicated our intention to pursue other
opportunities for growth both organically and through acquisitions. I am
therefore pleased to announce that both Gall Thomson and SES have increased
their product range.
Gall Thomson has entered into an agreement with Water Weights, a division of
Industrial and Marine Engineering Services Limited, an Aberdeen based company,
to develop a reconnectable breakaway hawser. The markets and customers for the
hawser are those already served by Gall Thomson. SES has acquired the
business, assets and goodwill of Data Transmission Systems Inc. a supplier of
high frequency radio telemetry systems for use in offshore survey work. SES
has also entered into an exclusive agreement with Hydroquip Limited, an
Aberdeen based company, for the supply of subsea acoustic systems and gyros in
the USA.
We are actively seeking further opportunities to develop the Gall Thomson
Environmental Group. We will pursue new opportunities to expand our range of
services and constantly review potential acquisitions to expand the Group. The
continued success of a service business such as ours is dependent on the
personnel involved. We are indeed fortunate that the staff in the Group are
loyal, motivated and enthusiastic. I would like to thank every one of them for
their hard work and achievements throughout 1996/97.
John P. Evans
Chairman
1 July 1997
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 March 1997
Note Year 8 months Year
ended ended ended
31 March 31 March 31 March
1997 1996 1996
#'000 #'000 #'000
TURNOVER
Marine breakaway couplings 3,358 2,394 3,569
Equipment sales and rental 2,447 1,764 2,354
-------- -------- --------
5,805 4,158 5,923
-------- -------- --------
OPERATING PROFIT BEFORE
AMORTISATION OF GOODWILL,
MANAGEMENT CHARGES FROM FORMER
PARENT COMPANIES AND MERGER
AND RECONSTRUCTION COSTS
Marine breakaway couplings 1,642 1,364 1,912
Equipment sales and rental 794 355 531
Central overhead (141) - -
-------- -------- --------
2,295 1,719 2,443
Amortisation of goodwill (230) (267) (775)
Management charges from
former parent companies - (125) (221)
Merger and reconstruction costs (37) - -
-------- -------- --------
OPERATING PROFIT FROM
CONTINUING OPERATIONS 2,028 1,327 1,447
Interest payable on loans from
former parent companies - (31) (122)
Other net interest receivable 41 7 7
------- --------- ---------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 2,069 1,303 1,332
Tax on profit on ordinary
activities 2 (814) (462) (609)
------- ----------- --------
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 1,255 841 723
Dividends 3 (389) - (750)
-------- -------- --------
866 841 (27)
===== ===== =====
EARNINGS PER ORDINARY SHARE 4 4.4p 3.4p 2.9p
===== ===== =====
PRO FORMA EARNINGS PER
ORDINARY SHARE 4 4.9p 3.5p 5.0p
===== ===== =====
CONSOLIDATED BALANCE SHEET
As at 31 March 1997
31 March 31 March
1997 1996
#'000 #'000
FIXED ASSETS
Intangible assets - 3,099
Tangible assets 468 330
------ ------
468 3,429
------ ------
CURRENT ASSETS
Stocks 60 59
Debtors 1,236 1,628
Cash at bank and in hand 1,588 173
------- --------
2,884 1,860
CREDITORS: amounts falling due within one year (1,948) (4,639)
-------- --------
NET CURRENT ASSETS/(LIABILITIES) 936 (2,779)
-------- --------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,404 650
Creditors: amounts falling due after
more than one year - (34)
------- -------
NET ASSETS 1,404 616
===== =====
CAPITAL AND RESERVES
Called up share capital 156 125
Merger reserve - 96
Other reserves (13) -
Profit and loss account 1,261 395
------- --------
EQUITY SHAREHOLDERS' FUNDS 1,404 616
===== =====
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 March 1997
Note Year 8 months Year
ended ended ended
31 March 31 March 31 March
1997 1996 1996
#'000 #'000 #'000
NET CASH INFLOW FROM OPERATING
ACTIVITIES 2,722 1,617 2,158
-------- ------- -------
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received 60 12 12
Interest paid on finance leases (19) (5) (5)
-------- ------- -------
41 7 7
------ ------ -------
TAXATION
UK corporation tax paid (232) (422) (600)
Overseas tax paid (80) - -
------ ----- ------
(312) (422) (600)
------- ------- -------
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Purchase of tangible fixed assets (458) (155) (282)
Sale of tangible fixed assets 273 51 79
------ ------- -------
(185) (104) (203)
------- ---- ----
EQUITY DIVIDEND PAID - - (750)
----- ----- -------
CASH INFLOW BEFORE MANAGEMENT OF
LIQUID RESOURCES AND FINANCING 2,266 1,098 612
------- ------- -------
FINANCING
Issue of ordinary share capital 3,114 130 130
Expenses of share issue (309) - -
Repayment of loans from former parent company (3,481) (1,157) (643)
Repayment of principal under finance leases (174) - -
------- ------- -------
(850) (1,027) (513)
----- ------- -------
INCREASE IN CASH IN THE PERIOD 5 1,416 71 99
------- ------- -------
NOTES TO THE RESULTS
YEAR ENDED 31 MARCH 1997
1 Basis of preparation
On 18 July 1996, the Company agreed to acquire all of the issued share capital
of Survey Equipment Services, Inc. from Oceonics Group PLC (Oceonics). The
consideration was satisfied by the issue of 6,884,000 ordinary shares of 0.5p
to Oceonics. The acquisition of Survey Equipment Services Inc. was conditional
on the admission of the Company's ordinary shares to trading on AIM, which
occurred on 13 August 1996.
The financial statements are presented using merger accounting principles as
if the acquisition of Survey Equipment Services, Inc. had taken place prior to
1 April 1995. The previous statutory accounts of the Company were for the
eight month period ended 31 March 1996 and thus comparatives are shown for
this period. However, to show a meaningful comparison figures for the year
ended 31 March 1996 have also been shown. These have been extracted from the
Admission Document dated 18 July 1996.
2 Tax on profit on ordinary activities
Year 8 months Year
ended ended ended
31 March 31 March 31 March
1997 1996 1996
#'000 #'000 #'000
United Kingdom corporation tax at 33%
(1996 - 33%) 559 423 569
Overseas tax 245 39 40
Under provision in prior years 10 - -
------- ------ -------
814 462 609
-------- ------- -------
The effective rate of the UK tax charge is high as the amortisation of
goodwill is not deductible for tax purposes. The overseas tax charge in prior
periods is low due to the utilisation of trading losses against taxable
profits. All such trading losses were utilised by 31 March 1996.
3 Dividends
Year 8 months Year
ended ended ended
31 March 31 March 31 March
1997 1996 1996
#'000 #'000 #'000
Interim dividend paid to
former parent company - - 750
Final dividend proposed
(1.25p per ordinary share) 389 - -
------- ------- -------
389 - 750
------- ------- -------
4 Earnings per share
The calculation of earnings per share is based on profit for the financial
year of #1,255,000 (1996, 8 month period - #841,000, year #723,000) and a
weighted average of 28,833,556 (1996, 8 month period and year - 24,892,000)
shares in issue during the period. No material dilution of earnings per share
would arise if all share options were exercised.
The pro forma earnings per share is based on pro forma profit for the
financial year as stated below, and on the number of shares in issue following
admission, 31,120,000.
Year 8 months Year
ended ended ended
31 March 31 March 31 March
1997 1996 1996
#'000 #'000 #'000
Operating profit before amortisation of
goodwill, management charges from former
parent companies and merger and
reconstruction costs 2,295 1,719 2,443
Estimated costs of new group function - (89) (133)
------- ------- -------
Pro forma operating profit 2,295 1,630 2,310
Interest excluding that payable on loans
from former parent companies 41 7 7
------- ------- -------
Pro forma profit on ordinary activities
before taxation 2,336 1,637 2,317
Taxation (814) (540) (766)
------- ------- -------
Pro forma profit after taxation 1,522 1,097 1,551
------- ------- -------
5 Movements in cash balances
Year 8 months Year
ended ended ended
31 March 31 March 31 March
1997 1996 1996
#'000 #'000 #'000
Opening cash balances 173 104 78
Foreign exchange movement (1) (2) (4)
Increase in cash and cash equivalents 1,416 71 99
------- ------- -------
Closing cash balances 1,588 173 173
------- ------- -------
6 Financial information
The financial information set out above does not constitute full accounts for
the purposes of Section 240 of the Companies Act 1985. The financial
information has been extracted from the Group's Annual Report and Accounts on
which the auditors have given an unqualified report. Copies of the report and
accounts will be posted to shareholders shortly.
END