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BRITISH STEEL PLC RESULTS FOR THE HALF YEAR TO 2 OCT. 1993

 LONDON, Nov. 15 /PRNewswire/ -- British Steel plc (NYSE: BST) today reported results for the half year to 2 Oct. 1993.
 The unaudited half year results have been prepared on the basis of accounting policies set out in the Report and Accounts for the year ended 3 April 1993. Figures for the year ended 3 April 1993 have been extracted from the audited accounts for that year which have been delivered to the Registrar of Companies and on which the auditors issued an unqualified report.
 The Interim Statement will be mailed to shareholders on 17 November 1993, at which time copies will also be available from the Secretary, British Steel plc, 9 Albert Embankment, London SE1 7SN, or by telephoning 071-735-7654.
 Interim Statement
 RESULTS
 A trading profit for the half year of 44m pounds (1992/93: loss- 51m pounds) mainly reflected improvements in selling prices and in operating performance.
 After taking account of net interest and the Company's share of the results of associated undertakings, the profit before tax amounted to 27m pounds (1992/93: loss-51m pounds).
 Net borrowings reduced by 20m pounds during the half year to 62m pounds at the end of September.
 The Board has decided to pay an interim dividend of 0.5p (1992/93: nil) net per ordinary share.
 CHAIRMAN AND CHIEF EXECUTIVE'S COMMENT
 "UK demand for steel recovered markedly in the first half of 1993 but this largely reflected an increase in inventory levels from the low base at the end of 1992. The underlying improvement in UK steel demand, therefore, remains modest. In mainland Europe the markets for the Company's products are very depressed and no recovery is expected in the current year.
 "Progress on reaching solutions to the problems of overcapacity and subsidies in the EC steel industry has been slow, particularly as a result of delays in the submission of firm plans regarding state-owned companies in Italy, Spain and Germany. Further delay in resolving state aid cases could also adversely impact on plans being formulated for additional restructuring by the rest of the European industry. While strenuous efforts are being made by the European Commission to uphold existing restrictions on state aid, subsidies continue and the Council of Ministers must now bring matters to a head in order to prevent insolvent state-owned companies forcing some private-sector producers out of markets.
 "Improvements in selling prices have been an important factor in returning the Company to profitability during the half year, but it must be recognized that prices are still at levels which cause other efficient producers in Europe to incur considerable losses. These uneconomic prices prevail because of continuing subsidies and delays in necessary restructuring.
 "The Company continues to pursue further improvements in operating performance and to consolidate its position as one of Europe's most efficient steel companies. Its financial condition remains strong with net gearing being reduced to less than 2 percent at the end of the half year.
 "Capital expenditure at 42m pounds (1992/93: 110m pounds) reflected a significantly reduced programme focused on small schemes with quick paybacks. The half year did, however, see the completion and commissioning ahead of schedule of the new wide electrolytic tinning line in South Wales at a capital cost of 40m pounds. Designed to widen the product range, improve quality and reduce costs, its results to date are very encouraging.
 "In my statement on last year's results, I said that a sustained recovery in the profitability of the Company, as well as the continued maintenance of a sound financial position, would be required to reinstate dividend payments to more normal levels. The industry's overcapacity problems are not yet resolved and market conditions remain extremely weak.
 "The Board, however, has decided to pay an interim dividend of 0.5p (1992/93: nil), given the profit in the half year combined with the Company's strong financial position.
 "The Company continues to demonstrate its ability to deal with extremely difficult market conditions but the critical ingredient for a return to adequate profitability and increased dividends remains the political will of governments to end the proliferation of state subsidies in the EC."
 BRITISH STEEL PLC
 CONSOLIDATED PROFIT AND LOSS ACCOUNT
 Unaudited Unaudited Audited
 half year half year full year to
 to 2 Oct 93 to 3 Oct 92 3 April 93
 pounds m pounds m pounds m
 GROUP TURNOVER 2,446 2,552 5,083
 Deduct share of
 turnover of associated
 undertakings (481) (346) (780)
 TURNOVER 1,965 2,206 4,303
 Operating costs (1,921) (2,257) (4,416)
 TRADING PROFIT/(LOSS) 44 (51) (113)
 Share of results of
 associated undertakings (8) 5 (19)
 OPERATING PROFIT/(LOSS)
 BEFORE INTEREST 36 (46) (132)
 Net interest (9) (5) (17)
 PROFIT/(LOSS) BEFORE
 TAXATION 27 (51) (149)
 Taxation (6) 3 19
 PROFIT/(LOSS) AFTER
 TAXATION 21 (48) (130)
 Minority interests (1) -- --
 PROFIT/(LOSS) ATTRIBUTABLE
 TO SHAREHOLDERS 20 (48) (130)
 Dividends (10) -- (20)
 PROFIT/(LOSS) RETAINED FOR
 THE PERIOD 10 (48) (150)
 PROFIT/(LOSS) PER SHARE 1.0p (2.4p) (6.5p)
 NOTE: In November 1992 British Steel merged its stainless steel interests into Avesta Sheffield AB which from that date became a 40 percent owned associated undertaking.
 CONSOLIDATED BALANCE SHEET
 Unaudited Unaudited Audited
 at 2 Oct 93 at 3 Oct 92 at 3 April 93
 pounds m pounds m pounds m
 FIXED ASSETS
 Tangible assets 2,661 2,913 2,741
 Investments 709 560 725
 Total 3,370 3,473 3,466
 CURRENT ASSETS
 Stocks 759 977 710
 Debtors 890 1,008 1,002
 Short term deposits 486 367 494
 Cash at bank and in
 hand 28 27 58
 Total 2,163 2,379 2,264
 CREDITORS: AMOUNTS FALLING
 DUE WITHIN ONE YEAR (915) (1,025) (1,084)
 NET CURRENT ASSETS 1,248 1,354 1,180
 TOTAL ASSETS LESS CURRENT
 LIABILITIES 4,618 4,827 4,646
 CREDITORS: AMOUNTS FALLING
 DUE AFTER MORE THAN ONE
 YEAR (533) (533) (537)
 PROVISIONS FOR LIABILITIES
 AND CHARGES (242) (290) (265)
 ACCRUALS AND DEFERRED
 INCOME
 Regional development and
 other grants (108) (124) (114)
 Total 3,735 3,880 3,730
 CAPITAL AND RESERVES
 Called up share
 capital 1,000 1,000 1,000
 Statutory reserve 2,338 2,338 2,338
 Profit and loss
 account 386 531 382
 Total 3,724 3,869 3,720
 MINORITY INTERESTS 11 11 10
 Total 3,735 3,880 3,730
 STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES
 Unaudited Unaudited Audited
 half year half year full year to
 to 2 Oct 93 to 3 Oct 92 to 3 April 93
 pounds m pounds m pounds m
 Profit/(loss) for
 the period 20 (48) (130)
 Exchange translation
 differences on foreign
 currency net investments (6) 3 (24)
 Total recognized gains
 and losses relating to
 the period 14 (45) (154)
 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
 Unaudited Unaudited Audited
 half year half year full year to
 to 2 Oct 93 to 3 Oct. 92 to 3 April 93
 pounds m pounds m pounds m
 Profit/(loss) for
 the period 20 (48) (130)
 Dividends (10) -- (20)
 Total 10 (48) (150)
 Exchange translation
 differences on foreign
 currency net investments (6) 3 (24)
 Goodwill arising on
 consolidation --- 3 (17)
 Net increase/(reduction)
 in shareholders' funds 4 (42) (191)
 Shareholders' funds at
 beginning of period 3,720 3,911 3,911
 Shareholders' funds at
 end of period 3,724 3,869 3,720
 CONSOLIDATED CASH FLOW STATEMENT
 Unaudited Unaudited Audited
 half year to half year to full year to
 2 Oct 93 3 Oct 92 3 April 93
 pounds m pounds m pounds m
 NET CASH INFLOW FROM
 OPERATING ACTIVITIES 97 41 202
 RETURNS ON INVESTMENTS
 AND SERVICING OF FINANCE:
 Interest received 19 26 39
 Interest paid (22) (20) (48)
 Interest element of finance
 lease rental payments (2) (6) (9)
 Dividends received from
 associated undertakings 4 4 12
 Dividends paid (20) (30) (30)
 NET CASH OUTFLOW FROM
 RETURNS ON INVESTMENTS AND
 SERVICING OF FINANCE (21) (26) (36)
 TAXATION:
 U.K. corporation tax paid --- (21) (3)
 Overseas tax paid (1) (2) (2)
 TAX PAID (1) (23) (5)
 INVESTING ACTIVITIES:
 Sale of tangible
 fixed assets 8 2 12
 Sale of fixed asset
 investments 7 --- ---
 Merger of stainless
 business --- --- 45
 Repayment of loans 2 2 3
 Purchase of tangible
 fixed assets (74) (138) (225)
 Purchase of subsidiaries
 and business (net of
 cash acquired) --- (2) (3)
 Purchase of fixed asset
 investments --- (11) (22)
 Net (increase)/decrease
 in deposits with
 original maturity
 greater than 3 months
 (see note below) (264) 139 208
 NET CASH (OUTFLOW)/
 INFLOW FROM INVESTING
 ACTIVITIES (321) (8) 18
 NET CASH (OUTFLOW)/
 INFLOW BEFORE FINANCING (246) (16) 179
 FINANCING:
 New long term loans 14 17 108
 Principal payments under
 capital leases (2) (4) (7)
 Repayment of borrowings (20) (15) (107)
 NET CASH OUTFLOW FROM
 FINANCING ACTIVITIES (8) (2) (6)
 (REDUCTION)/INCREASE IN
 CASH AND CASH EQUIVALENTS
 (see note below) (254) (18) 173
 This statement has been prepared in accordance with Financial Reporting Standard No. 1 which requires utilization of bank deposits with original maturity greater than three months to be treated as an investing activity. The statement reflects a switch in deposits from less to more than three months maturity. The overall cash inflow for the period was 18m pounds as set out in note 9.
 Supplementary Information
 Half year to Half year to Full year to
 2 Oct 93 3 Oct 92 3 April 93
 TURNOVER:
 GEOGRAPHICAL ANALYSIS
 BY DESTINATION: pounds m pounds m pounds m
 United Kingdom 1,074 1,139 2,197
 European Community
 (excluding U.K.) 477 656 1,235
 Europe (excluding EC) 88 112 230
 North America 154 145 301
 South America 11 11 25
 Africa 21 12 34
 Asia 131 121 264
 Australasia 9 10 17
 Total: 1,965 2,206 4,303
 MAJOR PRODUCT GROUPING: pounds m pounds m pounds m
 Strip products:
 Uncoated 446 428 860
 Coated 440 429 854
 Total: 886 857 1,714
 Sections and plates 427 420 871
 Tubular products 179 224 438
 Stainless products --- 165 189
 Other steel products 35 29 65
 Finished products 1,527 1,695 3,277
 Semi-finished products 104 117 228
 Total steel industry
 products 1,631 1,812 3,505
 Distribution 287 342 685
 Others 47 52 113
 Total: 1,965 2,206 4,303
 Supplementary Information
 Half year Half year Full year to
 to 2 Oct 93 to 3 Oct 92 to 3 April 93
 TURNOVER (continued)
 SALES VOLUME BY MAJOR
 PRODUCT GROUPING: mt mt mt
 Strip products:
 Uncoated 1.8 1.7 3.6
 Coated 1.1 1.1 2.3
 Total: 2.9 2.8 5.9
 Sections and plates 1.5 1.6 3.2
 Tubular products 0.4 0.5 0.9
 Stainless products --- 0.1 0.2
 Other steel products 0.1 0.1 0.3
 Finished products 4.9 5.1 10.5
 Semi-finished products 0.7 0.7 1.4
 Total steel industry
 products 5.6 5.8 11.9
 U.K. 3.1 3.0 6.1
 Export and overseas 2.5 2.8 5.8
 OPERATING COSTS: pounds m pounds m pounds m
 Raw materials and
 consumables 819 978 1,859
 Maintenance costs
 (excluding own labor) 171 207 383
 Other external charges 328 364 704
 Employment costs 438 485 915
 Depreciation (net of
 grants released) 106 116 236
 Other operating costs 92 117 225
 Changes in stock of
 finished goods and
 work in progress (30) (2) 102
 Own work capitalized (3) (8) (8)
 Total: 1,921 2,257 4,416
 The above costs are stated
 after (crediting)/charging:
 Rationalization and
 related measures
 (see note below) (12) 2 27
 Net profit on disposal of
 fixed assets (6) (1) (3)
 Note: The amount of 12m pounds includes a credit of 11m pounds, being the release of a provision which is no longer required because the like provision has been made by an associate and is included in the share of results of associated undertakings.
 Supplementary Information
 DIVIDEND PAYMENT:
 For ordinary shareholders, the dividend of 0.5p per share is payable on 17 January 1994 to shareholders on the register at the close of business on 9 December 1993. For ADR holders, the dividend is payable in dollars on January 27, 1994 to holders of American Depositary Receipts whose names are registered with The Bank of New York on December 9, 1993.
 Half year Half year Full year to
 to 2 Oct 93 to 3 Oct 92 3 April 93
 CAPITAL EXPENDITURE: pounds m pounds m pounds m
 Purchase of tangible
 fixed assets (as per
 cash flow statement) 74 138 225
 Movement in capital
 creditors (32) (28) (28)
 Capital expenditure
 during period 42 110 197
 PROVISIONS FOR RATIONALIZATION
 COSTS: pounds m pounds m pounds m
 At beginning of period 150 276 276
 Profit and loss account (1) 2 6
 Net cash outflow
 during period (19) (108) (130)
 Other movements --- 1 (2)
 At end of period 130 171 150
 TAXATION pounds m pounds m pounds m
 U.K. corporation tax (1) (18) (93)
 ACT written off 5 15 73
 Overseas taxes 4 --- ---
 Deferred tax (6) --- 3
 Associated undertakings 4 --- (2)
 Charge/(credit) to
 P&L account 6 (3) (19)
 EMPLOYEES number number number
 Average weekly
 numbers employed:
 Within U.K. 37,600 42,900 41,100
 Overseas 4,100 4,700 4,500
 Total: 41,700 47,600 45,600
 Numbers employed
 at period end:
 Within U.K. 37,500 41,800 37,900
 Overseas 3,900 4,700 4,200
 Total: 41,400 46,500 42,100
 Supplementary Information
 Half year Half year Full year to
 to 2 Oct 93 to 3 Oct 92 3 April 93
 pounds m pounds m pounds m
 NET BORROWINGS:
 Short term deposits 486 367 494
 Cash at bank and
 hand in hand 28 27 58
 Due within one year:
 Bank overdrafts (68) (80) (117)
 Bank and other loans (6) (4) (7)
 Finance leases (5) (3) (6)
 Due after more than
 one year:
 Debenture stock (150) (150) (150)
 Bank and other loans (266) (265) (272)
 Finance leases (81) (88) (82)
 Net borrowings at
 end of period (62) (196) (82)
 ANALYSIS OF CHANGES IN
 NET BORROWINGS:
 Net cash (outflow)/
 inflow before financing (246) (16) 179
 Add back net (outflow)/
 inflow of deposits with
 original maturity greater
 than three months 264 (139) (208)
 Total cash inflow/
 (outflow) for period 18 (155) (29)
 Net borrowings at
 beginning of period (82) (11) (11)
 Exchange rate effects 2 (30) (42)
 Net borrowings at
 end of period (62) (196) (82)
 RECONCILIATION OF OPERATING
 PROFIT/(LOSS) TO NET CASH
 INFLOW FROM OPERATING
 ACTIVITIES:
 Operating profit/(loss) 36 (46) (132)
 Share of results of
 associated undertakings 8 (5) 19
 Depreciation (net
 of grants released) 106 116 236
 Rationalization and
 related costs:
 -- net cash outflow (19) (108) (130)
 -- new provisions (1) 2 6
 (Increase)/reduction
 in stocks (51) 22 166
 Reduction in debtors 97 134 46
 (Reduction)/increase
 in creditors (81) (83) 1
 Other movements 2 9 (10)
 Net cash inflow from
 operating activities 97 41 202
 SUPPLEMENTARY INFORMATION
 US GAAP CANADIAN GAAP
 Unaudited half year Unaudited half year
 to Oct 2, 1993 to Oct 2, 1993
 pounds m US$m (a) pounds m Cdn$m (a)
 PROFIT ATTRIBUTABLE
 TO SHAREHOLDERS-UK GAAP 20 30 20 40
 ADJUSTMENTS:
 Amortization of goodwill (9) (14) (9) (18)
 Pension costs (3) (4) 2 4
 Interest costs capitalized 7 10 7 14
 Depreciation of capitalized
 interest (3) (4) (3) (6)
 Taxation (b) (2) (3) (11) (22)
 NET INCOME-US AND
 CANADIAN GAAP 10 15 6 12
 HALF YEAR TO OCT 3, 1992 (5) (8) 11 22
 SHAREHOLDERS' EQUITY-
 UK GAAP 3,724 5,607 3,724 7,491
 ADJUSTMENTS:
 Goodwill 228 343 228 459
 Interest costs capitalized
 (net of depreciation) 103 155 103 207
 Pension costs (28) (42) 66 133
 Taxation (b) (233) (351) (242) (487)
 Proposed dividend 10 15 10 20
 SHAREHOLDERS' EQUITY-US
 AND CANADIAN GAAP 3,804 5,727 3,889 7,823
 HALF YEAR TO OCT 3, 1992 3,931 5,918 4,004 8,054
 (a) At Oct 2, 1993 exchange rates of 1 pound equals US$1.5055 and 1 pound equals Cdn$2.0115.
 (b) US GAAP has been adjusted to comply with FAS 109.
 -0- 11/15/93
 /CONTACT: British Steel, 071-735-7654, or Rick Steelman of Georgeson & Co., 212-440-9830/
 (BST)


CO: British Steel plc ST: IN: MNG SU: ERN

ML-ML -- NY026 -- 4320 11/15/93 10:42 EST
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