Deputy City Editor
BET, the business services group, signalled its intention to accelerate its growth after four years of recovery with the pounds 70m acquisition yesterday of one of Britain's leading conference and training businesses.
The purchase of Style, for a mixture of cash and shares, is the latest move in a restructuring of BET which has seen it reduce its subsidiaries from over 180 to under 60, an attempt to rein back after an expansion spree in the late 1980s that almost brought the company down. John Clark, BET's chief executive, said Style, which owns 18 purpose-built conference centres, was a natural fit with the group's existing businesses, which turned in better-than-expected profits yesterday for the year to April.
Pre-tax profits of pounds 122m were 33 per cent higher than last year's pounds 92m and at the top end of expectations. They were boosted by a strong performance from BET's plant hire business, where profits increased by 83 per cent, making up for flat performances elsewhere.
A final dividend of 2.8p (2.25p) made a full-year total of 4p, up 23 per cent although still well down on the level before the payout was slashed three years ago as BET plunged into the red.
BET had said it wanted to expand now that some order had been imposed on the company. It has developed a focus on four sectors: business services (including cleaning, personnel and security), distribution, plant hire and textile services.
The acquisition will be funded with pounds 54m in cash and pounds 16m in BET shares. At the end of the year BET had net cash of pounds 34.2m despite an 89 per cent increase in capital expenditure to pounds 149m. Mr Clark said the acquisition would be earnings-enhancing within the current year. He expected the debt incurred to be paid off rapidly through internal cash generation.
Bob Carpenter at Kleinwort Benson said the year's performance represented a consolidation of the reorganisation of the past four years and laid the foundations for future growth.
The shares, which have underperformed the All-Share index by more than 60 per cent over five years, closed 6p higher at 126.5p.
Investment Column, page 34