BM shows big loss for second year

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The Independent Online
BM, the debt-laden engineer driven to the brink of collapse by ill-starred acquisitions, announced a second year of big losses yesterday.

In the year to end-June it made taxable losses of pounds 71.4m, compared with losses of pounds 116.6m the year before. Although operating profits on continuing operations, ranging from tobacco machinery and fasteners to metal fabrication, rose from pounds 1.3m to pounds 6.7m, one- off charges of pounds 67.5m dragged the group into the red.

These included the write-off of pounds 51.6m of goodwill linked to a rapid-fire disposal programme to reduce debt. There was also a pounds 12.7m write-down of pension pre-payment triggered by that programme's pruning of the workforce.

BM said it believed it had reached a watershed in its recovery efforts. It said 17 disposals in 16 months had cut borrowings from pounds 160m to pounds 40m, as agreed under the standstill agreement with its 12 banks, which expires in December.

Moger Woolley, chairman, said BM also had in place new banking agreements with three banks, with most facilities committed for three years.

Mr Woolley said the new arrangements showed BM had recovered from 'the desperate position in which it was placed by the disastrous acquisition policies of the past'. He announced a change of name to Brunel Holdings as a symbolic end to a troubled period.

Yesterday's developments follow the steep two-year fall from grace of BM, one of the 20 best-performing stocks of the 1980s under the ambitious stewardship of its founder and chairman, Roger Shute.

At the height of the construction recession in 1990 the company's profits of pounds 23m were 10 times those of 1985/6.

But growth in difficult markets was achieved only through acquisitions, including the pounds 54m purchase in 1990 of Blackwood Hodge, the earth- moving equipment distributor. This was followed by the pounds 41m purchase 18 months later of Thomas Robinson, the loss- making mini-conglomerate.

Industry experts felt that Mr Shute overpaid for struggling businesses whose markets were about to be hit by recession. Concerns also began to surface that BM's accounting policies on acquisitions flattered profits.

In June 1992 Shute stunned the stock market by resigning as chairman due to ill-health. The shares plummeted 81p to 233p. They continued to fall, reaching 15p at one stage. Yesterday they closed at 45p, up 0.5p.

BM also announced yesterday a recommended pounds 2.89m offer for the preference shares of Blackwood Hodge, as a prelude to putting the loss-making subsidiary into liquidation.

For the year to June 1995, analysts are expecting pre-tax profits of up to pounds 5m. NatWest Securities also believes there will be a token dividend of 0.25p to signal renewed confidence.