Bottom Line: Bullish Bullough

AFTER three years of bad news it must have been a relief for Bullough's chairman, Derrick Battle, to produce a pleasant surprise with the annual results.

Pre-tax profits, at pounds 9.2m, were about pounds 1m ahead of most market estimates, an out-turn that sent the shares racing ahead 14p to 186p. Tighter than expected control of working capital and good cash flow also helped to reduce borrowings beyond expectations, leaving net gearing at less than 5 per cent.

Mr Battle was also upbeat about this year, arguing that the heavy restructuring costs incurred in the past two years were now behind the group and that earnings were firmly on a recovery path.

Indeed, the new chief executive, Gordon Bond, was at pains to point out that further restructuring this year would cost no more than 10 per cent of last year's operating profits of pounds 15m.

A better-focused Bullough must emerge from the current mish- mash of unconnected businesses - refrigeration, office furniture and general engineering.

But expectations of that look to be already in the price. The shares stand at more than 20 times market estimates of earnings for this year. The price looks demanding enough for now.