Dobson makes new pounds 3m mining venture provision: British Coal's pit closures reduce demand for equipment in UK

Click to follow
The Independent Online
THE accelerating pit closure programme at British Coal has forced Dobson Park Industries to provide a further pounds 3m against the value of a mining equipment joint venture it set up earlier this year.

Alan Kaye, chairman, said a restructuring provision of pounds 10.9m, revealed with the full-year figures yesterday, was higher than the pounds 8m goodwill write-off expected when Dobson merged its mining business with Meco, a rival, in January.

Mr Kaye said the venture, which provides cutting equipment, conveyors and roof supports to the mining industry, was now a world leader in terms of technology and market share.

But he warned: 'Longwall has yet to adjust fully to its changed role of being predominantly a supplier to international markets with only limited demand arising in the UK.'

After a reduction in pre-tax profits for the year to October from pounds 10.3m to pounds 4.16m, the final dividend was cut by 34 per cent to 2.55p. Following a similar cut at the interim stage, the full-year payout emerged at 3.75p (5.75p). Earnings per share were 1.42p (5.52p).

The headline profit figure included a pounds 4.6m exceptional loss on the disposal of two businesses, Power Tools and Revere Aerospace. The underlying operating profit fall from pounds 10.4m to pounds 8.75m is expected to be reversed in the current year.

Mining equipment contributed operating profits of pounds 4.48m ( pounds 5.96m) with strong orders from the US and Australia, providing 70 per cent of the division's sales, but failing to make up for lower UK sales.

Profits of pounds 3.9m ( pounds 4m) from industrial electronics, the other main division, reflected difficult markets for its five measurement device companies. Mr Kaye said future acquisitions would be used to widen the division's product range.

The third leg, a toys operation that the company tried unsuccessfully to sell three years ago, benefited from cost-cutting. Profits increased from pounds 330,000 to pounds 1.38m despite lower sales.

After the enlarged balance sheet provision, shareholders' funds fell during the year from pounds 79m to pounds 65m, on which borrowings of pounds 8.4m represent an unchanged gearing level of 13 per cent.

The shares, which yield 5.5 per cent, fell 4p yesterday to 85p.