Refinancing and tool sell-offs boost Elliott

AN UPBEAT statement on prospects yesterday accompanied the announcement of a return to operating profits by B Elliott, the engineering group, for the year to 2 April.

The pounds 3.1m operating profit, against a loss of pounds 1.83m in the previous year, has been made at the expense of the company's recession-battered machine tool operations, which have all been sold or closed.

Somerset Gibbs, chairman, said: 'Core businesses have remained profitable throughout the recession and are thus well positioned for improvement in profitability and for generating a strong cash flow.'

Elliott, which underwent a pounds 28m refinancing last December, has been rationalised into three divisions: specialist engineering, electrical engineering and machinery. The full benefits of the refinancing, however, were not reflected. Finance charges of pounds 5.4m, up from pounds 4.9m, resulted in a pounds 3m pre-tax loss against pounds 9.4m last time.

Borrowings at the year-end were pounds 14m, down from pounds 42.5m just before the refinancing. 'Whilst gearing remains high, we aim to reduce it further during the course of this year,' Mr Gibbs said.

Divisionally, machinery was the only one of those three to show a profits improvement, increasing its contribution from pounds 444,000 to pounds 962,000. The division's figures reflected growth in exports for its tube-bending systems and increased market share in the UK for metal-sawing products.

Profits from specialist engineering, affected by pressure on margins on automotive products, eased from pounds 1.8m to pounds 1.6m. Electrical engineering profits fell from pounds 1.9m to pounds 777,000.