Steetley stimulus lifts Redland in first half

THE acquisition of Steetley added pounds 15m to Redland's operating profits, helping it to a 12 per cent increase in the first half of the year.

Redland said the cost-savings are now running at more than pounds 30m on an annualised basis. Gerland Corbett, finance director, said there should be more to come both in UK bricks and French aggregates.

Gobitta, the French aggregates business, had been the 'major disappointment' and had been in a far worse position than expected. For example, it had pounds 45m of leases for office and other equipment, which meant the total debt was larger than expected.

In total, Redland has cut 800 of Steetley's 10,000 employees and a further 200 will lose their jobs by the year-end. Further losses in France are likely next year. The major changes have been in the UK, where 11 brick plants have been permanently closed, saving pounds 10.8m, and the two groups' aggregates businesses have been merged, saving pounds 7.4m.

Redland has written down the value of Steetley's Spanish aggregates business, its US brick interests and Gobitta, but it also revalued some aggregates and clay reserves. Rationalisation provisions will be about pounds 60m, which means the net effect will be to cut Steetley's net assets, shown as pounds 330m at the beginning of the year, by about pounds 30m.

The group's pre-tax profits rose from pounds 78.8m to pounds 88.5m. The figures also benefited from the sale of land for waste disposal sites, which brought in pounds 7m compared with pounds 4m the previous year.

At the operating level, profits were pounds 15.4m higher at pounds 95.2m while net interest payable rose from pounds 1m to pounds 6.7m, largely because it took on pounds 307m of Steetley's debt. This was largely bank borrowings and has now been refinanced, saving pounds 5.5m.

Earnings per shares fell from 13.6p to pounds 11.6p, reflecting dilution from the pounds 260m rights issue last April.

But the group has backtracked on the dividend promise made with the acquisition. Then, it said that the full year dividend would be increased. Now, it says that 'adverse conditions' mean it will be maintained at 25p. The interim was held at 8.25p.

Analysts are split over whether it will cut the dividend in 1993. Andrew Melrose at Nomura, who is expecting pounds 195m profits this year and next - giving 23p of earnings in 1993 - believes the group may be forced to cut to 16p. But Mark Stockdale of Warburg Securities, who expects pounds 210m profit this year, thinks it may be held.

Redland's shares fell 19p to 343p.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk