The Investment column: Trust me, says Tarmac boss
Wednesday 09 April 1997
Britain's biggest construction and building materials group has certainly taken investors for a switch-back ride over the past five years. But the real benefits of its big initiative, swapping assets with Wimpey, are yet to be felt.
Making comparisons with Tony Blair's New Labour Party is not entirely inappropriate. When chairman John Banham unveiled the Wimpey deal at the end of 1995 he said the future was bright for "New Tarmac".
There was certainly a slick, electoral-style presentation on show yesterday as Tarmac unveiled end-of-year 1996 financial results. The only problem for the stage managers is that Simms might have the vision of Blair, but has the wordiness of Neil Kinnock. His reiteration of the words "shareholder value" almost obscured the basic message that there had been a 29 per cent improvement in operating profits and an upturn was predicted this year for its core UK businesses.
For the 12 months to 31 December the reported pre-tax profit figure was an unimpressive pounds 10.5m, which compared with pounds 20.3m last time. But strip out exceptional items, like the pounds 65m restructuring charge following the Wimpey swap, and the pre-tax result rose from pounds 67.1m to a respectable pounds 75.5m.
Tarmac has re-arranged its business into two main lines, heavy building materials and construction services. The former saw operating profit surge 27 per cent due to a strong performance from its US activities. Construction services also showed signs of improvement and Tarmac is proud of its pounds 1.4bn current order book and the potential for PFI contracts worth pounds 800m. Never one to stint on optimism, Mr Simms was trumpeting a much improved outlook for this year and boasting of rationalisation benefits of almost twice the original target.
On the basis of forecast profits this year of pounds 125m, before exceptionals, the shares, up11p at 115p yesterday, trade on a prospective price/earnings ratio of 12.8, a discount to both the market and the rest of the sector. With a 6 per cent yield, that looks fair value.
- 1 Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
- 2 Scottish independence: Ireland since 1919 is a lesson for Scotland in what a Yes vote means
- 4 John Travolta addresses former pilot's gay romance allegations publicly for the first time
Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
Scottish independence: Police will be on high alert on Friday whatever the result
John Travolta addresses former pilot's gay romance allegations publicly for the first time
QS university world rankings: Imperial College London leapfrogs Oxford to join Cambridge as best British university
Scottish independence exclusive: Millions of banknotes sent to Scotland in case Yes vote sparks run on ATMs
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
Portuguese academic says British are 'filthy, violent and drunk'
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
iJobs Money & Business
£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...
£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...