Yesterday's presentation was designed to portray the group as low-geared, cash-generative and with a manageable property exposure. It pointed out that 40 per cent of the pounds 110m worth of property completed and under construction is let and will produce pounds 4m a year 'in due course' - that is, when the rent-free periods expire. But that leaves pounds 50m that has been frozen as an unproductive drain on resources, while there is a significant risk of provisions against its share of the Spitalfields development.
On cash, the picture is certainly much healthier. It generated pounds 37m from trading in the first half which, with the pounds 154m rights issue, meant that on- and off-balance-sheet debt fell from pounds 232m in December to pounds 145m. This was despite paying pounds 35m for shares in GGC, the Spanish cable company now a subsidiary, and taking pounds 100m of its debt into the books.
But it also has pounds 177m of convertible capital bonds - debt in most people's eyes - and has to pay about pounds 60m for the acquisition of Reynolds in the US and KWO in Germany. With total gearing about 60 per cent, there is little leeway for write-downs or further investment in property.
Underlying trading remains bleak. Mr Biggam warned that no recovery is likely until 1993 'and even then volume recovery is likely to be modest'. Profit before tax was down 14 per cent on 1991's depressed result to pounds 58m and earnings were down 17.6 per cent to 11.2p, reflecting dilution from the rights issue. BT is buying only half the cables expected when the latest contract was signed and no increase is expected this year. At Balfour Beatty, the order book is a healthy pounds 1.7bn but competition for work is squeezing margins in the UK, which still accounts for 85 per cent of the business.
Analysts are expecting between pounds 120m and pounds 130m in the current year, putting it on about 12.6 times earnings. The interim dividend was maintained at 6p and, given the commitment at the time of the rights, the final payment of 13.25p also looks safe. The market is likely to remain sceptical about the group, but the shares are underpinned by a 9.2 per cent yield.
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