Interim payout held at Newman

CONTINUED weakness in UK construction markets has led to a 9 cent fall to pounds 6.6m in half-time pre-tax profits at Newman Tonks, the locks and architectural hardware specialist.

Coupled with a rising tax charge, this meant a maintained interim dividend of 3.8p was not covered by earnings. Geoff Gahan, chief executive, said the decision to hold the dividend reflected long-term confidence in the group and an improvement in gearing from 27 to 16 per cent.

Mr Gahan conceded that a maintained total dividend of 9.3p would be unlikely to be covered by earnings in the current financial year, extended to 14 months ending 31 December. 'We will have to see what trading conditions are like at the time. But we do see ourselves as a yield stock.'

On the basis of an unchanged final payment, Newman Tonks shares, unchanged at 123p yesterday, are yielding 10 per cent, a measure of the stock market's uncertainty about the dividend.

The decline in profits was exacerbated by a rise in the tax charge from 28.7 per cent to 34.7 per cent and an increase in issued share capital following a placing earlier this year. These combined to leave earnings 23 per cent lower at 3.5p a share against 4.55p.

January's pounds 18m placing was made to finance the purchase of Shapland & Petter, a door maker, and Moller & Auster, a Norwegian lock manufacturer. Both made a positive contribution to first-half profits.

Weakness in British markets, where volume ran 15 per cent lower, has meant another 5 per cent cut in Newman's workforce, depressing profits further.