some clarity

I've noticed some dismay from members of the forum as to the performance of BKN following the latest half year results. This may provide some clarity to BKN followers, and possibly some explanation? This is in addition to the fact that the market was also falling over this period.

1. Half year net profit was $35.7m. This included a $4.2m gain on the repurchase of bonds (refer to note 3 of the accounts) which I don't personally classify as profit derived from BKN's ordinary course of business. The profit also included a $10.8m contribution from the AmeriCast Technologies acquisition (refer to note 6 of the accounts).

The 2008 half year profit was affected by true one-off issues in the power and cement business, similarly it appears that same business was affected by different one-off issues this year, so the net-net impact of these could possibly cancel each other out.

The 2008 half year profit also included contributions from acquisitions. These don't appear to be in the magnitude of the AmeriCast Technologies acquisition.

So when you adjust profit for the first two explained items, net profit (remember on an adjusted basis) would be $20.7m. That appears to be the profit derived from Bradken's normal day to day businesses and excluding the acquisition.

Profit for the previous corresponding period (the first half of the 2008 financial year) was $23.3m.

2. The initial decision to underwrite the dividend reinvestment plan had the potential to dilute equity. Basically BKN would be issuing new shares to cover the dividend - if shareholders elect to participate in the DRP, they get new shares - if they elect not to participate, they get cash and shares are issued to the underwriter for cash to pay for the dividend.

This had the potential for more shares on issue going forward, diluting earnings per share. This doesn't seem to be an issue now, BKN have announced they will fund dividend's from internal facilities and will not underwrite the DRP.