Last checked at 5 May 2010 09:32
Press Release 5 May 2010
Billington Holdings Plc
Billington Holdings PLC
("Billington") or ("the Group")
Disposal of non core business
Billington Holdings Plc (AIM:BILN) announces that it has reached agreement to sell Dosco Holdings Limited to SMT Scharf AG, for a cash consideration of £1.8million payable on completion. SMT Scharf is based in Hamm, Germany and is the technology and world market leader for rail-bound railway systems for the mining sector.
This transaction is viewed as a very positive move by the Billington Board as it completes the disposal of non core businesses enabling the group to concentrate on the future development of its core business activities of structural steel and safety solutions. The ongoing business consists of Billington Structures - one of the leading structural steel contractors businesses in the UK focusing on the design, manufacture and erection of structural steelwork for industrial, public sector and commercial buildings and easi-edge - a specialist in the development, production and rental or sale of edge protection systems and other safety related products.
The exiting group consists of two principal businesses based in Nottinghamshire, Dosco Overseas Engineering Limited "Dosco" and Hollybank Engineering Limited "Hollybank". Dosco is engaged in the manufacture and supply of underground mining machines to the international mining industry and Hollybank supplies underground support arches principally for the UK mining industry.
The transaction is viewed as positive for the exiting group in that as part of SMT Scharf AG they will complement its core business activities of rail- bound railways in terms of both customers and technologies. The turnover and loss before taxation attributable to the exiting group for the year ended 31 December 2009 were £12.8m and a loss of £0.8m respectively.
The combined value of the net assets being disposed is £3.0m, which is stated after taking into account the deficit attributable to the Dosco final salary pension scheme of £5.2m calculated on an FRS17 basis as at 31 December 2009.The impact on the Financial Statements of this transaction is a loss to the continuing group of £1.5m after accounting for the costs of the transaction. All figures are unaudited and relate to the financial year ended 31 December 2009.
This transaction completes the disposal of non-core businesses and in doing so removes a level of risk to the group arising both from the cash flow requirements to finance working capital and the very substantial potential liabilities attributable to the Dosco pension scheme. The nature of the Dosco business, being the supply of capital goods to international markets, has proved to be very volatile with a consequent impact on group management time and cashflows, that together with the ongoing uncertainty as to the potential impact of the Pension Scheme liabilities attributable to the Dosco Scheme are both issues that have adversely impacted the operations of the continuing business to date.
The group has received no contribution to group profits from these businesses in recent years after taking account of payments due under the Pension Scheme recovery plan and was projected to have little or no prospect of doing so, as part of the continuing group, in the foreseeable future based on current activity levels. It is currently intended to retain the proceeds from this transaction within the group to support and develop the continuing business activities.
Commenting on the disposal of Dosco Holdings Limited, Steve Fareham, Chief Executive of Billington Holdings Plc, said:
"We are delighted to have come to an agreement with SMT Scharf for the disposal of Dosco and Hollybank. The acquisition complements SMT Scharf's core business of rail-bound railways in terms of both customers and technologies and allows us to focus on our core business of structural steel whilst eliminating potential liabilities attributable to the Dosco pension scheme."
The Company will announce its preliminary results for the year ended 31 December 2009 on Tuesday 11 May 2010.
For further information please contact:
Billington Holdings plc Tel: 00 44 1226 340666
Peter Hems Executive Chairman
Steve Fareham Chief Executive
Blythe Weigh Communications Tel: 00 44 20 7138 3204
Tim Blythe, Ana Ribeiro, Matthew Neal
Brewin Dolphin Investment Banking Limited Tel: 00 44 845 270 8610
Andrew Emmott