Billington Regulatory News (BILN)

7 Mar 2006 14:11

AMCO Corporation PLC07 March 2006 AMCO CORPORATION PLC ("AMCO" OR "THE GROUP") PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2005 CHAIRMAN'S STATEMENT Results before taxation I am pleased to report substantially improved results for 2005. The profitbefore taxation for 2005 was £7.0 million compared with £3.0 million in 2004.This was on total turnover of £126 million as compared with £134 million for2004. Structural steel activities had a particularly good year and contracting,property development and plastics manufacture all performed well. Doscounderground equipment manufacture again had an unsatisfactory year although onlymodest losses were sustained. Taxation The effective rate was 28.6% due mainly to the utilisation of the balance oftrading losses brought forward. Earnings per share Earnings per share were 42.7 pence for 2005 compared with 23.0 pence for 2004. Dividend I am delighted to announce a return to the payment of dividends with arecommended dividend for 2005 of 11 pence per share payable on 3rd July 2006 toshareholders of record on 2nd June 2006. Liquidity and capital resources The Group had net funds in hand at 31st December 2005 of £4.2 million ascompared with a net debt position at 31st December 2004 of £0.2 million. Pension Schemes The net deficits on the Group's final salary pension schemes increased by £0.8million to £12.6 million at 31st December 2005. We intend to make additional contributions, in excess of normal contributions,to the schemes of £1.4 million in 2006. Prospects for 2006 I am pleased to report that prospects for 2006 are good. Structural steel activities continue to be buoyant and another good year isexpected in 2006. Property development activities in 2006 should be better than in 2005 havingregard to developments in progress. Following the closure of the U.K. coal contracting activities in 2005, we expectreduced profits from contracting activities in 2006. Plastics manufacturing is expected to have a satisfactory year in 2006. Dosco is operating in a very difficult market but we hope for modest profits in2006. Management and workforce I should like to thank all directors and employees for their efforts andenthusiasm in 2005 which have contributed to a significant extent to the verysatisfactory outcome to the year. S. N. GordonChairman7th March 2006 OPERATIONAL REVIEW Overview The Group's focus on the development of its contracting, structural steel andproperty businesses continues, supported by its interests in engineering andmanufacturing. The results in 2005 were a further significant improvement on the figuresregistered in 2004. 2005 marked the Group's final withdrawal from the UK coal mining contractingindustry after 35 years. Provided that the progressive growth of our specialist construction activitiesare maintained and that the structural steel market remains relatively buoyant,and with the completion of property development projects currently in hand, theGroup should achieve a further satisfactory performance in 2006. We will continue to make investment throughout the Group to expand the scope ofthe services and products we offer and improve the efficiency and profitabilityof our businesses. Health and Safety Health and Safety is at the core of the Group's operations and is seen as anintegral element of ongoing business success. Considerable emphasis continues tobe placed on the identification and minimisation of health and safety risk, theprevention of accidents and the effective management of Occupational Health,Safety and Employee Well Being. As part of our policy of continuous improvement further initiatives will beadopted throughout 2006 to build on the health and safety successes of theprevious 12 months, particularly in the areas of employee behaviour andoccupational health. Management Systems 2005 saw further significant progress made in relation to the review anddevelopment of management systems within the Group. Amalgamated Construction,Amco Plastics, Billington Structures and Hollybank all operate process basedbusiness management systems delivered electronically using web browsertechnology. Billington Structures has continued to develop its electronic managementinformation system. It now includes document management and is linked toaccounting software. It is now possible, through a single portal, to store andretrieve all relevant documents by project and to monitor costs against projectsin real-time. January 2006 saw Amalgamated Construction roll out its "Workspace" Knowledge andDocument Management System and employees are currently undergoing training inits use. Companies within the Group have all successfully maintained ISO 9000 (Quality)and ISO 14000 (Environmental) certification of their management systems during2005. During this period Billington Structures also successfully achievedcertification to the Occupational Health Standard ISO 18001. Training and Development Substantial investment in employee training and development to meet the needs ofthe future business has been made in 2005 and will continue throughout 2006. The ongoing development of employee skills, knowledge and competence is seen asfundamental to the achievement of our longer term strategic objectives and assuch will continue to be the focal point around which our training anddevelopment strategy has been developed. This area received particular attentionduring 2005 with a significant amount of groundwork being carried out towardsthe development of a Competency Framework encompassing the areas of Managementand Leadership Skills, Technical Capability and Health & Safety. Significant focus has been and will continue to be placed on increasing healthand safety knowledge and awareness amongst employees. Of particular note during2005 was the successful completion of CITB recognised Health and Safety Trainingby all operational line managers and supervisors within AmalgamatedConstruction. Both Amalgamated Construction and Billington Structures continue to activelysupport the construction industry's national initiative of achieving a fullyqualified workforce. Environment We have continued to pursue our goal of continuous environmental improvementthrough the ongoing reduction of the environmental impact of our operations.Reductions in energy usage and waste have remained our main focus of attention. The Group continues to pride itself on the comprehensive measures implementedthroughout the organisation for the control of our environmental impacts. Notonly do these measures ensure our ongoing compliance with legislation they alsoearn acknowledgement from our clients. The ongoing development and promotion of good environmental practice,underpinned by sound environmental awareness and employee training, is seen tobe a key issue in continued business success. Contracting Amalgamated Construction had a successful year in 2005 reflecting strong demandfor and growth of its specialist construction activities. The business isstructured into two multi-disciplined client focused operating divisions;Capital Projects and Infrastructure Services. Capital Projects is focussed on traditional and design & build contractingopportunities covering civil engineering, tunnelling, bulk materials handlingand multi-discipline engineering projects servicing in particular the energy,water and transport sectors. During 2005 the business completed major projectsfor a number of blue chip clients including National Grid Transco, Scottish andSouthern Energy, United Utilities, RWE Innogy and Scottish Water. On Merseysideit completed the high profile Mersey Queensway Road Tunnel Emergency Escapescontract for Mersey Passenger Transport Authority, having previously undertakenthe Mersey Kingsway Tunnel Cross Passages contract for the same client. The £13million project included the construction of seven emergency refuge roomslocated below the road deck with associated fire protected, ramped access waysfrom road level down into each refuge. The Infrastructure division includes our specialist rail, mining andmulti-disciplined engineering and maintenance activities. Amco Rail had a verysuccessful year and further consolidated its position successfully deliveringmulti-disciplined civils, structures, maintenance and engineering projectsthroughout the Rail network. The growing prestige of the business was furtherdemonstrated in early 2006 when it was awarded Minor Works framework contractsfor three of the Network Rail Territories This £20 million per annum contractis for a period of 3 years with an option for a 2 year extension. Amco Miningwas awarded a further extension to its exploration drilling contract in Guineaand undertook major surface and underground installation works at Svea Nord Mineon Spitzbergen for SNSG. Amco Engineering had a satisfactory year from itsgrowing portfolio of maintenance work being undertaken for Magnox, NationalGrid, E-on, SSE, the Environment Agency, British Waterways and the Oil andPipelines Agency. The continued reduction in the UK coal mining industry determined that wewithdraw from deep mine contracting and as a result Amco Mining Services Ltd,the company established to service the requirements of UK Coal Plc, ceased totrade at the end of 2005. Structural Steel Billington Structures enjoyed a record year for turnover and profit in 2005.Market conditions were generally favourable and the company benefited from itswell-established relationships with a number of major contractors and clients.The company operates out of two modern production facilities at Wombwell nearBarnsley and Yate near Bristol. It was a particularly busy year on the SLAM contract for the MOD, with a largenumber of projects being undertaken. Other significant contracts included atown-centre development in Durham, an extension to a building that the companyhad built previously for Ikea in Doncaster, which has created the largestwarehouse in Europe, and a number of buildings at the Langeled facility, whichis the UK end of the new gas pipe-line from Norway. The company's abilities were recognised within the industry by winning two majorawards. It was named Structural Specialist of the Year by Building Magazine andSpecialist Steelwork Contractor of the Year by Construction News. Its continuing efforts to enhance health and safety have included theachievement of ISO 18001, the health and safety management standard, and thesuccessful establishment of Works Improvement Teams in its two factories. Thesehave tapped into the enthusiasm and knowledge of shopfloor employees and led toa number of worthwhile initiatives and improvements. The company's safetybarrier system, 'easi-edge', was made generally available within the industryand has enjoyed considerable success. Its distinctive orange barriers areprotecting workers on steel-framed multi-storey buildings on a large number ofsites in cities throughout the country. A major effort is underway to improve the facilities at the company's Yatefactory, with a view to increasing capacity. As part of this, an additional CNCsaw and drill is on order, for delivery mid 2006. This machine is nextgeneration, with substantial productivity benefits over current machines andwill more than double the factory's sawing and drilling capacity. Continuedgrowth in the business has meant that there is a severe shortage of office spaceat the company's main site at Wombwell. The Group has addressed this byauthorising an extension to the main office-block, which should providesufficient space for the foreseeable future when it is finished in the autumn of2006. The other structural steel business is Hollybank Engineering, which serves theunderground mining industry. Its fortunes are closely bound up with those of thecoal industry and, in consequence, it has declined considerably over the pastseveral years. However, in recent years it has stabilised and is stillprofitable. Immediate prospects are not good, with more pit closures announced,but it is possible that recent upheavals in the global energy market haveimproved the medium and longer-term prospects for coal and hence for Hollybank. Property Development In 2005 Amco Developments further consolidated its position in the Yorkshire andNorth East property development markets and had another successful year with thesale of Folly Hall Mill, Huddersfield and the St. Mary's Gate site in Sheffield,which it owned in its joint venture with Strata. Work began on the Arundel Street, Sheffield apartment block comprising 68 units,34 of which have already been sold. Completion of the block is anticipated inOctober 2006. A detailed planning consent was obtained for a large mixed use scheme inSheffield comprising 205 apartments, 10,000 sq. ft. of retail space and 35,000sq. ft. of office accommodation. It is anticipated a start on site will be madein October 2006 and strong interest has already been registered in the officeelement. The residential element of the development at St. James Boulevard, Newcastle,which is currently being undertaken in a joint venture, has been substantiallysold and the commercial element forward sold to an investor with completiontaking place in March 2006. Work continues on the 166,000 sq. ft. Temple Point Business Park in Leedsimmediately adjacent to Junction 46 of the M1. Two buildings totalling 22,000sq. ft. have been successfully completed and sold. Other phases comprising43,000 sq. ft. in seven units are currently in various stages of completion. A number of other schemes are expected to come on stream during 2006. Engineering Dosco continues to develop its activities and services away from its traditionalcore market which centred on the UK coal mining industry. This market has noweffectively been replaced through its expanding activities servicing the exportmining and material handling markets. Although the business provided by the UK coal mining industry will continue tobe serviced by the company, Dosco has had to look outside this market to providethe opportunity for a continuing structured and sustainable growth. The successachieved in changing its market base now provides a sound basis for Dosco tocontinue to expand its products and services around the world. The Russianservice centre is now well established in the Siberian coalfields. During 2005 the company successfully completed a £2.5m contract to supply threeroadheading machines to the Chinese coal mining market and one to Russia. One ofthe sales into China was for a MK4 machine, a new machine utilising the latesttechnologies for variable strata conditions Orders for 2006 have so far been received from USA, China and the DominicanRepublic. The American order is for an initial two machines which will be usedto develop underground workings for the extraction of oil, the DominicanRepublic order is for a machine to develop the Santo Domingo underground system. Manufacturing During 2005 Amco Plastics continued to focus on the expansion of its extrusionbusiness with the development of new products to serve a wide cross-section ofindustry applications. The company successfully completed the supply of almost30 kilometres of tunnel ventilation ducting to the high speed train link fromMadrid to La Coruna at Guadarrama during 2005 and as a result won the contractto supply similar ducting to the new road tunnel from France to Spain at LePerthus. Amco Plastics also supplied more than 80 million metres of extruded product tothe UK cable industry and 25 million metres of tube to the UK DIY industry. FINANCIAL DIRECTOR'S REPORT Results Total turnover in the year ended 31st December 2005 reduced by 6.3% to £126.0mfrom £134.5m in the previous year. The Group reported a total operating profit for 2005 of £7.2m a 125% increase onthe profit achieved in 2004 of £3.2m. Operating margins also more than doubled,increasing from 2.4% to 5.7%. Taxation The tax charge of £2.0m in the year equates to an effective corporation tax rateof 28.6% on the Group's profits. Profit and dividends per share Earnings per share were 42.7p in 2005, which compares with earnings per share of23.0p in 2004. No dividends were paid in the year although a final dividend of11p per share is proposed in respect of the 2005 results. As a result of theGroup implementing FRS 21: "Events after the balance sheet date" the proposedfinal dividend is no longer shown as a liability of the Group at 31st December2005. Capital expenditure The Group continued to invest in capital equipment with a further £3.3m (2004 -£2.4m) of capital expenditure in the year of which £1.8m (2004 - £1.3m) relatedto replacements in the Group's motor vehicle fleet. Of the balance of £1.5m,£1.1m was in respect of new equipment in the structural steel businesses withthe rest invested in plant and equipment throughout the Group. The depreciationcharge for the year was £2.3m which, together with sundry disposals, caused thetotal fixed assets in the Group to increase by £0.5m to £15.1m. Cashflow The Group had net funds at the end of 2005 of £4.2m, an increase of £4.4m fromthe net debt position of £0.2m at the end of 2004. There were no bank overdraftsat the year end with the Group having total cash at bank of £7.7m at 31stDecember 2005, a cash inflow of £2.1m in 2005. Bank and other loans reduced by£2.3m and the level of finance leases remained constant. Pension Schemes The deficit on the Group's pension schemes as calculated by FRS 17 increasedduring the year by £0.8m to £12.6m after allowing for deferred tax. Thisincrease in the deficit was a result of changes in the actuarial assumptionsunderlying the present value of the scheme liabilities. The actual return on thescheme assets of £7.9m was £5.3m in excess of the anticipated return and theGroup made contributions £0.9m in excess of the current service charge but the£7.3m actuarial losses caused the gross deficit to increase by £1.1m beforedeferred tax. The Group intends to make additional contributions to the pensionschemes in 2006 of £1.4m. I. SwireGroup Financial Director7th March 2006 Profit and loss account for the year ended 31st December 2005 2005 2004 £000 £000 £000 £000Total turnover (including share of turnover injoint ventures) 125,982 134,498Increase /(decrease) in work in progress 46 (331) 126,028 134,167Less: share of turnover in joint ventures (7,222) (2,542)Group turnover 118,806 131,625Raw materials and consumables 44,019 46,945Other external charges 25,140 34,548 (69,159) (81,493) 49,647 50,132Staff costs 37,783 42,215Depreciation 2,349 2,539Other operating charges 3,043 2,340 (43,175) (47,094)Group operating profit 6,472 3,038Share of operating profit in joint ventures 739 178Total operating profit 7,211 3,216Net interest (68) (187)Other finance (cost)/income (192) 2Profit on ordinary activities before taxation 6,951 3,031Tax on profit on ordinary activities (1,971) (312)Profit transferred to reserves 4,980 2,719Earnings per share 42.7p 23.0p Statement of total recognised gains and losses for the year ended 31st December 2005 2005 2004 £000 £000Profit for the financial year 4,980 2,719 Actuarial loss recognised in the pensionscheme (1,858) (4,032) Movement on deferred tax relating to pensionliability 342 929 Current tax relating to pension liability 215 281 Total recognised gains/(losses) for the year 3,679 (103) Consolidated balance sheet at 31st December 2005 2005 2004 £000 £000 £000 £000Fixed assetsTangible assets 15,136 14,649Investments 350 350Investments in joint ventures: share of gross assets 12,595 5,630 share of gross liabilities (10,934) (4,485) 1,661 1,145 17,147 16,144Current assetsStock and work in progress 11,381 10,801Amounts recoverable on contracts 957 8,098Debtors 15,823 13,209Cash at bank and in hand 7,738 5,618 35,899 37,726Creditors: amounts falling duewithin one year (28,653) (33,634)Net current assets 7,246 4,092Total assets less current liabilities 24,393 20,236Creditors: amounts falling dueafter more than one year (1,710) (1,830)Net assets excluding pension liability 22,683 18,406Pension liability (12,640) (11,840)Net assets including pension liability 10,043 6,566 Capital and reserves Called up share capital 1,293 1,293 Share premium 1,864 1,864 Capital redemption reserve 132 132 Property revaluation reserve 3,284 3,284 Other reserves (798) (596) Profit and loss account 4,268 589 Shareholders' funds 10,043 6,566 Consolidated cashflow statement for the year ended 31st December 2005 2005 2004 £000 £000 £000 £000Net cash inflow from operating activities 7,702 3,277Dividends from joint ventures 0 125Returns on investments and servicing of finance Interest received 159 174 Interest paid (87) (214) Hire purchase interest paid (140) (147)Net cash outflow from returns on Investments and servicing of finance (68) (187)Taxation (486) 153Capital expenditure and financial investment Purchase of tangible fixed assets (1,499) (928) Sale of tangible fixed assets 702 2,203Net cashflow from capital expenditure andfinancial investment (797) 1,275Net cash inflow before financing 6,351 4,643Financing Bank and other loans (2,290) 1,640 Capital element of finance lease rentals (1,739) (1,689) Employee Share Ownership Plan - purchase of shares (230) (20) - disposal of shares 28 5Net cash outflow from financing (4,231) (64)Increase in cash 2,120 4,579 Notes: 1. Basis of preparation The financial information in this preliminary announcement has been prepared inaccordance with the accounting policies set out in the financial statements ofAmco Corporation Plc for the year ended 31st December 2004, which have remainedunchanged for the financial year ended 31st December 2005 apart from theadoption of FRS 21 - Events After the Balance Sheet Date. 2. Accounts The summary accounts set out above do not constitute statutory accounts asdefined by Section 240 of the UK Companies Act 1985. The summarised consolidatedbalance sheet at 31 December 2005, the summarised consolidated profit and lossaccount, the summarised consolidated cash flow statement and the summarisedstatement of total recognised gains and losses for the year then ended have beenextracted from the Group's 2005 statutory financial statements upon which theauditors' opinion is unqualified. The statutory financial statements for theyear ended 31 December 2005 were approved by the directors on 7th March 2006,but have not yet been delivered to the Registrar of Companies. 3. Earnings per share Earnings per ordinary share have been calculated on the basis of profit for theyear after tax, divided by the weighted average number of ordinary shares inissue in the year (excluding those held in the ESOP Trust) of 11,654,508 (2004 -11,797,808). 4. Preliminary announcement Copies of the preliminary announcement are available from the company'sregistered office at Amco House, Cedar Court Office Park, Denby Dale Road,Wakefield, WF4 3QZ. The Annual Report and Accounts for the year ended 31stDecember 2005 will be posted to shareholders on or about 29th April 2006. This information is provided by RNS The company news service from the London Stock Exchange