Billington Regulatory News (BILN)

23 Apr 2008 07:00

AMCO Corporation PLC23 April 2008 Press Release 23 April 2008 Amco Corporation plc ("Amco" or "The Group") Preliminary Results Amco Corporation plc (AIM: ARP) announces its preliminary results for the yearended 31st December 2007, including the disposal of certain non-core assets. Financial highlights: • First full year to be presented under IFRS; disposal of non-core assets reported as a post balance sheet event and results reported as continuing and discontinued operations• Operating profit on continuing operations up 5.4% at £4.8 million on turnover of £69.8 million (2006: £65.4 million)• Profit before tax before non-recurring items in line with market expectations at £7.5 million• Earnings per share 28.6 pence (2006: 28.0 pence)• Proposed final dividend of 7.5 pence per share that increases the total dividend for the year to 11.0 pence (2006: 13.0 pence on the back of record profits) Operational highlights: • Disposal of non-core assets: Amalgamated Construction Ltd and property development activities• Market position and reputation of continuing operations strengthened during 2007• Structural Steel division reported record results and record forward order book of £40 million; further investment in plant and machinery as well as development of new products Peter Hems, Executive Chairman, commented: "I am very pleased with the progress the Group made in 2007. Our strategicdecision to create a business that is capable of sustained organic growth led tothe disposal of non-core assets post year end. The continuing operations, and inparticular Structural Steel, have performed well and we are confident about thefuture prospects of the Group." - Ends - For further information: Amco Corporation plcPeter Hems, Executive Chairman Tel: +44 (0) 116 257 5170Steve Fareham, Managing Director +44 (0) 1226 340666 Brewin Dolphin Investment BankingAndrew Emmott, Corporate Finance Tel: +44 (0) 845 270 8610 Media enquiries:Abchurch CommunicationsAriane Comstive/ Jack Ballantyne Tel: +44 (0) 207 398 7705ariane.comstive@abchurch-group.com www.abchurch-group.com CHAIRMAN'S STATEMENT I am pleased to report on the full year results for Amco Corporation plc for2007; a strong operating performance particularly from the core Structural Steelbusiness and a major turning point in our strategy with the disposal of certainnon-core businesses announced on 14 April 2008. The Group is now focussed on our award winning and industry leading StructuralSteel business, Billington Structures Ltd. We believe this business is capableof sustained organic growth, and with the disposal proceeds we have theflexibility to invest where appropriate to capitalise on further organicopportunities and to consider growth by acquisition. In order to support that new focus the company intends to change its name toBillington Holdings plc at the forthcoming Annual General Meeting. Results overview The 2007 figures for the Group are the first full year to be presented underInternational Financial Reporting Standards "IFRS", the rules of which requireus to reflect the disposal of the non-core businesses as a substantial postbalance sheet event and to report the results as continuing and discontinuedoperations. Overall profits before taxation before non-recurring items were in line withmarket expectations at £7.5m. This result is down from the outstanding result of£8.8m profit before taxation achieved in 2006 which included substantial profitsfrom the Group's property development arm. Continuing operations generated an operating profit of £4.8m, an increase of5.4% over 2006, on a turnover of £69.8m (2006: £65.4m). It is pleasing to notethat the majority of this increase has come from improved margins in theStructural Steel business. Earnings per share for continuing activitiesincreased from 28.0p to 28.6p. Discontinued operations generated an operating profit of £0.8m after a provisionof £1.8m relating to a contract in Guinea (2006: £4.3m). Earnings per share fordiscontinued operations were 9.7p compared with 24.9p in 2006. The disposal of non-core assets gave rise to an £8.6m non-recurring item from awrite down of the assets to fair value. This brings the loss for the year aftertaxation to £4.2m and the loss per share to 36.0p (2006: earnings per share53.0p). Overall Group operating cash flow was £7.5m for the year and the continuingoperations finished the year with £6.0m of cash and no borrowings. Dividend I am pleased to announce a recommended final dividend for 2007 of 7.5 pence pershare payable on 7 July 2008 to shareholders on record on 6 June 2008. This willmake the total dividend paid and proposed in respect of 2007 11.0 pence, whichis in line with broker expectations. This figure compares with 13.0 pence pershare for 2006 on the back of record profits. Pension Schemes The net deficits on the Group's final salary pension schemes reduced by £4.6m to£4.0m at 31 December 2007. The continuing Group has retained responsibility forthe Dosco scheme and in line with the new requirements of the Pensions Act hasbeen in discussion with the Trustees in terms of agreement of a recovery plan.Provisional agreement has been reached with the Trustees on the terms of such aplan and as part of those arrangements it is intended to make additionalcontributions of around £0.8m during 2008. The Disposal As we set out in the announcement on 14 April 2008, the rationale for thetransaction has been to enable the Group to have focus and to develop a strategyaround the core activity of its Structural Steel business. In arriving at that rationale it was necessary to assess which of the principalactivities carried on by the Group was the most appropriate to form the basisfrom which to develop a future focus and strategy for the Group. Amalgamated Construction Ltd has suffered substantial losses from contracting inthe past as it looked to move away from its traditional coal mining background.Although it has substantially moved away from those activities that gave rise tothe loss making contracts and has sought to change the nature of its activities,the profits generated from the new work have not yet generated an appropriatecontribution to Group profits. The company also has an overseas drillingoperation based in Guinea, which although profitable is reliant for the majorityof its work on one customer. It was concluded that this was not the business onwhich to develop a future group strategy. The property development activities have from time to time produced substantialcontributions to profits. However the level of activity is not sufficient togenerate a regular flow of transactions to provide a consistent contribution toprofit in each year. The property development activities are principally underthe control of one person and in order to generate an increased level ofactivity this would require a substantial increased investment in terms of thesize of the team and also the additional working capital required to funddevelopment activities. In the light of all these factors and the currentdifficulties in the property market it was concluded that this also was not thebusiness on which to develop a future group strategy. The conclusion regarding the future focus for the Group coincided with themanagement team approaching the Board about the possibility of a managementbuyout of these businesses. An Independent Committee of the Board was formed tocarry out negotiations with Endless LLP and the management team on behalf ofNewco. This resulted in the agreement to dispose of the non core businesses fora total consideration of £9.4 m, with £8 m paid on completion and the balancewithin twelve months. The value attributed to the exiting businesses was arrivedat following a process of negotiation to agree the overall value of the packagebased on the profitability of those businesses and taking into account anallowance towards the pension deficit on the Amco Pension Scheme. The Scheme isshowing a small surplus on an FRS17 basis, but shows a deficit of between £5.3mand £8.0m on a buy out basis depending on the assumptions used. The valuearrived at was less than the carrying value of the assets attributable to thosebusinesses resulting in a one off write off in the accounts of £8.6m. TheIndependent Committee of the Board appointed Grant Thornton to advise on thetransaction. The independent directors, having consulted with Brewin DolphinInvestment Banking, the nominated adviser, consider that the terms of thetransaction are fair and reasonable insofar as the shareholders are concerned. Board Changes The disposal has given rise to some board changes. David Jackson and Ian Swire, previously Executive Director and Finance Directorof Amco Corporation, worked with Endless LLP on the disposal and have resignedto take up new roles with the new owners. Ian Swire and David Jackson haveserved as directors on the Group Board since 1996 and 1999 respectively andduring that time have made a substantial contribution to the success of thebusiness. On behalf of the Board I would like to thank them for theircontribution and to wish them success with their new venture. Steve Fareham, managing director of Billington Structures Ltd and a board membersince October 2006, becomes Managing Director for the Group. Peter Hart, finance director of Billington Structures Ltd, was appointed FinanceDirector for the Group on completion of the disposal. Likewise, Mike Fewster, operations director of Billington Structures Ltd, wasappointed Operations Director for the Group. Prospects for 2008 The new Board are confident about the future prospects of the Group. Structural Steel has a record forward order book in excess of £40m. The workloadis spread geographically across the length and breadth of the UK mainland withstructural steelwork destined for projects that service a wide variety ofbuilding types and sectors. Current projects cover a wide spectrum of activitiesincluding education, military infrastructure, the arts, commercial premises andindustrial buildings. This coupled with a substantial blue chip customer base,provides a strong trading pipeline for Structural Steel through 2008 and beyond. The recent turmoil in the financial markets has led to a degree of generalnervousness in the construction sector, particularly affecting residential anddistribution projects. Neither of these building types feature highly inBillington's current portfolio and we continue to see strong demand from thevarious schools initiatives, power stations and general town centre regenerationprojects. The easi-edge safety solutions business has already developed a number ofinteresting products and should see a steady growth in their activities andprofitability in 2008. We can expect a consistent level of demand for rental of barriers and sales ofthe new trailarrest and coresafe products. The current buoyant conditions in the world mining industry mean that Dosco isexperiencing a steady demand in its spares business and has orders and enquiriesfor new and refurbished machines going through into 2009. Management and workforce I should like to express my thanks to all the directors and employees for theirefforts and assistance in the last twelve months. I look forward to working withthe continuing team to achieve future success and wish those departing with theexiting business every success for the future. Peter HemsExecutive Chairman22 April 2008 OPERATIONAL REVIEW The Group as a whole performed in line with expectations in 2007. However, thedisposal completed since the year end has had a significant impact on the Groupand so we concentrate here on the continuing operations. These comprise theexisting Structural Steel and Engineering businesses. Discontinued operations includes businesses which have provided volatile resultswhich detract from the consistency and visibility of the earnings stream fromthe businesses we have retained. Structural Steel comprises Billington Structures, the award-winning andnationally recognised steelwork contractor and the largest single component ofcontinuing operations; easi-edge, a safety solutions provider, and Hollybank, amanufacturer of steel arches for the mining industry. Engineering comprises Dosco, an internationally known designer and manufacturerof underground tunnelling and roadheading machinery. The continuing operations of Amco Corporation plc, particularly StructuralSteel, further strengthened its reputation and position in the market placeduring 2007. It produced its best ever results in turnover and profitabilityterms, coupled with a record end of the year forward order book. Client focus and service on projects both large and small remain at our core. Structural Steel Billington Structures A selection of projects undertaken by the company, included: • Buildings at Warwick and Liverpool Universities;• Complex fabrications for Government Agencies;• Various Military buildings under the ongoing SLAM project;• Castle Hill Hospital Hull;• Retail, leisure and residential developments at Bishop Stortford and Camberley;• Wakefield Market Hall;• Sheffield's Digital Centre;• Major refurbishment projects in Finsbury Circus, London and The Headrow, Leeds;• Completion of 3 major structures at St Paul's Square, Liverpool, including the first use of a bi-steel core fabricated by the steelwork contractor;• Mezzanine floors for a variety of data centres and also Rolls Royce Cars, Goodwood;• Various schools in and around Manchester as part of our ongoing Manchester Schools partnership;• The National Blood Service, Bristol; and• Architectural extensions to the Trafford Centre, Manchester. The new Headquarters building for Billington was handed over and brought intouse during the year, providing an industry best working environment. Furtherinvestments in plant and machinery were undertaken particularly with theinstallation of a new CNC controlled saw and drill line in the Yate factorywhich is capable of scribing the positions of fittings. In house erections teams were introduced, and as a key part of our ongoingdevelopment, the new post of Supply Chain Manager was created and successfullyfilled during the year. easi-edge Operating from our Tuxford, North Nottinghamshire base, as a trading division ofBillington. easi-edge continues to expand its portfolio of safety solution products to theconstruction industry. These include coresafe a new development in lift shaftvoid protection. Over 80km of the award winning easi-edge barriers are in daily use on projectsacross the length and breadth of the country, many on major high profilestructures including: • The first ever Ikea inner city store in Coventry;• Newcastle upon Tyne's stylish new library;• Gresham Street, London;• Extensions to the Majedski Stadium, Reading;• Sheffield Heart of the city projects;• Various projects in Aberdeen and Inverness;• Burnley College;• Southampton Row, London;• Suffolk College; and• The Rose Bowl, Leeds Metropolitan University. easi-edge was a founder member of the EPF (Edge Protection Federation) andactively participated in the development of the new guidance booklet to BS13374.It became the first edge protection member of the BCSA (British ConstructionalSteelwork Association) to achieve Silver status in Sustainability. Hollybank Engineering As the major supplier of underground steelwork to the UK coal industry,Hollybank enjoyed a buoyant second half as the world demand for coal increased.Working in partnership with UK Coal and Corus alternative steel arch sectionswere developed. The factory buildings at Tuxford were rationalised andproduction processes improved. Engineering Dosco Overseas Engineering Further success was enjoyed by Dosco in generating yet more orders from China.Further reorganisation and streamlining of the company took place during theyear with key posts in Engineering and Purchasing filled. A decision was made towithdraw from the non core pipe conveyor market. The company continues to focus its activities and services away from itstraditional core market, which centered on the UK mining industry, and whilstthis market remains important, 2007 saw in excess of 86% of the turnovergenerated overseas. During 2007 the company successfully built upon theachievements made in 2006 and sold equipment into China, Russia and the USA. Inaddition spares sales were generated in twelve different countries as well asthe UK. The company has further consolidated its activities and will now concentrate onits core business of supplying equipment for the development of roadways andtunnels to customers around the world. Significant opportunities exist in 2008where it is expected that a further four MK4 machines will be supplied to anexisting customer in China, four LH1400 machines complete with drill rigs willbe sold to a new client in India and further sales will take place in Russia. Inaddition there is an excellent opportunity to introduce a new continuous minerand a new backhoe loader to a customer in the USA. The company had a disappointing result in 2007, as explained in the FinancialReview, but we believe that the operational difficulties that gave rise to thoseresults will not be repeated and that continuing to focus on key export marketsand core products provides a solid base for the company's continued structuredand sustainable growth in worldwide markets. Health, Safety and Environment Health, safety and the environment underpins all activities in the Group. Weparticipated in the formation of an industry led sustainability group and theinaugural meeting was held in our Wombwell office. During the period healthsurveillance schemes, for all, were introduced and all employees were activelyencouraged to become involved in various aspects of health, safety and theenvironment. This included participating in the filming of and assistance in thefinancing of a BCSA (British Constructional Steelwork Association) DVD entitled'Protecting our People'. The recruitment of an additional Health and SafetyManager, based at our Bristol plant, further demonstrated our commitment.Various audits were successfully completed, of our management systems to ISO9000, 14000 and 18001 during the period. We were particularly pleased to be oneof the first, of Bovis preferred suppliers, to be successfully accreditedthrough the Achilles process. Training and Development Billington successfully maintained the internationally recognised Investors inPeople (IIP) accreditation. Graduate recruitment and development continues to bea key driver in the Group's HR development programme. Acknowledging the industrywide problem of recruitment and development at all levels, we activelyparticipated in the formation of a BCSA fronted HR group and inaugural meetingswere held at our Wombwell office. Our links to the professional institutions,particularly the Institution of Structural Engineers, BCSA and localUniversities remain extremely active at all levels in the organisation.Communication on all aspects of our business to all employees is paramount andthree 'Team Briefs' were given at all sites. Conclusion 2007 will be remembered as a significant milestone in the development of theAMCO group, with changes at Board level and a greater empathy from the now morefocussed organisation. Going forward I now believe the Group is betterpositioned than ever to enjoy sustainable growth. Steve FarehamManaging Director22 April 2008 FINANCIAL REVIEW International Financial Reporting Standards "IFRS" These are the first full year accounts of the Group to be prepared under IFRS.The change has no impact on the overall profit for the year, but does have animpact in terms of Balance Sheet disclosures of Investments, Deferred Taxationand Revaluation Reserve. Full details of the impact of those changes are set outin Note 26 to the Financial Statements. IFRS require that where there has been asubstantial transaction post year end the Group Financial Statements should bedrawn up on the basis of showing separately the figures for continuing anddiscontinued activities. The disposal referred to in Note 3 is deemed to be sucha transaction and this is the basis on which the Group Financial Statements havebeen prepared. Continuing and Discontinued Operations The continuing operations reflect the new group structure and consist of theStructural Steel business of Billington Structures and Hollybank, theEngineering business consisting of Dosco and Group activities, which covercentral costs offset by management charges and internal group rentals. The discontinued operations reflect the results relating to the companiesexiting the group being Amalgamated Construction, the Property Developmentbusinesses, Amco Plastics and that part of the Group costs which are alsoexiting. Results for year The profit for the year before taxation from continuing operations is reportedas £4.8m (2006: £4.6m) and after taxation as £3.31m (2006: £3.27m). The profitfor the year before taxation from discontinued operations was £0.9m (2006:£4.2m) and after taxation £1.1m (2006: £2.9m). The result for the year was expected to be a profit before tax of between £7.0mand £8.0m depending on whether or not the sales of apartments on the first phaseof the Summerfield Street property development completed in the year. Theachieved overall profit before taxation was £5.7m, which is after making aprovision of £1.8m in connection with an overseas drilling contract. Thus beforehaving made that provision the results were in line with expectations on thebasis that virtually all the Summerfield Street sales did not complete beforethe year end. The profits from discontinued activities in 2006 included asubstantial contribution from property development activities. The assets that are being disposed of as part of the transaction have beenwritten down by £8.6m to the value realised. This is a one off transaction, butin terms of presentation the write down is charged against the profit fromoperations resulting in a loss for the year of £4.2m. The statement ofrecognised income and expense shows a credit from actuarial gains in relation tothe pension schemes (net of taxation) amounting to £3.4m such that after takinginto account the loss for the year there is a net reduction in the income andexpense for the period attributable to shareholders of £0.8m. Continuing Operations Structural Steel The turnover showed a slight increase over the previous year at £58.2m comparedwith £57.1m, but the profit before tax increased from £4.2m to £4.6m, which wasin line with expectations and represented the company's best ever performance. The company's safety products division enjoyed a year of consolidation. Salesgrew by 12%, but profit was lower as demand was affected by strong pricecompetition, particularly earlier in the year. However, good progress was madein strengthening the team and in developing products. Trailarrest, the systemfor protecting workers loading and unloading trailers, proved attractive and thecompany is hopeful that its new development, coresafe, which guards lift-shaftvoids, will also meet an unsatisfied need in the market. Investment expenditure was down on the record level of the previous year. Therewere no major items of plant purchased and expenditure on new easi-edge barrierswas also lower. The company starts 2008 with its best-ever order book. Engineering Dosco is principally engaged in the manufacture and sale of mining, tunnellingand material handling equipment. 2007 again saw a significant increase in saleswith turnover being some 42% higher than that achieved in 2006 at £12.0m asagainst £9.2m. However disappointingly this was not reflected in terms ofprofit, which showed a reduction from £0.3m to £0.1m. The company sufferedadversely due to the performance of Sterling against the Dollar and aparticularly problematic pipe conveyor project. The company normally looks toprotect against currency exchange risks, but due to the volatility of theexchange markets during this period there was an exposure which was not covered.In order to avoid such future risks the company has moved to a policy ofcontracting in sterling wherever possible. The loss on the pipe conveyorcontract was such that the company has decided not to take on any new contractsfor this type of work. Discontinued Activities Amalgamated Construction The profit before taxation was in line with budget before taking into account aloss provision of £1.8m (£1.2m after tax) resulting in an overall break evenposition for the company. The provision is in respect of overseas withholdingtax that should have been deducted by a customer in relation to a drillingcontract. The claim by the customer has been strenuously resisted, but aftercommercial negotiation a new schedule of rates and an extension to the contractterm has been agreed in return for which Amalgamated Construction has agreed toaccept responsibility for the overpayment and to repay this to the customer overthe revised term of the contract. Property Development The profit before taxation generated from property development and investmentactivities in 2006 amounted to £3.4m. The achieved result for the current yearamounted to £0.4m, which was considered to be a satisfactory result in all thecircumstances. The 2006 results included the completion of the 68 apartmentresidential development in Arundel Street, Sheffield. There remain a number ofthose apartments still to be sold, sales of which during 2007 were much slowerthan anticipated. The first phase, involving 50 residential apartments, of thelarger mixed use development at Summerfield Street, Sheffield was completed inDecember 2007, but completion of the sales did not take place until after theyear end. Taxation The tax charge of £1.5m in the year on continuing operations equates to aneffective corporation tax rate of 30% on the Group's profits. Profit and dividends per share Earnings per share from continuing activities were 28.6 pence per share in 2007,as against 28.0 pence per share in 2006. During the year a final dividend of 6.0pence was paid in respect of the 2006 results and an interim of dividend of 3.5pence per share was paid in respect of the 2007 results. A final dividend of 7.5pence per share is proposed in respect of the 2007 results which would bring thetotal dividend in respect of 2007 to 11.0 pence. This compares with a totaldividend of 13.0 pence per share for 2006 on the back of record profitsincluding a substantial contribution from property development. Cash flow The continuing operations had no borrowings at the balance sheet date, but hadcash balances of £6.0 m. Cash and cash equivalent balances for the Group, including the disposedcompanies, grew by £7.4m in the year. Depreciation charges exceeded capitalexpenditure by £2.2m and the growth in creditors was £1.5m greater than that ofstock, work-in-progress and debtors. The additional funds of £8.4m (£9.4mconsideration net of £1.0m professional fees) which will be generated from thedisposal mean that the company will be well placed to fund organic growth andniche acquisitions from its own resources as and when opportunities arise. Pension Schemes The deficit on the Group's pension schemes, as calculated in accordance with FRS17, reduced by £4.6m (after allowing for deferred tax) to £4.0m at the year-end.This deficit is entirely attributable to the Dosco scheme, which remains withthe continuing operations. The deficit before deferred tax reduced by £6.7m, ofwhich £1.4m was due to additional contributions by Group, £4.0m was due tochanges in actuarial assumptions in calculating scheme liabilities and £1.3mfrom gains on scheme liabilities. A valuation of the liabilities of the DoscoScheme was due at 30 April 2007 and in line with the requirements of thePensions Act there have been discussions with the Trustees in terms of agreementof a recovery plan. Provisional agreement has been reached with the Trustees onthe terms of such a plan and as part of those arrangements it is intended tomake additional contributions of around £0.8m to that Scheme during 2008. Peter HartFinance Director22 April 2008 Consolidated income statement for the year ended 31st December 2007 2007 2006 £'000 £'000 £'000 £'000 Continuing operations Revenue 69,831 65,436Increase in work in progress 317 1,105 70,148 66,541 Raw materials and consumables 46,649 44,966Other external charges 1,125 1,115Staff costs 13,415 12,366Depreciation 1,495 1,274Other operating charges 2,621 2,224 (65,305) (61,945)Total operating profit 4,843 4,596 Finance cost (39) (5)Finance income 6 58Profit on ordinary activities before taxation 4,810 4,649 Tax on profit on ordinary activities (1,496) (1,375)Profit for the year from continuing operations 3,314 3,274 Discontinued operations Profit for the year from discontinued operations 1,130 2,912 Loss on measurement to fair value less costs to (8,624) -sell of discontinued operations (Loss)/profit for the year attributable to (4,180) 6,186equity holders of the parent company Earnings per share (basic and diluted) from 28.6p 28.0pcontinuing operations Earnings per share (basic and diluted) from 9.7p 24.9pdiscontinued operations (Loss)/earnings per share (basic and diluted) (36.0)p 53.0pfrom continuing and discontinued operations Consolidated statement of recognised income and expense for the year ended 31stDecember 2007 2007 2006 £'000 £'000 Actuarial gain recognised in the pension schemes 5,043 4,291 Movement on deferred tax relating to pension (2,114) (1,734)liabilityCurrent tax relating to pension liability 489 447Net income recognised directly in equity 3,418 3,004 (Loss)/profit for the year (4,180) 6,186Total recognised income and expense in the year (762) 9,190attributable to equity holders of the parentcompany Consolidated balance sheet at 31st December 2007 2007 2006 £'000 £'000 £'000 £'000 Assets Non current assets Property, plant and equipment 10,920 18,735 Investments in joint ventures - 1,250 Deferred tax assets 1,748 4,054Total non current assets 12,668 24,039 Current assets Inventories and work in progress 8,385 21,591 Amounts recoverable on contracts - 8,230 Trade and other receivables 4,812 13,385 Cash and cash equivalents 6,038 3,427Total current assets 19,235 46,633Assets included in disposal group classified 57,224 -as held for saleTotal assets 89,127 70,672 Liabilities Current liabilities Short term borrowings - 1,477 Current portion of long term borrowings - 3,623 Trade and other payables 19,252 32,513 Current tax payable 691 633Total current liabilities 19,943 38,246Liabilities included in disposal group 48,824 -classified as held for sale Non current liabilities Long term borrowings - 3,089 Pension liabilities 5,603 12,275Total non current liabilities 5,603 15,364Total liabilities 74,370 53,610Net assets 14,757 17,062 Equity Called up share capital 1,293 1,293 Share premium 1,864 1,864 Capital redemption reserve 132 132 Other reserve (1,310) (869) Accumulated profits 12,778 14,642Shareholders' funds 14,757 17,062 Consolidated cash flow statement for the year ended 31st December 2007 2007 2006 £'000 £'000 Cash flows from operating activities Group (loss)/profit after tax (4,180) 6,186Adjustments for: Profits from joint ventures (5) (2,039) Depreciation on property, plant and 3,432 2,905 equipment Difference between pension charge and cash (1,490) (1,467) contributions Profit on sale of property, plant and (122) (470) equipment Taxation expense recognised in income 1,263 2,689 statement Taxation paid (1,475) (1,552) Finance income (55) (25) Increase in inventories and work in (5,505) (10,210) progress Increase in trade and other receivables (2,070) (5,573) Increase in trade and other payables 9,090 6,016 Loss on measurement to fair value of 8,624 - disposal groupNet cash flow from operating activities 7,507 (3,540) Cash flows from investing activities Distributions from joint ventures 192 2,450 Net cash flow from returns on investments (84) 1 and servicing of finance Purchase of property, plant and equipment (1,249) (4,981) Proceeds from sale of property, plant and 438 805 equipment Net cash inflow from disposal of - 372 investmentsNet cash flow from investing activities (703) (1,353) Cash flows from financing activities Equity dividends paid (1,102) (2,100) Proceeds of bank and other loans 7,153 6,357 Repayment of bank and other loans (3,187) (3,310) Capital element of hire purchase payments (1,786) (1,771) Employee Share Ownership Plan share (458) (104) purchases Employee Share Ownership Plan share sales 17 33Net cash flow from financing activities 637 (895)Net increase/(decrease) in cash and cash 7,441 (5,788)equivalentsCash and cash equivalents at beginning of period 1,950 7,738Cash and cash equivalents at end of period 9,391 1,950Cash and cash equivalents 6,038 3,427Bank overdraft - (1,477)Cash and cash equivalents of continuing Group 6,038 1,950Included within the disposal group 3,353Total cash and cash equivalents 9,391 Notes: 1. Basis of preparation With effect from 1st January 2007, the company is required to present its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Accordingly, the financial information in this preliminary announcement has been prepared in accordance with accounting policies which are based on the IFRS in issue and in effect at 31st December 2007. Comparatives have been restated in compliance with the principles of IFRS. The details of the impact of the transition from UK GAAP to IFRS are set out in Note 26 to the Group financial statements which is appended hereto. 2. Accounts The summary accounts set out above do not constitute statutory accounts as defined by Section 240 of the UK Companies Act 1985. The summarised consolidated balance sheet at 31 December 2007, the summarised consolidated income statement, the summarised consolidated cash flow statement and the summarised statement of recognised income and expense for the year then ended have been extracted from the Group's 2007 statutory financial statements upon which the auditors' opinion is unqualified. The statutory financial statements for the year ended 31 December 2007 were approved by the directors on 22 April 2008, 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 the result for the year after tax, divided by the weighted average number of ordinary shares in issue in the year (excluding those held in the ESOP Trust) of 11,598,808 (2006 - 11,674,408). Reconciliation of profit before taxation and non-recurring item £000 Profit before taxation - continuing operations 4,810 Profit before taxation - discontinued operations 897 Non recurring item - discontinued operations 1,800 7,507 4. Report and accounts and AGM The Annual Report and Accounts for the year ended 31st December 2007 will be posted to shareholders by the end of May and will be available on the company's website: www.amco-corporation.co.uk. The Annual General Meeting will be held on 24 June 2008 at 11am at Billington Structures Ltd, Barnsley Road, Wombwell, South Yorkshire S73 8DS. 5. Segmental information The continuing operations of Amco Corporation Plc operate in two segments: - Structural Steel and Engineering. The Structural Steel segment includes the activities of Billington Structures Ltd and Hollybank Engineering Company Ltd. The operations of Dosco Overseas Engineering Ltd are included within the Engineering segment. The Group activities comprise services and assets provided to Group companies and a small element of external property rentals and management charges. All assets of the continuing Group reside in the UK. Structural Continuing Discontinued Steel Engineering Group Activities Activities £'000 £'000 £'000 £'000 £'000 Year ended 31st December 2007 RevenueExternal sales 58,270 11,781 97 70,148 81,370 Segmental resultOperating profit 4,593 131 119 4,843 803Share of results of joint ventures - 5Net finance income/(cost) (33) (33) 89Profit before taxation 4,593 131 86 4,810 897Taxation (1,496) 233Profit for the year before fair value 3,314 1,130adjustments Assets and liabilitiesSegment assets 12,312 3,923 8,581 24,816 42,557Unallocated assets 7,087 13,604Investment in joint venture - 1,063Total assets 12,312 3,923 8,581 31,903 57,224Segment liabilities (14,379) (1,068) (1,275) (16,722) (23,405)Unallocated liabilities (8,824) (25,419)Total liabilities (14,379) (1,068) (1,275) (25,546) (48,824)Net assets (2,067) 2,855 7,306 6,357 8,400 Other informationCapital expenditure 863 8 7 878 2,013Depreciation 1,398 64 33 1,495 1,937 Structural Continuing Discontinued Steel Engineering Group Activities Activities £'000 £'000 £'000 £'000 £'000 Year ended 31st December 2006 RevenueExternal sales 57,188 9,186 167 66,541 70,753 Segmental resultOperating profit 4,178 347 71 4,596 2,215Share of results of joint ventures - 2,039Net finance income/(cost) 53 53 (28)Profit before taxation 4,178 347 124 4,649 4,226Taxation (1,375) (1,314)Profit for the year before fair value 3,274 2,912adjustments Assets and liabilitiesSegment assets 13,203 4,438 8,280 25,921 34,737Unallocated assets (384) 9,148Investment in joint venture - 1,250Total assets 13,203 4,438 8,280 25,537 45,135Segment liabilities (11,617) (1,632) (1,310) (14,559) (18,646)Unallocated liabilities (5,598) (14,807)Total liabilities (11,617) (1,632) (1,310) (20,157) (33,453)Net assets 1,586 2,806 6,970 5,380 11,682 Other informationCapital expenditure 2,500 177 13 2,690 4,171Depreciation 1,164 123 33 1,320 1,585 6. Discontinued activities On 11 April 2008 the non core businesses were sold to a NEWCO, Amco Group Ltd. Amco Group Ltd is owned by Endless LLP, a venture capital business, and members of a management team lead by Messrs Swire and Jackson. The non core businesses consist of Amalgamated Construction Ltd, Amco Developments Ltd, Amco Plastics Ltd and associated subsidiaries together with a number of dormant companies. The 'held for sale' date is deemed to be 31 December 2007. The continuing operations consist of Billington Structures Ltd, Dosco Overseas Engineering Ltd and Hollybank Engineering Ltd. As at 31st December 2007 these operations are reported as discontinued activities. The discontinued activities results were as follows: 2007 2006 £'000 £'000 £'000 £'000 Revenue 76,917 62,462Increase in work in progress 4,453 8,291 81,370 70,753 Raw materials and consumables 7,357 5,832Other external charges 43,183 36,357Staff costs 27,216 23,932Depreciation 1,937 1,631Other operating charges 874 786 (80,567) (68,538)Group operating profit 803 2,215Share of post tax profit in joint ventures 5 2,039Total operating profit 808 4,254Finance cost (50) (52)Other finance income 139 24 Profit on ordinary activities before taxation 897 4,226Tax on profit on ordinary activities 223 (1,314)Profit for the year from discontinued operations 1,130 2,912 Cash flows from discontinued operations for the year ended 31st December 2007 £'000Net cash flow from operating activities (1,372)Net cash flow from investing activities (1,435)Net cash flow from financing activities 3,847Net increase in cash and cash equivalents 1,040 In accordance with IAS 7 and IFRS 5 the cash flows above in respect of thediscontinued operations are included in the consolidated cash flow statementunder their respective headings. Balance sheet of disposal group at 31st December 2007 £'000 £'000Property, plant and equipment 6,958Investment in joint ventures 1,063Deferred tax assets 901Inventories and work in progress 18,711Amounts recoverable on contracts 10,080Trade and other receivables 24,732Current tax receivables 50Cash and cash equivalents 3,353Assets of disposal group 65,848Current portion of long term borrowings (8,124)Trade and other payables (38,291)Long term borrowings (2,409)Liabilities of disposal group (48,824)Net assets of disposal group 17,024Disposal proceeds (net of professional fees) (8,400)Loss on disposal allocated to disposal group assets 8,624 Note 26 to the financial statements - Transition notes These are the Group's first consolidated financial statements prepared underIFRS. An explanation of how the transition from UK GAAP to IFRS has affected theGroup is set out below. The IFRS accounting policies of the Group are detailedin the Group financial statements. IAS 31 Interests in Joint Ventures Previously under FRS 9 Joint Ventures were accounted for under the gross equitymethod. Under IFRS these are reported under the equity method. Under FRS 9 theGroup's share of the turnover, operating profit before tax, finance cost orincome and taxation charge were reported separately within the profit and lossaccount or notes thereto. Under IFRS Joint Ventures appear as a single line itemwithin the income statement, being the Group's share of the profit or loss aftertax. Within the balance sheet the Group's investment in joint ventures is nowshown as a single line item rather than the share of gross assets and share ofgross liabilities which was previously shown under FRS 9. All joint ventures areundertaken by the discontinued operations. IAS 12 Income Taxes Under IFRS, deferred tax is to be provided on all revalued assets included inthe balance sheet. Under UK GAAP deferred tax had not been provided on theproperty revaluations. As a result of the application of IFRS the gross amountof the property revaluations has been left unchanged as the application ofindexation allowance means that no capital gains tax would be payable in theevent of a disposal of properties. In addition pension liabilities are nowstated gross and the related deferred tax asset disclosed within non currentassets. Property Revaluation Reserve The revalued amount for property has been accounted for as deemed cost under thetransition to IFRS. As a result the property revaluation reserve previouslydisclosed under UK GAAP is transferred to the profit and loss account reserve. Explanation of material adjustments to the cash flow statement Application of IFRS has resulted in reclassification of certain items in thecash flow statement as follows: Under UK GAAP, payments to acquire property, plant and equipment were classifiedas part of 'Capital expenditure and financial investment'. Under IFRS, paymentsto acquire property, plant and equipment have been classified as part of'Investing activities'. Income taxes are classified as operating cash flows under IFRS, but wereincluded in a separate category of tax cash flows under previous GAAP. Interest paid and interest received are classified as cash flows from investingactivities under IFRS, but were included in the 'Returns on investments andservicing of finance' category in cash flows under UK GAAP. Equity dividends paid are classified as financing cash flows under IFRS, butwere included in a separate category of dividend cash flows under previous GAAP. There are no other material differences between the cash flow statementpresented under IFRS and the cash flow statement presented under UK GAAP. Discontinued operations As referred to in note 6 above, certain of the Group's companies arerecategorised as discontinued operations as at 31st December 2007. 2006comparatives have been restated to reflect the trading results of theseoperations which are now separately disclosed within the income statement. In the balance sheet, all assets and liabilities held by the discontinuedoperations at 31st December 2007 are reclassified as held for sale and disclosedseparately within total assets and total liabilities. Reconciliation of net income for the year ended 31st December 2007 2006 £'000 £'000 £'000 £'000 £'000 UK GAAP Joint Total Discontinued IFRS Ventures Operations Operations As Restated Total revenue (including share of revenue 135,730 (7,832) 127,898 (62,462) 65,436in joint ventures (Decrease)/increase in work in 9,396 - 9,396 (8,291) 1,105 progress 145,126 (7,832) 137,294 (70,753) 66,541 Less: share of revenue in joint (7,832) 7,832 - - - ventures 137,294 - 137,294 (70,753) 66,541 Raw materials and consumables 50,798 - 50,798 (5,832) 44,966Other external charges 37,472 - 37,472 (36,357) 1,115Staff costs 36,298 - 36,298 (23,932) 12,366Depreciation 2,905 - 2,905 (1,631) 1,274Other operating charges 3,010 - 3,010 (786) 2,224 130,483 - 130,483 (68,538) 61,945 Group operating profit 6,811 - 6,811 (2,215) 4,596Share of operating (loss)/profit in joint 2,092 (53) 2,039 (2,039) -venturesTotal operating profit 8,903 (53) 8,850 (4,254) 4,596Finance income 210 (9) 201 (143) 58Finance cost (200) - (200) 195 (5)Other finance income/(cost) 24 - 24 (24) -Profit on ordinary activities before 8,937 (62) 8,875 (4,226) 4,649taxationTax on profit on ordinary activities (2,751) 62 (2,689) 1,314 (1,375)Profit for the year from continuing 6,186 - 6,186 (2,912) 3,274activities Discontinued operationsProfit for the year from discontinued - - - 2,912 2,912operations Profit for the year attributable to the 6,186 - 6,186 - 6,186equity holders of the parent company Reconciliation of equity as at 1st January 2006 1st January 1st January 2006 2006 £'000 £'000 £'000 £'000 £'000 UK GAAP Joint Deferred Tax Revaluation IFRS Ventures Reserve AssetsNon current assets Property, plant and equipment 15,136 - - - 15,136 Investments in joint ventures: - 1,661 - - 1,661 share of gross assets 12,595 (12,595) - - - share of gross liabilities (10,934) 10,934 - - - Investment held for resale 350 - - - 350 Deferred tax assets 1,263 - 4,892 - 6,155Total non current assets 18,410 - 4,892 - 23,302 Current assets Inventories and work in progress 11,381 - - - 11,381 Amounts recoverable on contracts 957 - - - 957 Trade and other receivables 15,085 - - - 15,085 Cash and cash equivalents 7,738 - - - 7,738Total current assets 35,161 - - - 35,161Total assets 53,571- - 4,892 - 58,463 LiabilitiesCurrent liabilitiesShort term borrowings - - - - -Current portion of long term borrowings 1,846 - - - 1,846Trade and other payables 26,497 - - - 26,497Current tax payable 310 - - - 310Total current liabilities 28,653 - - - 28,653Non current liabilitiesLong term borrowings 1,710 - - - 1,710Deferred tax provision 525 - (525) - -Pension liabilities 12,640 - 5,417 - 18,057Total non current liabilities 14,875 - 4,892 - 19,767Total liabilities 43,528 - 4,892 - 48,420Net assets 10,043 - - - 10,043 Equity Issued capital 1,293 - - - 1,293 Share premium 1,864 - - - 1,864 Capital redemption reserve 132 - - - 132 Property revaluation reserve 3,284 - - (3,284) - Other reserve (798) - - - (798) Accumulated profits 4,268 - - 3,284 7,552Shareholders' funds 10,043 - - - 10,043 Reconciliation of equity as at 31st December 2006 31st December 31st December 2006 2006 £'000 £'000 £'000 £'000 £'000 UK GAAP Joint Deferred Tax Revaluation IFRS Ventures Reserve AssetsNon current assets Property, plant and equipment 18,735 - - - 18,735 Investments in joint ventures: - 1,250 - - 1,250 share of gross assets 4,765 (4,765) - - - share of gross liabilities (3,515) 3,515 - - - Deferred tax assets 942 - 3,112 - 4,054Total non current assets 20,927 - 3,112 - 24,039 Current assets Inventories and work in progress 21,591 - - - 21,591 Amounts recoverable on contracts 8,230 - - - 8,230 Trade and other receivables 13,385 - - - 13,385 Cash and cash equivalents 3,427 - - - 3,427Total current assets 46,633 - - - 46,633Total assets 67,560 - 3,112 - 70,672 LiabilitiesCurrent liabilitiesShort term borrowings 1,477 - - - 1,477Current portion of long term borrowings 3,623 - - - 3,623Trade and other payables 32,513 - - - 32,513Current tax payable 633 - - - 633Total current liabilities 38,246 - - - 38,246Non current liabilitiesLong term borrowings 3,089 - - - 3,089Deferred tax provision 571 - (571) - -Pension liabilities 8,592 - 3,683 - 12,275Total non current liabilities 12,252 - 3,112 - 15,364Total liabilities 50,498 - 3,112 - 53,610Net assets 17,062 - - - 17,062 Equity Issued capital 1,293 - - - 1,293 Share premium 1,864 - - - 1,864 Capital redemption reserve 132 - - - 132 Property revaluation reserve 3,284 - - (3,284) - Other reserve (869) - - - (869) Accumulated profits 11,358 - - 3,284 14,642Shareholders' funds 17,062 - - - 17,062 ENDS This information is provided by RNS The company news service from the London Stock Exchange