Billington Regulatory News (BILN)

6 Mar 2007 16:37

AMCO Corporation PLC06 March 2007 AMCO CORPORATION PLC ("AMCO" OR "THE GROUP")6th March 2007 PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2006 CHAIRMAN'S STATEMENT Following the death of Stuart Gordon, chairman of the Group, on Sunday 4 March2007, I have agreed to delay my planned retirement for the time being and willact as interim Chairman until I am replaced by Mr Peter Hems who joins theCompany on 1 April 2007. Results before taxation I am pleased to report substantially improved results for 2006. The profitbefore taxation for 2006 was £8.9 million compared with £7.0 million in 2005.This was on total turnover of £136 million as compared with £126 million for2005. Structural steel Structural steel activities had an extremely good year and returned operatingprofits of £3,997,000. Property Property development and investment returned operating profits of £3,352,000. Specialist engineering Specialist engineering operating profits of £1,569,000. Manufacturing There were operating profits of £504,000. Earnings per share Earnings per share were 53.0 pence for 2006 compared with 42.7 pence for 2005. Dividend I am delighted to announce a recommended final dividend for 2006 of 6 pence pershare payable on 2nd July 2007 to shareholders of record on 8th June 2007. Thiswill increase the total dividend paid and proposed in respect of 2006 to 13pence, an 18% increase over the 11 pence paid in respect of 2005. Liquidity and capital resources The Group had net debt at 31st December 2006 of £4.8 million as compared with anet funds in hand position at 31st December 2005 of £4.1 million. Shareholdersfunds increased from £10,043,000 at 1st January 2006 to £17,062,000 at 31stDecember 2006. Pension Schemes The net deficits on the Group's final salary pension schemes reduced by £4.0million to £8.6 million at 31st December 2006. We intend to make additional contributions, in excess of normal contributions,to the schemes of £1.4 million in 2007. Prospects for 2007 Following the termination of possible offer discussions announced earlier in theyear the Board is now focused on driving the continuing development of the Groupand I am pleased to report that prospects for 2007 are good. Structural steel activities continue to be buoyant and another good year isexpected in 2007. Due to timings associated with present developments in progress, propertydevelopment results in 2007 are likely to be less profitable than in 2006. We anticipate satisfactory profits from specialist engineering activities in2007. Plastics manufacturing is expected to have an acceptable year in 2007. Dosco continues to operate in a very difficult market but we anticipatereasonable profits in 2007. Management and workforce I should like to thank all directors and employees for their efforts andenthusiasm in 2006 which have contributed to a significant extent to the verypleasing outcome to the year. M.R. SpeakmanInterim Chairman6th March 2007 OPERATIONAL REVIEW Overview The Group's focus on the development of its structural steel, propertydevelopment, specialist engineering and manufacturing businesses continues. The results in 2006 were a further improvement on the figures registered in2005. Provided that the structural steel market remains relatively buoyant, thecompletion of property development projects currently in hand and theprogressive growth of our specialist engineering activities are maintained thenthe Group should achieve a further satisfactory performance in 2007. 2006 was a year of high capital investment within the Group as we consolidatedour position in the niche markets that we service. There was further investmentin modernising the steel facilities, particularly in our Yate factory andadditional drill rigs were acquired to support and expand our overseasexploration drilling operation in Guinea. We will continue to make investmentsthroughout the Group to expand the scope of the services and products we offerand improve the efficiency and profitability of our businesses. Health and Safety Health and Safety remains at the core of the Group's operations and we continueto maintain our year on year improvement in Health and Safety performance. Billington Structures in particular has reinvigorated its system of monitoringand seeking improvements in Health and Safety by introducing a tiered structureof working groups, which make use of the experience and ideas of those mostclosely involved and at risk, both in its factories and on sites. During 2007 the Group will maintain its focus on the minimisation of Health andSafety risk through the identification and elimination of workplace hazards andthe implementation of improvements in the areas of behavioural safety,occupational road risk and the management of sub contractor performance. Management Systems 2006 saw further progress made in relation to the review and development ofmanagement systems within the Group. Both Amalgamated Construction andBillington Structures have achieved continued success with the furtherdevelopment of their "Workspace" and "BILLMISS" electronic managementinformation systems. The project to develop a process based electronic management system for DoscoOverseas Engineering is nearing completion and the system is programmed to golive in February 2007. Companies within the Group have all successfully maintained ISO 9000 (Quality)and ISO 14000 (Environmental) certification of their management systems during2006. Billington Structures has achieved certification to the OccupationalHealth Standard OHSAS 18001 and Amalgamated Construction will be seekingcertification to OHSAS 18001 during 2007. Training and Development Substantial investment in employee training and development has been made in2006 and increased levels of investment are envisaged during 2007. The increased manpower levels within Amalgamated Construction, following theaward of the three Network Rail Minor Works Framework Contracts, has requiredspecific attention throughout 2006 to ensure that new employees have receivedthe training required to enable them to fully meet the company's operationalrequirements. 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 is developed. However it is also clearly recognised thatcontinued professional and career development are crucial in respect of longerterm employee retention and opportunities for improvement will be sought inthese areas during 2007. Both Amalgamated Construction and Billington Structures continue to activelysupport the construction industry's national initiative of achieving a fullyqualified workforce. Billington Structures continued to build on its relationships with local schoolsand universities, which have helped it to maintain apprenticeship schemes in itsfactories and a graduate engineer scheme in its technical department. 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 but theyalso earn 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. Billington Structures enthusiastically supports an initiative developed by itstrade association, in turn encouraged by the Government, for a SustainabilityCharter for the industry. There are three classes of membership and BillingtonStructures is one of only two companies in the industry to be awarded thehighest, the Gold Standard. Structural Steel Billington Structures enjoyed a further record year for turnover and profit in2006. It benefited from the generally favourable conditions in the constructionindustry, but also from its policy of developing long-term relationships with anumber of major contractors and clients. Among the projects supplied with steelwork were a major town centrere-development at Bishops Stortford, the new grandstand at Doncasterrace-course, a number of schools and hospitals, a new warehouse for Corus atScunthorpe and a transport interchange in Barnsley. The company's safety solutions division, easi-edge, had a year of strong growth.There was expanding demand for its safety barrier system, as the industryincreasingly saw the need to provide a more substantial method of protectingworkers at height than is provided by the traditional scaffolding poles. It alsobenefited from its growing portfolio of new products, including a well-receivedsystem for guarding stairs and an innovative product to protect workers loading/unloading trailers called "Trailarrest". It was a record year for investment. The growth of the easi-edge hire businessneeded supporting with considerable expenditure on additional barriers and thestrong growth in structural steelwork encouraged the Group to make a substantialinvestment in modernising and increasing the capacity of its Yate factory. Thisfacility, which at the start of the year, was only capable of producing half theoutput of the Wombwell factory, is now on occasion producing in excess ofWombwell. The main item of spend was a next-generation Ficep CNC saw/drill.Another major investment by the Group to support growth in the business was anextension to the main office-block at Wombwell. This was completed just prior tothe end of the year. Hollybank Engineering is the Group's other structural steel business. Itsupplies the underground mining industry, in particular the UK coal industry. Inconsequence, its market has been declining over a number of years. A particularblow in 2006 was the closure of one of its principal customers, Tower Colliery.In spite of the difficult conditions in which it operates, it still managed totrade profitably in 2006. Conditions are currently even tougher and 2007 islikely to be very difficult for the company. Property Development Amco Developments enjoyed a record year for turnover and profit in 2006. The Arundel Street, Sheffield residential development of 68 apartments wassuccessfully completed in December 2006 with over half of the units havingalready been sold or under offer. Planning for 50 apartments in phase one of the larger mixed use development atSummerfield Street, Sheffield was successfully achieved and work has commencedon site in January 2007. All 50 units in the phase have successfully been soldoff plan. Phase two which comprises of 205 apartments, 20,000 sq.ft. of officesand some 5,000 sq.ft. of retail space is likely to commence on site in late2008. A number of other exciting opportunities have been secured. These include ascheme for 129 apartments in Dewsbury with work expected to commence on site inthe third quarter of 2007 and a scheme for 21 apartments in Bradford where workis anticipated to commence in the second quarter of 2007. Phase four of the successful Temple Point business park in Leeds currently beingundertaken in a joint venture with Tolent has been completed and sold to aninvestor. Amco Developments continues to actively identify other development opportunitiesto build on what has been a highly successful 2006. Specialist Engineering Amalgamated Construction is the multi-disciplinary specialist engineeringsubsidiary of the Group, operating throughout the UK across the rail, civil,mechanical and electrical engineering sectors. It also provides explorationdrilling services in West Africa. The business again had a successful year in2006 reflecting the continued strong demand for its specialist engineeringactivities. The rail business achieved significant growth throughout the period and furtherconsolidated its position in the rail market throughout the UK through thesuccessful delivery of multi-disciplined civils, structures, building,maintenance and engineering projects for Network Rail, train operating companiesand major rail contractors. In 2006 the company was awarded Minor Worksframework contracts for three Network Rail Territories. This £20 million perannum contract is for a period of 3 years with an optional 2 year extension. Thecompany specialises in tunnel and shaft refurbishment, bridge and structuresreplacement and refurbishment, trackside civils works, new build andrefurbishment of stations, signal boxes and lineside structures, specialistmechanical and electrical refurbishment and the delivery of a wide range ofminor works maintenance services. Projects undertaken in 2006 included majortunnel and shaft repairs, viaduct repairs, embankment stabilisations, earthworksand drainage schemes, the Monkwearmouth bridge refurbishment and the WallingfordRoad bridge replacement in Goring. The engineering business provides a range of multi-disciplinary design, projectmanagement, turnkey contracting, installation, commissioning and maintenanceservices to the power, water, nuclear, utilities, ports, mining andmanufacturing industries. Current and recent projects cover mechanical andelectrical services, bulk materials handling installations, moving structuresand fluid power engineering for a range of clients including Magnox, NationalGrid, E-on, SSE, British Energy, RWE Innogy, the Environment Agency, BritishWaterways, Network Rail, the Oil and Pipelines Agency and Local Authorities.Major projects undertaken in 2006 include Monkwearmouth rail bridgerefurbishment, Exeter Canal swing bridge and bascule bridges refurbishment andArdrishaig swing bridge refurbishment. The civil engineering business is focussed on civil and multi-disciplineengineering contracts across the energy, water, utilities, transport and publicsectors. It specialises in the project management and delivery ofmulti-discipline engineering projects, both traditional and design-construct,drawing on specialist skills and resources from around the company. It retainsspecialist skills, resources and plant relating to the construction, maintenanceand refurbishment of below ground structures and engineering projects includingtunnels and shafts. The company has been working with Dundee City Councilthroughout 2006 under an Early Contractor Involvement arrangement to assist indesign development and advise on construction options, logistics, railinterfaces and programming for the Dock Street rail tunnel strengtheningcontract. The £6m contract works started at the beginning of 2007. The exploration drilling company is based in Guinea, West Africa. The businesscontinued to expand its operations with the acquisition of four new drill rigsin 2006, two of which have been commissioned in early 2007. Manufacturing Dosco Overseas Engineering had a successful year in 2006 with turnover beingsome 24% higher than that achieved in 2005. The company continues to focus itsactivities and services away from its traditional core market, which centred onthe UK mining industry, and whilst this market remains important, 2006 sawapproximately 80% of the turnover generated overseas. During 2006 the company successfully sold further MK4 roadheaders into theChinese coal mining market as well as completing machine orders for theDominican Republic, Russia and the United States. In addition spares sales weregenerated in eleven different countries in addition to the UK. The company hasnow successfully supplied equipment into three of the top ten coal producers inChina as well as two of the largest producers in Russia, the company's two keymarkets. Significant orders for 2007 have so far been received from China, Russia and theMiddle East. The Chinese orders are from two different coal mining bureaus andare for two machines each. The Russian order is for major ancillary equipment toform the back-up system behind a Dosco roadheader and the Middle Eastern orderis a major spares order to support previously supplied Dosco equipment. Inaddition to the mining sales currently secured the company also has two pipeconveyor orders, one for the UK and one for Poland. The success achieved to-date together with our strategy of focussing on keyexport markets and core products, namely roadheading and material handlingequipment, provides a solid base for the company's continued structured andsustainable growth in worldwide markets. During 2006 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. To enable it to meet the demand created in the year twonew extrusion lines were brought into service along with 6,500 sq.ft. ofadditional storage space. Amco Plastics increased sales of extruded product to the UK cable industry andbecame the sole supplier of tube to the UK paint roller industry. After some design difficulties the company successfully completed the supply of10 kilometres of 2.5 metre diameter tunnel ventilation ducting to the high speedtrain link from Spain to France at Le Perthus and La Jonquera. FINANCIAL DIRECTOR'S REPORT Results Total turnover (including the increase in work in progress) in the year ended31st December 2006 increased by 15.2% to £145.1m from £126.0m in the previousyear. The Group reported a total operating profit for 2006 of £8.9m a 23.6% increaseon the profit achieved in 2005 of £7.2m. Operating margins increased in the yearfrom 5.7% to 6.1%. Taxation The tax charge of £2.8m in the year equates to an effective corporation tax rateof 30.8% on the Group's profits. Profit and dividends per share Earnings per share were 53.0p in 2006, which compares with earnings per share of42.7p in 2005. During the year a final dividend of 11p per share was paid inrespect of the 2005 results and an interim dividend of 7p per share paid inrespect of the 2006 results. A final dividend of 6p per share is proposed inrespect of the 2006 results which would result in total dividends in respect of2006 of 13p, an increase of 18.2% over the comparative 2005 dividend. Capital expenditure The Group continued to invest in capital equipment with a further £6.9m (2005 -£3.3m) of capital expenditure in the year of which £1.9m (2005 - £1.8m) relatedto replacements in the Group's motor vehicle fleet. Of the balance of £5.0m,£2.4m was in respect of new equipment in the structural steel businesses, £1.5mon construction drilling equipment, £0.8m on an office extension with the restinvested in plant and equipment throughout the Group. The depreciation chargefor the year was £2.9m which, together with sundry disposals, caused the totalfixed assets in the Group to increase by £3.6m to £18.7m. Cashflow The Group had net debt at the end of 2006 of £4.8m, an increase in net debt of£8.9m from the net funds position of £4.1m at the end of 2005. There was a netcash outflow during the year of £5.8m and an increase in bank loans, primarilyto fund property developments of £3.0m. The large outflow of funds during theyear resulted from an increase in working capital of £9.8m, fixed assetacquisitions of £6.9m, £2.1m of dividend payments and £1.5m of additionalcontributions to the defined benefit pension schemes. The large increase inworking capital in the year largely related to two separate events. One of thesewas the acquisition of land in Sheffield for a large property development andthe other was a result of the awarding to Amalgamated Construction during theyear of the Minor Works framework contracts for two additional Network RailTerritories. The Network Rail payment terms on these contracts requires thecompany to invest considerable sums of additional working capital. Pension Schemes The deficit on the Group's pension schemes as calculated by FRS 17 reducedduring the year by £4.0m to £8.6m after allowing for deferred tax. Thisreduction in the deficit was a result of changes in the actuarial assumptionsunderlying the present value of the scheme liabilities and better thananticipated returns on the schemes' assets. The actual return on the schemeassets of £5.2m was £2.2m in excess of the anticipated return and the Group madecontributions in the year £1.5m in excess of the current service charge. Inaddition the £2.1m of further actuarial gains caused the gross deficit to reduceby £5.8m before deferred tax. The Group intends to make additional contributionsto the pension schemes in 2007 of £1.4m. International Financial Reporting Standards (IFRS) The Group is required to issue its financial statements for the year ending 31stDecember 2007 in accordance with IFRS, including the June 2007 interims, in linewith mandatory AIM rules. The directors have started to consider theimplications of these requirements, and in particular which areas of the Group'sbalance sheet and results would be significantly affected by the adoption ofIFRS. This process has not been completed to date, but the key areas wheredifferences in treatment between UK GAAP and IFRS may arise include: IAS 12 Income Taxes (Deferred Tax) IAS 16 Property, Plant and equipment IAS 31 Interests in joint ventures IAS 11 Construction Contracts A further update on IFRS matters will be provided to shareholders in due course,once the impact of the changes can be quantified in a sufficiently reliablemanner and also in the interim report for the period ending 30 June 2007. I. SwireGroup Financial Director6th March 2007 Profit and loss account for the year ended 31st December 2006 2006 2005 £000 £000 £000 £000Total turnover (including share ofturnover in joint 135,730 125,982ventures)Increase in work in progress 9,396 46 145,126 126,028Less: share of turnover in joint (7,832) (7,222)venturesGroup turnover 137,294 118,806Raw materials and consumables 50,798 44,019Other external charges 37,472 25,140 (88,270) (69,159) 49,024 49,647Staff costs 36,298 37,783Depreciation 2,905 2,349Other operating charges 3,010 3,043 (42,213) (43,175)Group operating profit 6,811 6,472Share of operating profit in joint 2,092 739venturesTotal operating profit 8,903 7,211Net interest 10 (68)Other finance income /(cost) 24 (192)Profit on ordinary activities before 8,937 6,951taxationTax on profit on ordinary activities (2,751) (1,971)Profit transferred to reserves 6,186 4,980Earnings per share (basic and diluted) 53.0p 42.7p Statement of total recognised gains and losses for the year ended 31st December2006 2006 2005 £000Profit for the financial year 6,186 4,980Actuarial gain/(loss) recognised in the pension scheme 4,291 (1,858)Movement on deferred tax relating to pension liability (1,734) 342Current tax relating to pension liability 447 215Total recognised gains for the year 9,190 3,679 Consolidated balance sheet at 31st December 2006 2006 2005 £000 £000 £000 £000Fixed assetsTangible assets 18,735 15,136Investments 0 350Investments in joint ventures:share of gross assets 4,765 12,595share of gross liabilities (3,515) (10,934) 1,250 1,661 19,985 17,147Current assetsStock and work in progress 21,591 11,381Amounts recoverable on contracts 8,230 957Debtors 13,756 15,823Cash at bank and in hand 3,427 7,738 47,004 35,899Creditors: amounts falling due (38,246) (28,653)within one yearNet current assets 8,758 7,246Total assets less current liabilities 28,743 24,393Creditors: amounts falling due (3,089) (1,710)after more than one yearNet assets excluding pension 25,654 22,683liabilityPension liability (8,592) (12,640)Net assets including pension 17,062 10,043liabilityCapital and reservesCalled up share capital 1,293 1,293Share premium 1,864 1,864Capital redemption reserve 132 132Property revaluation reserve 3,284 3,284Other reserves (869) (798)Profit and loss account 11,358 4,268Shareholders' funds 17,062 10,043 Consolidated cashflow statement for the year ended 31st December 2006 2006 2005 £000 £000 £000 £000Net cash (outflow)/inflow from operating (1,988) 7,702activitiesDistributions from joint ventures 2,450 0Returns on investments and servicing offinanceInterest received 201 159Interest paid (49) (87)Hire purchase interest paid (151) (140)Net cash inflow/(outflow) from returns 1 (68)oninvestments and servicing of financeTaxation (1,552) (486)Capital expenditure and financialinvestmentPurchase of tangible fixed assets (4,981) (1,499)Sale of tangible fixed assets 805 702Net cash outflow from capitalexpenditure and (4,176) (797)financial investmentAcquisitions and disposalsSale of investment 372 0Net cash inflow from acquisitions and 372 0disposalsEquity dividends paid (2,100) 0Net cash (outflow)/inflow before (6,993) 6,351financingFinancingBank and other loans 3,047 (2,290)Capital element of finance lease rentals (1,771) (1,739)Employee Share Ownership Plan - purchase of shares (104) (230) - disposal of shares 33 28Net cash inflow/(outflow) from financing 1,205 (4,231)(Decrease)/increase in cash (5,788) 2,120 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 2005, which have remainedunchanged for the financial year ended 31st December 2006. 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 2006, 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 2006 statutory financial statements upon which theauditors' opinion is unqualified. The statutory financial statements for theyear ended 31 December 2006 were approved by the directors on 6th March 2007,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 11,674,408 (2005 -11,654,508). 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 2006 will be posted to shareholders on or about 30th April 2007. This information is provided by RNS The company news service from the London Stock Exchange