Billington Regulatory News (BILN)

1 Apr 2005 13:51

AMCO Corporation PLC01 April 2005 AMCO CORPORATION PLC ("AMCO" OR "THE GROUP") PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2004 CHAIRMAN'S STATEMENT Results before taxation The profit before taxation for 2004 was £3.0 million compared with a loss of£4.4 million for 2003. However shareholders' funds at 31 December 2004 reducedmarginally by £0.1 million mainly due to an increased deficit in the finalsalary pension schemes following a change in actuarial assumptions. The problem civil engineering contract continuing from 2003 has now beencompleted. Unfortunately there were further unexpected costs on that contractaffecting the 2004 contracting results which consequently only showed modestprofits. Those particular civil engineering activities have now ceased. Dosco again incurred losses in its underground equipment manufacture primarilydue to lack of turnover. Structural steel, property development and plastics manufacturing were againprofitable. Taxation Due to trading losses from prior years the effective rate of corporation tax was10.3%. Earnings per share These were 23.0 pence compared with a loss per share for 2003 of 26.0 pence. Dividends We do not intend to pay a dividend for 2004. Liquidity and capital resources Gearing at 31 December 2004 was 1.1% compared with 19.5% at 31 December 2003. Prospects I am pleased to report that prospects for 2005 are good. Structural steel activities are very buoyant at present and we anticipate aconsiderable improvement in 2005. We are not aware of any prospective problem contracts in the contractingactivities and 2005 should see a material improvement in profits. We have some significant property developments in progress and although theseshould also benefit 2006 results we expect improved profits in 2005. Dosco has an improved order book for 2005 and should return to profits. Plastics manufacturing should again be profitable. It is very difficult to predict how the final salary pension schemes deficitwill move in 2005 due to changes in interest rates, market prices and actuarialassumptions and we hope that there will be no worsening of the position at theend of 2005. Management and workforce I should like to thank all employees for their efforts and enthusiasm in what Iconsider was very much a transitional year setting the scene for betterperformance in the future. S. N. Gordon Chairman 1 April 2005 OPERATIONAL REVIEW Overview The Group's focus on the development of its construction, structural steel andproperty activities continues, supported by its interests in engineering andmanufacturing. The Group's results in 2004 are a significant improvement on the disappointingfigures registered in 2003. However they were still affected by ongoing problemson the extremely disappointing contract in Amalgamated Construction thataffected the 2003 figures. This contract is now completed and the financialimplications incurred. The management changes that took place in AmalgamatedConstruction in 2003 have provided the company with a stable structure todevelop the markets in which it can utilise its expertise. Provided that the progressive growth of our specialist construction activitiesis maintained and that the structural steel market remains relatively buoyant,and with the completion of property development projects currently in hand, theGroup should achieve an improved performance in 2005. 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 The reduction of risk and the provision of a work environment that is free fromaccidents, incidents and ill health hazards will continue to remain a prioritythroughout the Group's operations. In 2005 further Health and Safety initiatives will be adopted as part of ourpolicy of continuous improvement in order to further promote and develop ahealth and safety focussed culture throughout our businesses. Management Systems 2004 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. Companies within the Group have all successfully maintained ISO 9000 (Quality)and ISO 14000 (Environmental) certification of their management systems during2004. The further development and integration of the "Workspace" Knowledge Management& Project Collaboration System will continue throughout 2005. Training and Development Substantial investment in employee training and development to meet the needs ofthe future business has been made in 2004 and will continue throughout 2005. The ongoing development of employee competence is seen as fundamental to theachievement of our longer-term strategic objectives. Both AmalgamatedConstruction and Billington Structures continue to support the constructionindustry's national initiative of achieving a fully qualified workforce. Ourinitial qualification and registration programmes were successfully completedduring 2004, however it is expected that further individual requirements in thisarea will continue to be identified and addressed. 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 and innovativesolutions implemented throughout the organisation for the control of ourenvironmental impacts. The ongoing development and promotion of good environmental practice,underpinned by sound environmental awareness and training, is seen to be a keyissue in continued business success. Construction At the beginning of 2004 Amalgamated Construction restructured its activitiesinto two multi-disciplined client focused operating divisions: Capital Projectsand Infrastructure Services. This restructuring proved to be successful. Capital Projects The Capital Projects division includes the Amco Donelon and Amco Birtleybusinesses. Amco Donelon, the specialist tunnelling and civil engineering contractorconsolidated its market position and achieved further growth in turnover in2004. Major projects activity in the year included the completion of the £5.8million Severn-Wye Cable Tunnel refurbishment contract and the commencement ofthe Mersey Queensway Tunnel contract. This £10 million project includes theconstruction of seven emergency refuge rooms below the road deck of the tunnel,each with the capacity to hold 180 people. Amco Birtley commenced a major materials handling project at Cottam powerstation associated with the construction of its new FGD plant and completed aproject to improve the coal import facilities at Tilbury Power Station, thescope of work encompassing a new conveyor and new oil unloading arms togetherwith the upgrade of two continuous ship unloaders. Infrastructure Services The Infrastructure Services division includes Amco Rail, Amco Mining and AmcoEngineering. At the start of 2004 Amco Rail negotiated a further two year extension to itsMinor Works contract for Network Rail's London North Eastern region. Thedivision also carried out the construction works associated with the awardwinning £20m Strood and Higham tunnels relining project for Network Rail inKent. Amco Mining completed the contract for remedial works to the Woodhead CableTunnel running beneath the Pennines for National Grid. It also continued toundertake exploration drilling at the Siguiri gold mine in Guinea. Having been awarded a 5 year £20 million EC&I term maintenance contract for theMagnox Power Stations in 2003, Amco Engineering continued to grow its portfolioof term maintenance work which now includes National Grid, PowerGen, theEnvironment Agency and the Oil and Pipelines Agency amongst its clients. Amco Mining Services Amco Mining Services was established in late 2003 to service the deep minecontracting requirements of UK Coal plc. The continued reduction in the UK coalmining industry has caused problems for both the mine owners and miningcontractors in recent years and in order to continue to provide this essentialservice for the UK mining industry it was crucial that a minimum level of workwas available. This was recognised by UK Coal plc and the new partnership thatwas established between the two companies has proved to be a successfuldevelopment. Structural Steel Billington Structures, despite a relatively slow start to the year, enjoyed arecord year for turnover in 2004. Billington benefited from its continuedemphasis on building long term, mutually beneficial relationships with a limitednumber of major clients and contractors. The company operates out of two modern production facilities at Wombwell nearBarnsley and Yate near Bristol. During 2004 Billington was named Specialist Contractor of the Year at theContract Journal Awards, as well as picking up the Information Technology Awardand being shortlisted in the Health and Safety and Product Manufacturercategories. The Health and Safety and Product Manufacturer nominations were for thedevelopment of the "easi-edge" edge protection systems for the construction andengineering industries. Bolting to the exposed structural steelwork with asimple fixing, the "easi-edge" barrier system offers workers protection fromfalling. During 2004 the company undertook a multitude of different contracts including anumber of MOD facilities as part of the SLAM consortium, the passenger terminalat the new Doncaster-Sheffield Robin Hood Airport and the conversion of the oldPost Office building in Leeds into a new residential, retail and leisuredevelopment. In addition the company was involved in designing a massivetransfer structure to support the corner section of an office development abovethe Liverpool underground system. Hollybank Engineering continues to specialise in the design and manufacture ofstructural steel underground supports, junction structures and ancillaries forthe mining and civil engineering industries. Its business has inevitably beenaffected by the reducing demand from the UK coal industry. Property Development In 2004 Amco Developments further consolidated its position in the Yorkshire andNorth East property development markets and a number of projects came on-streamduring 2004 with more anticipated to follow in 2005. Retail projects in Kingston-upon-Hull and Stockton-on-Tees were successfullycompleted in the year and work was started on a large mixed use scheme inNewcastle-upon-Tyne. This scheme, which is being undertaken in joint venturewith Ashtenne, involves the construction of residential, retail and leisurespace and is scheduled for phased completion from the final quarter of 2005. Planning approval was secured in early 2005 for a residential scheme in centralSheffield with over 50% of the proposed apartments already sold off plan.Construction is to commence shortly with completion scheduled for mid 2006. Work has now started on the 166,000 sq ft Temple Point business park in Leeds,immediately adjacent to Junction 46 of the M1, a 50:50 joint venture with TolentPLC. The first building was completed and sold during 2004 and further phasesare now underway or about to start. Strong interest has been registered frompotential tenants/owner occupiers and it is envisaged that the business parkwill be built out over the next few years. 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 civilengineering tunnelling market, export mining and material handling markets. Although the business provided by the UK coal mining industry will continue tobe important to the company, Dosco has had to look outside this market toprovide the opportunity for continuing, structured and sustainable growth. Thesuccess achieved in changing its market base now provides a sound basis forDosco to continue to expand its products and services around the world. Orders in 2004 were insufficient to fully utilise the company's productionfacilities and further rationalisation was necessary. Machine sales were made toa U.S. gold mine and to a Russian coal mine. However the company is anticipatinga more productive 2005 and has recently successfully negotiated a £2.5m contractto supply three roadheading machines to the Chinese coal mining market. This isin addition to a confirmed sale and several in final negotiation to the Siberiancoalfields in Russia. Manufacturing During 2004 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. Long term relationships with customers were fostered topromote supply partnerships as a platform for stable growth. The company now hasthe capacity to extrude and laminate polymer profiles to customers' precisespecifications and can also laminate a wide range of materials, includingrecycled polymers, aluminium, wood, glass fibre composites and MDF. FINANCIAL DIRECTOR'S REPORT Results Group turnover in the year ended 31st December 2004 increased by 25.0% to£131.6m from £105.3m in the previous year. The increase related to additionalconstruction, structural steel and property development activities. In additionthe Group's share of turnover in joint ventures increased by £1.6m to £2.5m. The Group reported a profit on ordinary activities before taxation for 2004 of£3.0m, a considerable improvement from the loss of £4.4m in 2003. A number ofloss making contracts in Amalgamated Construction adversely affected the resultin 2003 with one continuing to adversely affect the 2004 figures. The Groupgenerated profits of £0.2m from its share of the operating profits from theCheckhire joint venture. Taxation The tax charge of £0.3m in the year equates to an effective corporation taxcredit rate of 10.3% on the Group's profits. The reasons for the low tax chargerelate primarily to the effects of losses made in prior years. Profit and dividends per share Earnings per share were 23.0p in 2004, which compares with a loss per share of26.0p in 2003. No dividend has been declared or will be paid for the year. Capital expenditure The Group continued to invest in capital equipment with a further £2.4m (2003 -£3.5m) of capital expenditure in the year of which £1.3m (2003 - £1.6m) relatedto replacements in the Group's motor vehicle fleet. Of the balance of £1.1m,£0.8m 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 £2.5m which, together with sundry disposals, caused thetotal fixed assets in the Group to reduce by £1.6m to £14.6m. Cashflow The Group had net debt at the end of 2004 of £0.2m, a reduction of £3.1m fromthe net debt position of £3.3m at the end of 2003. Bank overdrafts wereeliminated by the year end with the Group having total cash at bank of £5.6m at31st December 2004, a cash inflow of £4.6m in 2004. Bank and other loansincreased by £1.6m and the repayment of £1.7m of finance leases exceeds by £0.2mthe inception of £1.5m of new leases. The gearing of the Group at the end of2004 was 1.1% (2003 - 19.5%), calculated on net debt of £0.2m and net assetsexcluding the pension liability of £18.4m. Pension Schemes The deficit on the Group's pension schemes as calculated by FRS 17 increasedduring the year by £2.2m to £11.8m 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 £3.9m was £1.5m in excess of the anticipated return and theGroup made contributions £0.9m in excess of the current service charge but the£5.5m actuarial loss caused the gross deficit to increase by £3.1m beforedeferred tax. I. Swire Group Financial Director 1 April 2005 Profit and loss account for the year ended 31st December 2004 2004 2003 (restated) £000 £000 £000 £000Turnover including share of joint ventures 134,498 104,084(Decrease)/increase in work in progress (331) 2,170 134,167 106,254Share of turnover in joint ventures (2,542) (912)Group turnover 131,625 105,342Raw materials and consumables 46,945 41,436Other external charges 34,548 26,528 (81,493) (67,964) 50,132 37,378Staff costs 42,215 34,785Depreciation 2,539 3,196Other operating charges 2,340 3,838 (47,094) (41,819)Group operating profit/(loss) 3,038 (4,441)Share of operating profit in joint ventures 178 521Total operating profit/(loss) 3,216 (3,920)Net interest (187) (177)Other finance income/(cost) 2 (332)Profit/(loss) on ordinary activities beforetaxation 3,031 (4,429)Tax on profit/(loss) on ordinary activities (312) 1,360Profit/(loss) transferred to/(from) reserves 2,719 (3,069)Earnings/(loss) per share 23.0p (26.0)p Statement of total recognised gains and losses for the year ended 31st December2004 2004 2003Profit/(loss) for the financial year 2,719 (3,069)Unrealised surplus on revaluation ofproperties 0 3,284 Actuarial (loss) /gain recognised in thepension scheme (4,032) 3,227 Movement on deferred tax relating to pensionliability 929 (1,236) Current tax relating to pension liability 281 291Total recognised (losses)/gains for the year (103) 2,497 Consolidated balance sheet at 31st December 2004 2004 2003 (restated) £000 £000 £000 £000Fixed assetsTangible assets 14,649 16,216Investments in joint ventures: share of gross assets 5,630 4,325 share of gross liabilities (4,485) (3,211) 1,145 1,114 16,144 17,330Current assetsStock and work in progress 10,801 10,876Amounts recoverable on contracts 8,098 5,034Debtors 13,209 12,139Cash at bank and in hand 5,618 3,748 37,726 31,797Creditors: amounts falling duewithin one year (33,634) (30,600)Net current assets 4,092 1,197Total assets less current liabilities 20,236 18,527Creditors: amounts falling dueafter more than one year (1,830) (2,169)Net assets excluding pension liability 18,406 16,358Pension liability (11,840) (9,674)Net assets including pension liability 6,566 6,684 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 (596) (581) Profit and loss account 589 692 Shareholders' funds 6,566 6,684 Consolidated cashflow statement for the year ended 31st December 2004 2004 2003 (restated) £000 £000 £000 £000Net cash inflow from operating activities 3,277 688Dividends from joint ventures 125 0Returns on investments and servicing of finance Interest received 174 162 Interest paid (214) (195) Finance lease interest paid (147) (132)Net cash outflow from returns onInvestments and servicing of finance (187) (165)Taxation 153 143Capital expenditure and financial investment Purchase of tangible fixed assets (928) (1,605) Sale of tangible fixed assets 2,203 1,551 Employee Share Ownership Plan - purchase of shares (20) (3) - disposal of shares 5 22Net cashflow from capital expenditure andfinancial investment 1,260 (35)Net cash inflow before financing 4,628 631Financing Bank and other loans 1,640 (376) Capital element of finance lease rentals (1,689) (2,232)Net cash outflow from financing (49) (2,608)Increase/(decrease) in cash 4,579 (1,977) 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 2003, which have remainedunchanged for the financial year ended 31st December 2004, except for theadoption of UITF 38, Accounting for ESOP Trusts, which has been treated as aprior year adjustment, resulting in a restatement of opening reserves of£581,000. 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 2004, 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 2004 statutory financial statements upon which theauditors' opinion is unqualified. The statutory financial statements for theyear ended 31 December 2004 were approved by the directors on 1 April 2005, buthave not yet been delivered to the Registrar of Companies. 3. Earnings/(loss) per share Earnings/(loss) per ordinary share have been calculated on the basis of profitfor the year after tax, divided by the weighted average number of ordinaryshares in issue in the year (excluding those held in the ESOP Trust) of11,797,808 (2003 - 11,816,458). 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 2004 will be posted to shareholders on or about 2 May 2005. This information is provided by RNS The company news service from the London Stock Exchange