Billington Regulatory News (BILN)

Press Release 20th March 2012

Billington Holdings Plc

("Billington" or "the Group")

 Full Year Results

Billington Holdings Plc (AIM:BILN), one of the UK's leading structural steel and construction safety solutions specialists, today announces audited full year results for the year ended 31st December 2011.

Highlights

·; Results slightly ahead of management's expectation at the time of the Group's most recent trading statement, in November 2011

·; Increased revenue offset by margin erosion due to challenging market conditions 

·; Strategic review completed, delivering annualised cost savings of £2.8 million, as the Group adapted to market environment and right-sized its operations

·; Successful acquisition and integration of Peter Marshall Stairs, which is expected to make a positive contribution in the current financial year

·; Balance sheet strength remains, with sufficient funds to cover working capital requirements

·; Further growth in ancillary businesses including 'easi-edge', 'hoard-it' and 'Tubecon AESS'

·; Anticipate slight improvement in trading conditions throughout 2012; Group well positioned to take advantage

Commenting on the results, Steve Fareham, Chief Executive, added:

"2011 has been a tough year for the Group, and the sector as a whole. The combination of an increase in steel prices and a highly competitive market led to downward pressure on margins.

"The Group reacted accordingly to the tough trading environment, ensuring that Billington remained competitive with a cost base that matched market conditions, while continuing to drive innovation in the safety solutions business and take advantage of market opportunities when possible, as demonstrated by the acquisition of Peter Marshall Stairs.

"Billington has maintained a positive cash balance throughout the downturn, adapted its businesses appropriately and grown market share. The Board expects a slight improvement in trading conditions during the course of this year and is confident that the action that has been taken has left the Group in a position of relative strength ahead of the expected medium-term recovery."

For further information please contact:

Billington Holdings Plc Tel: 01226 340666

Peter HemsExecutive Chairman

Steve FarehamChief Executive

Blythe Weigh Communications Tel: 020 7138 3204

Mobile: 07816 924626 / 07989 129658 / 07917 800011

Tim Blythe, Paul Weigh, Matthew Neal

W H Ireland Limited Tel: 0161 819 8875

Katy Mitchell

Chairman's Statement

Introduction

I am pleased to report that the full year results for Billington Holdings Plc ('Billington'/'Group'/'Company') for 2011 were slightly better than anticipated at the time of the trading statement issued in November.

The first half of the year was in line with expectations in terms of both revenue and result. Although volumes increased in the second half of the year, the increasingly challenging market conditions the Group faced led to further margin erosion that was not anticipated in the early part of the financial year, which, combined with difficulties experienced on a small number of contracts resulted in a disappointing full year Group result.

In March 2011 the Group acquired the trade and assets of Peter Marshall (Fire Escapes) Limited (in administration). These were placed into a wholly owned subsidiary, Peter Marshall Steel Stairs Limited ('Peter Marshall Stairs'). A substantial amount of effort was put into reorganising the business in order to appropriately address its cost base and to better position the business to reflect market demands. While financial results were disappointing for 2011 the Board is confident that the progress made during the course of the year will result in a much improved performance in 2012. I am pleased to report that easi-edge, together with its hoard -it division, produced a strong performance in 2011 and with continued development of its products and markets it is anticipated further progress will be made in 2012.

In order to ensure the Group remained as competitive as possible in what continues to be a highly challenging market, the Board commenced a strategic review process, which resulted in an ongoing reorganisation programme to streamline operations and reduce costs that has delivered annualised cost savings of £2.8 million to date. This has led to a reduction in the size of the workforce resulting in a charge for redundancy costs in the accounts amounting to some £472,000.

Results

The loss after tax for the year from continuing operations was £1.7 million on revenue of £53.9 million, compared with a profit of £0.8 million on revenue of £42.3 million in the previous year

The overall (loss)/earnings per share for the year amounted to (14.9p) compared with 7.1p in 2010, reflecting the difficult trading conditions during the year.

Dividend

The Board remains committed to supporting the shareholders with the payment of a dividend when it is prudent to do so. However, in light of the Group's overall performance and the Board's continued belief that it is in the best interests of the Group to continue to preserve cash for working capital requirements, the Board has decided not to declare a final dividend.

Liquidity and capital resources

There has been an outflow of cash during the year of £3.0 million, which can be attributed to a combination of the trading losses, additional working capital requirements of the business, property acquisitions and capital equipment replacement. Capital expenditure has been kept to a minimum, but does include the purchase of additional safety barriers for easi-edge and the purchase of the freehold of the premises occupied by Peter Marshall Stairs, which has in part been financed by a bank loan. The Group had cash balances of £1.8 million at 31 December 2011, which together with the bank overdraft facilities will provide adequate funds to cover the projected working capital requirements.

Prospects

The reorganisations that have taken place during 2011 and January 2012, which included the move to a pattern of single shift working, have enabled the Group to achieve a significant reduction in its cost base. We therefore entered 2012 confident that the Group remains competitive in what continue to be very difficult trading conditions. The current workload for Peter Marshall Stairs is encouraging and with the changes to the management team and structure that took place in the latter part of 2011 we anticipate a positive contribution from that business during 2012.

The easi-edge safety barrier and safety solutions business, together with its hoard-it division, is well placed to take further market share and enhance its contribution to Group performance in 2012.

We anticipate that there will be a slight improvement in trading conditions during 2012, albeit probably not until the latter part of the year. That slight improvement, together with the unfortunate loss of a number of competitors in the structural steelwork sector and our reduced cost base, give us a degree of confidence as we move forward into 2012.

Management and workforce

I should like to express my thanks to all the directors and employees for their efforts and assistance over the last twelve months which has been a particularly challenging period necessitating some difficult decisions.

As previously mentioned employee numbers have reduced significantly during the period due to redundancy, changes in management requirements and retirement. I would particularly like to thank Peter Hart, our Group Finance Director, who retired at the end of October. Peter was a cornerstone of our business and his personal support, direction and counselling over 22 years of being part of the senior management team is hereby acknowledged.

Peter Hems 

Executive Chairman

19th March 2012

Chief Executive's Statement

Operational Review 2011

2011 was without doubt the most difficult trading year in the history of the Group. Total volumes in the UK structural steelwork industry remained at half of their former peak, with industry over-supply resulting in an intensively competitive marketplace and significant downward pressure on margins. Contractual disputes and delays in payment further added to the challenges we faced during the year. The combination of these factors led to the Group reporting a set of results that are below the level we expected when we entered 2011.

Despite the unprecedented challenges our business faced in 2011, Billington Holdings maintained its focus on delivering the exceptional products and service level to which our broad client base has become accustomed. Encouragingly, Billington Structures increased market share and has focussed its attention on market sectors that provide growth opportunities going forward, while adding to our portfolio offering through the bolt-on acquisition of the trade and assets of Peter Marshall (Fire Escapes) Limited (in administration).

We maintained our cost conscious focus and continued to right-size the Group's business to appropriately reflect market conditions. While high levels of production activity took place throughout the summer months helping to increase revenue, it was necessary to implement a strategic review of Billington Structures in the autumn, which resulted in the decision to scale down its operations.

Regrettably, a number of shop floor redundancies and the closure of our project and technical office at our Bristol plant were required, together with the reduction of a number of senior management positions. A further deterioration in trading occurred in the run up to Christmas necessitating further trimming of capacity in January 2012, when more shop floor redundancies were necessary as we reverted back to a single shift operation at both of our structural steel plants. The combination of these actions has resulted in annualised cost savings of £2.8 million.

Despite these cutbacks, we retain sufficient capacity and the technical expertise required to remain committed and responsive to the needs of our strong and varied customer base. 

In March 2011, we acquired the trade and assets of the award winning and nationally recognised Peter Marshall (Fire Escapes) Limited (in administration) ('Marshall'). We knew Marshall's business well, having worked with the company for many years and saw the acquisition as a good opportunity to add a business to our portfolio that offered a complementary product that would fit seamlessly within our existing business. Following the acquisition, significant management time and attention was devoted to improving Marshall's position with the intention of returning the business to profitability in as short a time frame as possible. Following the period of change at Marshall's, we expect the company to contribute to the Group result in 2012.

On a positive note, trading at easi-edge and its hoard-it division was strong and resilient to the vagaries of the construction sector. We also successfully completed our first project as BS2, our joint venture with Bourne, for Westfield Shopping at Stratford City.

Health, Safety, Sustainability, Quality and the Environment

Health, safety, sustainability, quality and the environment remain the cornerstone of our businesses and consideration is given to the impact on each area of all major business decisions. Further progress was made on the on-going integration of the systems in the year. I would herewith like to acknowledge the work carried out over many years by Paul Chubsey, our Group Health and Safety Manager, who sadly died in 2011.

Despite the requirement for CE marking for structural steel products to BS EN ISO1090 being postponed to 2014, Billington is already one of a small group of companies which has achieved the standard, erecting the first CE structure complying with the standard to be completed in the UK, a Sainsbury's superstore on the outskirts of Manchester, during the course of the year. 

Billington Structures

Over 20,500 tonnes of structural steel was fabricated in our factories during 2011, with weekly production peaking at 560 tonnes. In addition, heavy summer commitments required subcontract assistance and a further 2,000 tonnes was sublet to our approved supply chain.

Key projects included:

·; St. George's Park - The new training centre near Burton on Trent for the Football Association

·; Major civic centres and office accommodation in Rotherham, Bolton and Woolwich

·; Academies and / or schools in Barnsley, Birmingham, Nottingham, Blackburn and Southampton

·; Over 20 new build supermarket and retail extensions in a variety of locations across the UK

·; Various on-going involvements with Debut's military SLAM schemes, which deliver living accommodation to Ministry of Defence personnel, now in year nine of a ten year programme, and other defence related installations

·; Industrial projects, including sites in Newcastle upon Tyne, Milton Keynes, Banbury and London

·; York sports village.

Capital expenditure remained low with attention being made to improving our processes. With the closure of our Bristol office our technical department was rationalised and a dedicated design and build team was created from within. This successfully doubled our volumes from last year to now and accounted for 30 per cent of our revenue, including our biggest contract of 2011, St. George's Park. With the demise of some previously strong competitors in the design and build sector we anticipate further growth to be made in 2012. 

Billington Structures starts 2012 with a strong portfolio of work including data centres, warehousing, SLAM projects and a raft of new supermarkets.

Tubecon AESS

Tubecon AESS, a division of Billington Structures, is focussed on the specialist Architecturally Exposed Structural Steelwork (AESS) sector and the directors believe it is becoming recognised as a serious player in this market. Tubecon AESS continues to develop its customer base and build continuing relationships with its clients to ensure repeat business.

During 2011 Tubecon AESS worked with Billington to deliver the complex sections of steel required to support the PVC roof to the indoor pitch at the National Football Centre, St. George's Park, Burton on Trent.

Other projects Tubecon AESS was involved in during 2011 include:-

·; The Scottish Crime Campus, Gartcosh

·; Atrium roof structure, Trowbridge County Hall, Wiltshire

·; Erection and modifications to the TATA triathlon canopy in Hyde Park

·; Various ETFE roof structures and canopies in Musselburgh, Pakefield, Southampton and Victoria Station, London.

Tubecon AESS also starts 2012 with some interesting projects, including the supply of specialist components for the O2 Arena roof walk, an exhibition building on the Olympic park for a major sponsor of the London 2012 Olympics, and a variety of structures to support fabric roofs.

The Tubecon AESS team are committed to developing the AESS side of the Billington Structures' business and to grow its market share, in order to make the Billington business more flexible in the type of work it can undertake.

easi-edge

easi-edge again increased its market share during the year and the directors believe it continues to be the number one supplier of choice to the UK steelwork sector. As a result of utilisations being in excess of 95 per cent during the autumn and in order to satisfy this increasing customer need, we added additional barriers and components to our inventory during 2011. The complementary timber frame system grew even more and some 15 per cent of revenues are now in this sector, where we have become the default product.

Our complementary products such as core-safe (lift shaft protection gates) and trailarrest (offloading fall protection) similarly sustained high utilisation levels.

Some notable projects included:

·; Snow Hill phase 2, Birmingham

·; Various academies, Birmingham

·; Molineux Stadium, Wolverhampton

·; EMDC, Castle Donington

·; Rolls Royce apprentice centre, Derby

·; Community Stadium, Salford.

hoard-it

With the consolidation of hoard-it, our unique site security hoarding system, at Wombwell a significant number of projects have been supplied and erected or hired across the length and breadth of the UK. Some notable projects have included:

·; Museum of Liverpool

·; Various Sainsbury's

·; John Lewis, Chichester

·; County Hall, Trowbridge

·; Lincolnshire schools

·; Portobello Road, London

·; Major domestic housing project, Banbury

·; Diageo offices, Dublin.

Our quest to provide the UK with a code of practice for temporary hoardings continues and we have commissioned research with the University of Leeds to build and analyse Computational Fluid Dynamic models of our system. Early results of this unique approach are extremely encouraging and we anticipate this, coupled with the ability of hoard-it to receive any form of electronic information, will be a major selling point to engineers and temporary works managers.

Peter Marshall Stairs

2011 has been a period of consolidation for Peter Marshall Stairs, after we acquired the trade and assets of Peter Marshall (Fire Escapes) Limited (in administration) in March 2011, from the administrator. Various senior management and system changes have been necessary in order to mitigate a variety of issues, particularly in the field of financial control. With this now firmly in place we remain optimistic that 2012 will prove a better year for the business. Some notable projects have included:

·; Completion of the stairs to the Aquatics stadium, Olympic Park

·; Temporary stairs for the Edinburgh military tattoo

·; Network Rail HQ, Milton Keynes

·; Milton Court, London

·; Sainsbury's in various locations

·; Glaxosmithkline, Ware.

People

I would like to take this opportunity to thank all of our employees for their continuing support in these most extraordinary times. I would also thank all of our stakeholders who remain similarly supportive of the Group. 

Conclusion

We continue to maintain a strong position in the UK structural steelwork sector. Alongside annualised savings of £2.8 million, our strategic review has delivered a leaner, more focussed business which, combined with capacity reductions in the industry as smaller, weaker firms become casualties, enables us to look to the future with cautious optimism. Although 2012 will continue to be difficult for our industry, slight improvements are beginning to be seen.

I remain under no illusion as to the challenges we will face in 2012 but with the support of a new and dynamic management team, an excellent workforce, a robust balance sheet, strong and committed shareholders, an established and loyal supply chain and not least of all significant cost base reductions, we will continue to face our challenges head on and seek to consolidate and, where possible, enhance our position during 2012.

Steve Fareham

Chief Executive

19th March 2012

Financial Review

Consolidated Income Statement

The results reflect the difficult trading conditions experienced throughout 2011, combined with difficulties experienced on a small number of contracts.

Revenue increased by 27 per cent following an extremely busy second half year as a result of a number of contracts initially scheduled for the first half being postponed. The primary attributable factors for the revenue increase were as a result of increased prices paid for our principal raw material, passed onto customers where possible, and volume output increases. Volume output at Billington Structures, the largest subsidiary, was 15 per cent higher than 2010.

Operating margins fell to (4.2) per cent, which was 7.4 per cent lower than in 2010. The operating margin for the first half of the year was (2.5) per cent and (5.4) per cent for the second half of the year. The variation is attributable to the issues encountered on a small number of projects in the second half.

Earnings per share from continuing operations fell from 8.3p in 2010 to a loss of 14.9p in 2011.

Redundancy and reorganisation costs of £472,000 were expended in the year with a further £259,000 paid in January 2012; the annualised cost saving of these redundancies is £2,846,000. The Group continues to monitor its resources on an on-going basis with a view to aligning the cost base with that of anticipated demand and the related price the Group feels it is able to achieve for its products.

Consolidated Balance Sheet

Whilst capital expenditure has been kept to a minimum where possible, the total amount expended was at a similar level to 2010 as a result of additional hire stock for the easi-edge business and the purchase of the trading premises for the Peter Marshall Stairs business.

Within non current assets property, plant and equipment increased by £145,000, and deferred tax assets increased by £490,000 primarily as a result of provisions made for future relief of Group losses against profits. Capital expenditure of £1,969,000 was incurred in the year with net disposals being £559,000 and depreciation was charged in the year of £1,265,000. The balance of the movement is as a result of a surplus on the defined benefit pension scheme.

The addition of £804,000 in current assets included increases of £1,261,000 in inventories, £2,709,000 in trade and other receivables and reductions of £151,000 in corporation tax receivable and £3,015,000 in cash.

The total increase of £2,802,000 in current liabilities was built up of increases of £2,744,000 in trade and other payables, £49,000 in current property loan liabilities and £9,000 in tax payable.

A property loan of £469,000 was taken in the year to purchase the trading premises of Peter Marshall Stairs, £413,000 of this is reflected within non-current liabilities.

Total equity reduced by £1,820,000 in the year to £12,797,000 and while this is disappointing the financial position of the Group at the end of the year remains robust and provides a platform from which to move forward through these protracted difficult economic times.

Consolidated Cash Flow Statement

The consolidated cash flow statement as presented in the results and as summarised above is extracted from accounts which in the case of 2010 included the cash flows from discontinued operations up to the date of the disposal and the net cash flows from the disposal transaction.

The primary factors underlying the net cash outflow in the year were capital expenditure including the trading premises and trading assets of Peter Marshall Stairs and further hire stock additions for the easi-edge business; an increase in inventories and accounts receivable from customers extending their standard terms of payment as well as activity levels being particularly high in the second half year; trade and other payables by an increase of £2,744,000 from 2010 as a result of activity levels in the second half year as well as the inclusion of the balances related to Peter Marshall Stairs.

Working capital in the continuing operations was as shown below:

Cash balances at the year-end totalled £1,839,000 and there were property loans outstanding of £462,000. While the cash position has decreased by £3,015,000 from 2010, £1,435,000 relates to amounts to fund working capital as a result of the significant workload in the second half year and is expected to be realised after the year end.

Pension Scheme

To limit the Group's exposure to future potential pension liabilities the decision was taken to close the remaining Billington defined benefit pension scheme to future accrual from 1 July 2011.

A recovery plan for the Billington scheme was agreed with the trustees following an actuarial valuation of the scheme liabilities as at 12 August 2008, in accordance with the requirements of the Pensions Act. Additional contributions are being made in accordance with this agreement.

Trevor Taylor

Financial Director

19 March 2012

Notes (audited)

Full year results for the year ended 31 December 2011

1. Basis of preparation

The financial information in this preliminary announcement has been prepared in accordance with accounting policies which are based on the International Financial Reporting Standards (IFRSs) as adopted by the European Union and in issue and in effect at 31 December 2011.

2. Accounts

The summary accounts set out above do not constitute statutory accounts as defined by Section 434 of the UK Companies Act 2006. The summarised consolidated balance sheet at 31 December 2011, the summarised consolidated income statement, the summarised consolidated statement of comprehensive income, the summarised consolidated statement of changes in equity and the summarised consolidated cash flow statement for the year then ended have been extracted from the Group's 2011 statutory financial statements upon which the auditor's opinion is unqualified and did not contain a statement under either sections 498(2) or 498(3) of the Companies Act 2006. The audit reports for the year ended 31 December 2010 did not contain statements under sections 498(2) or 498(3) of the Companies Act 2006. The statutory financial statements for the year ended 31 December 2010 have been delivered to the Registrar of Companies. The 31 December 2011 accounts were approved by the directors on 19 March 2012, but have not yet been delivered to the Registrar of Companies.

3. Earnings per share

(Loss)/earnings per share from continuing operations is calculated by dividing the loss for the year from continuing operations of £1,729,000 (2010 - profit - £957,000) by 11,586,616 (2010 - 11,586,908) fully paid ordinary shares, being the weighted average number of ordinary shares in issue during the year, excluding those held in the ESOP Trust.

(Loss)/earnings per share from discontinued operations is calculated by dividing the loss for the year from discontinued operations of £nil (2010 - £313,000) by 11,586,616 (2010 - 11,586,908) fully paid ordinary shares.

(Loss)/earnings per share from continuing and discontinued operations is calculated by dividing the loss for the year from continuing and discontinued operations of £1,729,000 (2010 - profit - £822,000) by 11,586,616 (2010 - 11,586,908) fully paid ordinary shares.

There is no impact on a full dilution of the (loss)/earnings per share calculation as there are no potential dilutive ordinary shares.

4. Report and accounts and AGM

The Annual Report and Accounts for the year ended 31 December 2011 will be posted to shareholders at the end of April and will be available on the company's website: www. billington-holdings.plc.uk.

The Annual General Meeting will be held on Wednesday 6 June 2012 at 3pm at Billington Holdings Plc, Steel House, Barnsley Road, Wombwell, South Yorkshire S73 8DS.

5. Segmental information

The continuing operations of Billington Holdings plc operate only in Structural Steel. The Structural Steel segment includes the activities of Billington Structures Limited, easi-edge Limited and Peter Marshall Steel Stairs Limited. The Group activities, comprising services and assets provided to Group companies and a small element of external property rentals and management charges, are considered incidental to the activities of Billington Structures Limited and have therefore not been shown as a separate operating segment but have been subsumed with Structural Steel. All assets of the continuing Group reside in the UK.