Final Results
AMCO Corporation PLC
23 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 year
ended 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 strategic
decision to create a business that is capable of sustained organic growth led to
the disposal of non-core assets post year end. The continuing operations, and in
particular Structural Steel, have performed well and we are confident about the
future prospects of the Group.'
- Ends -
For further information:
Amco Corporation plc
Peter Hems, Executive Chairman Tel: +44 (0) 116 257 5170
Steve Fareham, Managing Director +44 (0) 1226 340666
Brewin Dolphin Investment Banking
Andrew Emmott, Corporate Finance Tel: +44 (0) 845 270 8610
Media enquiries:
Abchurch Communications
Ariane Comstive/ Jack Ballantyne Tel: +44 (0) 207 398 7705
ariane.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 for
2007; a strong operating performance particularly from the core Structural Steel
business and a major turning point in our strategy with the disposal of certain
non-core businesses announced on 14 April 2008.
The Group is now focussed on our award winning and industry leading Structural
Steel business, Billington Structures Ltd. We believe this business is capable
of sustained organic growth, and with the disposal proceeds we have the
flexibility to invest where appropriate to capitalise on further organic
opportunities and to consider growth by acquisition.
In order to support that new focus the company intends to change its name to
Billington Holdings plc at the forthcoming Annual General Meeting.
Results overview
The 2007 figures for the Group are the first full year to be presented under
International Financial Reporting Standards 'IFRS', the rules of which require
us to reflect the disposal of the non-core businesses as a substantial post
balance sheet event and to report the results as continuing and discontinued
operations.
Overall profits before taxation before non-recurring items were in line with
market expectations at £7.5m. This result is down from the outstanding result of
£8.8m profit before taxation achieved in 2006 which included substantial profits
from the Group's property development arm.
Continuing operations generated an operating profit of £4.8m, an increase of
5.4% over 2006, on a turnover of £69.8m (2006: £65.4m). It is pleasing to note
that the majority of this increase has come from improved margins in the
Structural Steel business. Earnings per share for continuing activities
increased from 28.0p to 28.6p.
Discontinued operations generated an operating profit of £0.8m after a provision
of £1.8m relating to a contract in Guinea (2006: £4.3m). Earnings per share for
discontinued 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 a
write down of the assets to fair value. This brings the loss for the year after
taxation to £4.2m and the loss per share to 36.0p (2006: earnings per share
53.0p).
Overall Group operating cash flow was £7.5m for the year and the continuing
operations 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 per
share payable on 7 July 2008 to shareholders on record on 6 June 2008. This will
make the total dividend paid and proposed in respect of 2007 11.0 pence, which
is in line with broker expectations. This figure compares with 13.0 pence per
share 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 for
the Dosco scheme and in line with the new requirements of the Pensions Act has
been 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 a
plan and as part of those arrangements it is intended to make additional
contributions of around £0.8m during 2008.
The Disposal
As we set out in the announcement on 14 April 2008, the rationale for the
transaction has been to enable the Group to have focus and to develop a strategy
around the core activity of its Structural Steel business.
In arriving at that rationale it was necessary to assess which of the principal
activities carried on by the Group was the most appropriate to form the basis
from which to develop a future focus and strategy for the Group.
Amalgamated Construction Ltd has suffered substantial losses from contracting in
the 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 to
the 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 appropriate
contribution to Group profits. The company also has an overseas drilling
operation based in Guinea, which although profitable is reliant for the majority
of its work on one customer. It was concluded that this was not the business on
which to develop a future group strategy.
The property development activities have from time to time produced substantial
contributions to profits. However the level of activity is not sufficient to
generate a regular flow of transactions to provide a consistent contribution to
profit in each year. The property development activities are principally under
the control of one person and in order to generate an increased level of
activity this would require a substantial increased investment in terms of the
size of the team and also the additional working capital required to fund
development activities. In the light of all these factors and the current
difficulties in the property market it was concluded that this also was not the
business on which to develop a future group strategy.
The conclusion regarding the future focus for the Group coincided with the
management team approaching the Board about the possibility of a management
buyout of these businesses. An Independent Committee of the Board was formed to
carry out negotiations with Endless LLP and the management team on behalf of
Newco. This resulted in the agreement to dispose of the non core businesses for
a total consideration of £9.4 m, with £8 m paid on completion and the balance
within twelve months. The value attributed to the exiting businesses was arrived
at following a process of negotiation to agree the overall value of the package
based on the profitability of those businesses and taking into account an
allowance towards the pension deficit on the Amco Pension Scheme. The Scheme is
showing a small surplus on an FRS17 basis, but shows a deficit of between £5.3m
and £8.0m on a buy out basis depending on the assumptions used. The value
arrived at was less than the carrying value of the assets attributable to those
businesses resulting in a one off write off in the accounts of £8.6m. The
Independent Committee of the Board appointed Grant Thornton to advise on the
transaction. The independent directors, having consulted with Brewin Dolphin
Investment Banking, the nominated adviser, consider that the terms of the
transaction 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 Director
of Amco Corporation, worked with Endless LLP on the disposal and have resigned
to take up new roles with the new owners. Ian Swire and David Jackson have
served as directors on the Group Board since 1996 and 1999 respectively and
during that time have made a substantial contribution to the success of the
business. On behalf of the Board I would like to thank them for their
contribution and to wish them success with their new venture.
Steve Fareham, managing director of Billington Structures Ltd and a board member
since October 2006, becomes Managing Director for the Group.
Peter Hart, finance director of Billington Structures Ltd, was appointed Finance
Director for the Group on completion of the disposal.
Likewise, Mike Fewster, operations director of Billington Structures Ltd, was
appointed 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 workload
is spread geographically across the length and breadth of the UK mainland with
structural steelwork destined for projects that service a wide variety of
building types and sectors. Current projects cover a wide spectrum of activities
including education, military infrastructure, the arts, commercial premises and
industrial 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 general
nervousness in the construction sector, particularly affecting residential and
distribution projects. Neither of these building types feature highly in
Billington's current portfolio and we continue to see strong demand from the
various schools initiatives, power stations and general town centre regeneration
projects.
The easi-edge safety solutions business has already developed a number of
interesting products and should see a steady growth in their activities and
profitability in 2008.
We can expect a consistent level of demand for rental of barriers and sales of
the new trailarrest and coresafe products.
The current buoyant conditions in the world mining industry mean that Dosco is
experiencing a steady demand in its spares business and has orders and enquiries
for 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 their
efforts and assistance in the last twelve months. I look forward to working with
the continuing team to achieve future success and wish those departing with the
exiting business every success for the future.
Peter Hems
Executive Chairman
22 April 2008
OPERATIONAL REVIEW
The Group as a whole performed in line with expectations in 2007. However, the
disposal completed since the year end has had a significant impact on the Group
and so we concentrate here on the continuing operations. These comprise the
existing Structural Steel and Engineering businesses.
Discontinued operations includes businesses which have provided volatile results
which detract from the consistency and visibility of the earnings stream from
the businesses we have retained.
Structural Steel comprises Billington Structures, the award-winning and
nationally recognised steelwork contractor and the largest single component of
continuing operations; easi-edge, a safety solutions provider, and Hollybank, a
manufacturer of steel arches for the mining industry.
Engineering comprises Dosco, an internationally known designer and manufacturer
of underground tunnelling and roadheading machinery.
The continuing operations of Amco Corporation plc, particularly Structural
Steel, further strengthened its reputation and position in the market place
during 2007. It produced its best ever results in turnover and profitability
terms, 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 into
use during the year, providing an industry best working environment. Further
investments in plant and machinery were undertaken particularly with the
installation of a new CNC controlled saw and drill line in the Yate factory
which is capable of scribing the positions of fittings.
In house erections teams were introduced, and as a key part of our ongoing
development, the new post of Supply Chain Manager was created and successfully
filled during the year.
easi-edge
Operating from our Tuxford, North Nottinghamshire base, as a trading division of
Billington.
easi-edge continues to expand its portfolio of safety solution products to the
construction industry. These include coresafe a new development in lift shaft
void protection.
Over 80km of the award winning easi-edge barriers are in daily use on projects
across the length and breadth of the country, many on major high profile
structures 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) and
actively participated in the development of the new guidance booklet to BS13374.
It became the first edge protection member of the BCSA (British Constructional
Steelwork 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 sections
were developed. The factory buildings at Tuxford were rationalised and
production 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 the
year with key posts in Engineering and Purchasing filled. A decision was made to
withdraw from the non core pipe conveyor market.
The company continues to focus its activities and services away from its
traditional core market, which centered on the UK mining industry, and whilst
this market remains important, 2007 saw in excess of 86% of the turnover
generated overseas. During 2007 the company successfully built upon the
achievements made in 2006 and sold equipment into China, Russia and the USA. In
addition spares sales were generated in twelve different countries as well as
the UK.
The company has further consolidated its activities and will now concentrate on
its core business of supplying equipment for the development of roadways and
tunnels to customers around the world. Significant opportunities exist in 2008
where it is expected that a further four MK4 machines will be supplied to an
existing customer in China, four LH1400 machines complete with drill rigs will
be sold to a new client in India and further sales will take place in Russia. In
addition there is an excellent opportunity to introduce a new continuous miner
and a new backhoe loader to a customer in the USA.
The company had a disappointing result in 2007, as explained in the Financial
Review, but we believe that the operational difficulties that gave rise to those
results will not be repeated and that continuing to focus on key export markets
and core products provides a solid base for the company's continued structured
and sustainable growth in worldwide markets.
Health, Safety and Environment
Health, safety and the environment underpins all activities in the Group. We
participated in the formation of an industry led sustainability group and the
inaugural meeting was held in our Wombwell office. During the period health
surveillance schemes, for all, were introduced and all employees were actively
encouraged to become involved in various aspects of health, safety and the
environment. This included participating in the filming of and assistance in the
financing of a BCSA (British Constructional Steelwork Association) DVD entitled
'Protecting our People'. The recruitment of an additional Health and Safety
Manager, based at our Bristol plant, further demonstrated our commitment.
Various audits were successfully completed, of our management systems to ISO
9000, 14000 and 18001 during the period. We were particularly pleased to be one
of the first, of Bovis preferred suppliers, to be successfully accredited
through the Achilles process.
Training and Development
Billington successfully maintained the internationally recognised Investors in
People (IIP) accreditation. Graduate recruitment and development continues to be
a key driver in the Group's HR development programme. Acknowledging the industry
wide problem of recruitment and development at all levels, we actively
participated in the formation of a BCSA fronted HR group and inaugural meetings
were held at our Wombwell office. Our links to the professional institutions,
particularly the Institution of Structural Engineers, BCSA and local
Universities remain extremely active at all levels in the organisation.
Communication on all aspects of our business to all employees is paramount and
three 'Team Briefs' were given at all sites.
Conclusion
2007 will be remembered as a significant milestone in the development of the
AMCO group, with changes at Board level and a greater empathy from the now more
focussed organisation. Going forward I now believe the Group is better
positioned than ever to enjoy sustainable growth.
Steve Fareham
Managing Director
22 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 an
impact in terms of Balance Sheet disclosures of Investments, Deferred Taxation
and Revaluation Reserve. Full details of the impact of those changes are set out
in Note 26 to the Financial Statements. IFRS require that where there has been a
substantial transaction post year end the Group Financial Statements should be
drawn up on the basis of showing separately the figures for continuing and
discontinued activities. The disposal referred to in Note 3 is deemed to be such
a transaction and this is the basis on which the Group Financial Statements have
been prepared.
Continuing and Discontinued Operations
The continuing operations reflect the new group structure and consist of the
Structural Steel business of Billington Structures and Hollybank, the
Engineering business consisting of Dosco and Group activities, which cover
central costs offset by management charges and internal group rentals.
The discontinued operations reflect the results relating to the companies
exiting the group being Amalgamated Construction, the Property Development
businesses, Amco Plastics and that part of the Group costs which are also
exiting.
Results for year
The profit for the year before taxation from continuing operations is reported
as £4.8m (2006: £4.6m) and after taxation as £3.31m (2006: £3.27m). The profit
for 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 £7.0m
and £8.0m depending on whether or not the sales of apartments on the first phase
of the Summerfield Street property development completed in the year. The
achieved overall profit before taxation was £5.7m, which is after making a
provision of £1.8m in connection with an overseas drilling contract. Thus before
having made that provision the results were in line with expectations on the
basis that virtually all the Summerfield Street sales did not complete before
the year end. The profits from discontinued activities in 2006 included a
substantial contribution from property development activities.
The assets that are being disposed of as part of the transaction have been
written down by £8.6m to the value realised. This is a one off transaction, but
in terms of presentation the write down is charged against the profit from
operations resulting in a loss for the year of £4.2m. The statement of
recognised income and expense shows a credit from actuarial gains in relation to
the pension schemes (net of taxation) amounting to £3.4m such that after taking
into account the loss for the year there is a net reduction in the income and
expense 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 compared
with £57.1m, but the profit before tax increased from £4.2m to £4.6m, which was
in line with expectations and represented the company's best ever performance.
The company's safety products division enjoyed a year of consolidation. Sales
grew by 12%, but profit was lower as demand was affected by strong price
competition, particularly earlier in the year. However, good progress was made
in strengthening the team and in developing products. Trailarrest, the system
for protecting workers loading and unloading trailers, proved attractive and the
company is hopeful that its new development, coresafe, which guards lift-shaft
voids, will also meet an unsatisfied need in the market.
Investment expenditure was down on the record level of the previous year. There
were no major items of plant purchased and expenditure on new easi-edge barriers
was also lower. The company starts 2008 with its best-ever order book.
Engineering
Dosco is principally engaged in the manufacture and sale of mining, tunnelling
and material handling equipment. 2007 again saw a significant increase in sales
with turnover being some 42% higher than that achieved in 2006 at £12.0m as
against £9.2m. However disappointingly this was not reflected in terms of
profit, which showed a reduction from £0.3m to £0.1m. The company suffered
adversely due to the performance of Sterling against the Dollar and a
particularly problematic pipe conveyor project. The company normally looks to
protect against currency exchange risks, but due to the volatility of the
exchange 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 of
contracting in sterling wherever possible. The loss on the pipe conveyor
contract was such that the company has decided not to take on any new contracts
for this type of work.
Discontinued Activities
Amalgamated Construction
The profit before taxation was in line with budget before taking into account a
loss provision of £1.8m (£1.2m after tax) resulting in an overall break even
position for the company. The provision is in respect of overseas withholding
tax that should have been deducted by a customer in relation to a drilling
contract. The claim by the customer has been strenuously resisted, but after
commercial negotiation a new schedule of rates and an extension to the contract
term has been agreed in return for which Amalgamated Construction has agreed to
accept responsibility for the overpayment and to repay this to the customer over
the revised term of the contract.
Property Development
The profit before taxation generated from property development and investment
activities in 2006 amounted to £3.4m. The achieved result for the current year
amounted to £0.4m, which was considered to be a satisfactory result in all the
circumstances. The 2006 results included the completion of the 68 apartment
residential development in Arundel Street, Sheffield. There remain a number of
those apartments still to be sold, sales of which during 2007 were much slower
than anticipated. The first phase, involving 50 residential apartments, of the
larger mixed use development at Summerfield Street, Sheffield was completed in
December 2007, but completion of the sales did not take place until after the
year end.
Taxation
The tax charge of £1.5m in the year on continuing operations equates to an
effective 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 6.0
pence was paid in respect of the 2006 results and an interim of dividend of 3.5
pence per share was paid in respect of the 2007 results. A final dividend of 7.5
pence per share is proposed in respect of the 2007 results which would bring the
total dividend in respect of 2007 to 11.0 pence. This compares with a total
dividend of 13.0 pence per share for 2006 on the back of record profits
including a substantial contribution from property development.
Cash flow
The continuing operations had no borrowings at the balance sheet date, but had
cash balances of £6.0 m.
Cash and cash equivalent balances for the Group, including the disposed
companies, grew by £7.4m in the year. Depreciation charges exceeded capital
expenditure by £2.2m and the growth in creditors was £1.5m greater than that of
stock, work-in-progress and debtors. The additional funds of £8.4m (£9.4m
consideration net of £1.0m professional fees) which will be generated from the
disposal mean that the company will be well placed to fund organic growth and
niche 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 FRS
17, 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 with
the continuing operations. The deficit before deferred tax reduced by £6.7m, of
which £1.4m was due to additional contributions by Group, £4.0m was due to
changes in actuarial assumptions in calculating scheme liabilities and £1.3m
from gains on scheme liabilities. A valuation of the liabilities of the Dosco
Scheme was due at 30 April 2007 and in line with the requirements of the
Pensions Act there have been discussions with the Trustees in terms of agreement
of a recovery plan. Provisional agreement has been reached with the Trustees on
the terms of such a plan and as part of those arrangements it is intended to
make additional contributions of around £0.8m to that Scheme during 2008.
Peter Hart
Finance Director
22 April 2008
Consolidated income statement for the year ended 31st December 2007
2007 2006
£'000 £'000 £'000 £'000
Continuing operations
Revenue 69,831 65,436
Increase in work in progress 317 1,105
70,148 66,541
Raw materials and consumables 46,649 44,966
Other external charges 1,125 1,115
Staff costs 13,415 12,366
Depreciation 1,495 1,274
Other operating charges 2,621 2,224
(65,305) (61,945)
Total operating profit 4,843 4,596
Finance cost (39) (5)
Finance income 6 58
Profit 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) 6,186
equity holders of the parent company
Earnings per share (basic and diluted) from 28.6p 28.0p
continuing operations
Earnings per share (basic and diluted) from 9.7p 24.9p
discontinued operations
(Loss)/earnings per share (basic and diluted) (36.0)p 53.0p
from continuing and discontinued operations
Consolidated statement of recognised income and expense for the year ended 31st
December 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)
liability
Current tax relating to pension liability 489 447
Net income recognised directly in equity 3,418 3,004
(Loss)/profit for the year (4,180) 6,186
Total recognised income and expense in the year (762) 9,190
attributable to equity holders of the parent
company
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 4,054
Total 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 3,427
Total current assets 19,235 46,633
Assets included in disposal group classified 57,224 -
as held for sale
Total 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 691 633
Total current liabilities 19,943 38,246
Liabilities included in disposal group 48,824 -
classified as held for sale
Non current liabilities
Long term borrowings - 3,089
Pension liabilities 5,603 12,275
Total non current liabilities 5,603 15,364
Total liabilities 74,370 53,610
Net 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 14,642
Shareholders' 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) 6,186
Adjustments 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 group
Net 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
investments
Net 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 33
Net cash flow from financing activities 637 (895)
Net increase/(decrease) in cash and cash 7,441 (5,788)
equivalents
Cash and cash equivalents at beginning of period 1,950 7,738
Cash and cash equivalents at end of period 9,391 1,950
Cash and cash equivalents 6,038 3,427
Bank overdraft - (1,477)
Cash and cash equivalents of continuing Group 6,038 1,950
Included within the disposal group 3,353
Total 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
Revenue
External sales 58,270 11,781 97 70,148 81,370
Segmental result
Operating profit 4,593 131 119 4,843 803
Share of results of joint ventures - 5
Net finance income/(cost) (33) (33) 89
Profit before taxation 4,593 131 86 4,810 897
Taxation (1,496) 233
Profit for the year before fair value 3,314 1,130
adjustments
Assets and liabilities
Segment assets 12,312 3,923 8,581 24,816 42,557
Unallocated assets 7,087 13,604
Investment in joint venture - 1,063
Total assets 12,312 3,923 8,581 31,903 57,224
Segment 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 information
Capital expenditure 863 8 7 878 2,013
Depreciation 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
Revenue
External sales 57,188 9,186 167 66,541 70,753
Segmental result
Operating profit 4,178 347 71 4,596 2,215
Share of results of joint ventures - 2,039
Net finance income/(cost) 53 53 (28)
Profit before taxation 4,178 347 124 4,649 4,226
Taxation (1,375) (1,314)
Profit for the year before fair value 3,274 2,912
adjustments
Assets and liabilities
Segment assets 13,203 4,438 8,280 25,921 34,737
Unallocated assets (384) 9,148
Investment in joint venture - 1,250
Total assets 13,203 4,438 8,280 25,537 45,135
Segment 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 information
Capital expenditure 2,500 177 13 2,690 4,171
Depreciation 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 62,462
Increase in work in progress 4,453 8,291
81,370 70,753
Raw materials and consumables 7,357 5,832
Other external charges 43,183 36,357
Staff costs 27,216 23,932
Depreciation 1,937 1,631
Other operating charges 874 786
(80,567) (68,538)
Group operating profit 803 2,215
Share of post tax profit in joint ventures 5 2,039
Total operating profit 808 4,254
Finance cost (50) (52)
Other finance income 139 24
Profit on ordinary activities before taxation 897 4,226
Tax 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
£'000
Net cash flow from operating activities (1,372)
Net cash flow from investing activities (1,435)
Net cash flow from financing activities 3,847
Net increase in cash and cash equivalents 1,040
In accordance with IAS 7 and IFRS 5 the cash flows above in respect of the
discontinued operations are included in the consolidated cash flow statement
under their respective headings.
Balance sheet of disposal group at 31st December 2007
£'000 £'000
Property, plant and equipment 6,958
Investment in joint ventures 1,063
Deferred tax assets 901
Inventories and work in progress 18,711
Amounts recoverable on contracts 10,080
Trade and other receivables 24,732
Current tax receivables 50
Cash and cash equivalents 3,353
Assets of disposal group 65,848
Current 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 17,024
Disposal 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 under
IFRS. An explanation of how the transition from UK GAAP to IFRS has affected the
Group is set out below. The IFRS accounting policies of the Group are detailed
in the Group financial statements.
IAS 31 Interests in Joint Ventures
Previously under FRS 9 Joint Ventures were accounted for under the gross equity
method. Under IFRS these are reported under the equity method. Under FRS 9 the
Group's share of the turnover, operating profit before tax, finance cost or
income and taxation charge were reported separately within the profit and loss
account or notes thereto. Under IFRS Joint Ventures appear as a single line item
within the income statement, being the Group's share of the profit or loss after
tax. Within the balance sheet the Group's investment in joint ventures is now
shown as a single line item rather than the share of gross assets and share of
gross liabilities which was previously shown under FRS 9. All joint ventures are
undertaken by the discontinued operations.
IAS 12 Income Taxes
Under IFRS, deferred tax is to be provided on all revalued assets included in
the balance sheet. Under UK GAAP deferred tax had not been provided on the
property revaluations. As a result of the application of IFRS the gross amount
of the property revaluations has been left unchanged as the application of
indexation allowance means that no capital gains tax would be payable in the
event of a disposal of properties. In addition pension liabilities are now
stated gross and the related deferred tax asset disclosed within non current
assets.
Property Revaluation Reserve
The revalued amount for property has been accounted for as deemed cost under the
transition to IFRS. As a result the property revaluation reserve previously
disclosed 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 the
cash flow statement as follows:
Under UK GAAP, payments to acquire property, plant and equipment were classified
as part of 'Capital expenditure and financial investment'. Under IFRS, payments
to acquire property, plant and equipment have been classified as part of
'Investing activities'.
Income taxes are classified as operating cash flows under IFRS, but were
included in a separate category of tax cash flows under previous GAAP.
Interest paid and interest received are classified as cash flows from investing
activities under IFRS, but were included in the 'Returns on investments and
servicing of finance' category in cash flows under UK GAAP.
Equity dividends paid are classified as financing cash flows under IFRS, but
were included in a separate category of dividend cash flows under previous GAAP.
There are no other material differences between the cash flow statement
presented 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 are
recategorised as discontinued operations as at 31st December 2007. 2006
comparatives have been restated to reflect the trading results of these
operations which are now separately disclosed within the income statement.
In the balance sheet, all assets and liabilities held by the discontinued
operations at 31st December 2007 are reclassified as held for sale and disclosed
separately 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) 65,436
in 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) 44,966
Other external charges 37,472 - 37,472 (36,357) 1,115
Staff costs 36,298 - 36,298 (23,932) 12,366
Depreciation 2,905 - 2,905 (1,631) 1,274
Other 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) 4,596
Share of operating (loss)/profit in joint 2,092 (53) 2,039 (2,039) -
ventures
Total operating profit 8,903 (53) 8,850 (4,254) 4,596
Finance income 210 (9) 201 (143) 58
Finance cost (200) - (200) 195 (5)
Other finance income/(cost) 24 - 24 (24) -
Profit on ordinary activities before 8,937 (62) 8,875 (4,226) 4,649
taxation
Tax 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) 3,274
activities
Discontinued operations
Profit for the year from discontinued - - - 2,912 2,912
operations
Profit for the year attributable to the 6,186 - 6,186 - 6,186
equity 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
Assets
Non 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 - 6,155
Total 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 - - - 7,738
Total current assets 35,161 - - - 35,161
Total assets 53,571- - 4,892 - 58,463
Liabilities
Current liabilities
Short term borrowings - - - - -
Current portion of long term borrowings 1,846 - - - 1,846
Trade and other payables 26,497 - - - 26,497
Current tax payable 310 - - - 310
Total current liabilities 28,653 - - - 28,653
Non current liabilities
Long term borrowings 1,710 - - - 1,710
Deferred tax provision 525 - (525) - -
Pension liabilities 12,640 - 5,417 - 18,057
Total non current liabilities 14,875 - 4,892 - 19,767
Total liabilities 43,528 - 4,892 - 48,420
Net 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 7,552
Shareholders' 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
Assets
Non 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 - 4,054
Total 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 - - - 3,427
Total current assets 46,633 - - - 46,633
Total assets 67,560 - 3,112 - 70,672
Liabilities
Current liabilities
Short term borrowings 1,477 - - - 1,477
Current portion of long term borrowings 3,623 - - - 3,623
Trade and other payables 32,513 - - - 32,513
Current tax payable 633 - - - 633
Total current liabilities 38,246 - - - 38,246
Non current liabilities
Long term borrowings 3,089 - - - 3,089
Deferred tax provision 571 - (571) - -
Pension liabilities 8,592 - 3,683 - 12,275
Total non current liabilities 12,252 - 3,112 - 15,364
Total liabilities 50,498 - 3,112 - 53,610
Net 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 14,642
Shareholders' funds 17,062 - - - 17,062
ENDS
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