RNS Number:4933K
AMCO Corporation PLC
01 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 reduced
marginally by #0.1 million mainly due to an increased deficit in the final
salary pension schemes following a change in actuarial assumptions.
The problem civil engineering contract continuing from 2003 has now been
completed. Unfortunately there were further unexpected costs on that contract
affecting the 2004 contracting results which consequently only showed modest
profits. Those particular civil engineering activities have now ceased.
Dosco again incurred losses in its underground equipment manufacture primarily
due to lack of turnover.
Structural steel, property development and plastics manufacturing were again
profitable.
Taxation
Due to trading losses from prior years the effective rate of corporation tax was
10.3%.
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 a
considerable improvement in 2005.
We are not aware of any prospective problem contracts in the contracting
activities and 2005 should see a material improvement in profits.
We have some significant property developments in progress and although these
should 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 deficit
will move in 2005 due to changes in interest rates, market prices and actuarial
assumptions and we hope that there will be no worsening of the position at the
end of 2005.
Management and workforce
I should like to thank all employees for their efforts and enthusiasm in what I
consider was very much a transitional year setting the scene for better
performance 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 and
property activities continues, supported by its interests in engineering and
manufacturing.
The Group's results in 2004 are a significant improvement on the disappointing
figures registered in 2003. However they were still affected by ongoing problems
on the extremely disappointing contract in Amalgamated Construction that
affected the 2003 figures. This contract is now completed and the financial
implications incurred. The management changes that took place in Amalgamated
Construction in 2003 have provided the company with a stable structure to
develop the markets in which it can utilise its expertise.
Provided that the progressive growth of our specialist construction activities
is maintained and that the structural steel market remains relatively buoyant,
and with the completion of property development projects currently in hand, the
Group should achieve an improved performance in 2005.
We will continue to make investment throughout the group to expand the scope of
the services and products we offer and improve the efficiency and profitability
of our businesses.
Health and Safety
The reduction of risk and the provision of a work environment that is free from
accidents, incidents and ill health hazards will continue to remain a priority
throughout the Group's operations.
In 2005 further Health and Safety initiatives will be adopted as part of our
policy of continuous improvement in order to further promote and develop a
health and safety focussed culture throughout our businesses.
Management Systems
2004 saw further significant progress made in relation to the review and
development of management systems within the Group. Amalgamated Construction,
Amco Plastics, Billington Structures and Hollybank all operate process based
business management systems delivered electronically using web browser
technology.
Companies within the Group have all successfully maintained ISO 9000 (Quality)
and ISO 14000 (Environmental) certification of their management systems during
2004.
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 of
the future business has been made in 2004 and will continue throughout 2005.
The ongoing development of employee competence is seen as fundamental to the
achievement of our longer-term strategic objectives. Both Amalgamated
Construction and Billington Structures continue to support the construction
industry's national initiative of achieving a fully qualified workforce. Our
initial qualification and registration programmes were successfully completed
during 2004, however it is expected that further individual requirements in this
area will continue to be identified and addressed.
Environment
We have continued to pursue our goal of continuous environmental improvement
through 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 innovative
solutions implemented throughout the organisation for the control of our
environmental impacts.
The ongoing development and promotion of good environmental practice,
underpinned by sound environmental awareness and training, is seen to be a key
issue in continued business success.
Construction
At the beginning of 2004 Amalgamated Construction restructured its activities
into two multi-disciplined client focused operating divisions: Capital Projects
and Infrastructure Services. This restructuring proved to be successful.
Capital Projects
The Capital Projects division includes the Amco Donelon and Amco Birtley
businesses.
Amco Donelon, the specialist tunnelling and civil engineering contractor
consolidated its market position and achieved further growth in turnover in
2004. Major projects activity in the year included the completion of the #5.8
million Severn-Wye Cable Tunnel refurbishment contract and the commencement of
the Mersey Queensway Tunnel contract. This #10 million project includes the
construction 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 power
station associated with the construction of its new FGD plant and completed a
project to improve the coal import facilities at Tilbury Power Station, the
scope of work encompassing a new conveyor and new oil unloading arms together
with the upgrade of two continuous ship unloaders.
Infrastructure Services
The Infrastructure Services division includes Amco Rail, Amco Mining and Amco
Engineering.
At the start of 2004 Amco Rail negotiated a further two year extension to its
Minor Works contract for Network Rail's London North Eastern region. The
division also carried out the construction works associated with the award
winning #20m Strood and Higham tunnels relining project for Network Rail in
Kent.
Amco Mining completed the contract for remedial works to the Woodhead Cable
Tunnel running beneath the Pennines for National Grid. It also continued to
undertake exploration drilling at the Siguiri gold mine in Guinea.
Having been awarded a 5 year #20 million EC&I term maintenance contract for the
Magnox Power Stations in 2003, Amco Engineering continued to grow its portfolio
of term maintenance work which now includes National Grid, PowerGen, the
Environment 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 mine
contracting requirements of UK Coal plc. The continued reduction in the UK coal
mining industry has caused problems for both the mine owners and mining
contractors in recent years and in order to continue to provide this essential
service for the UK mining industry it was crucial that a minimum level of work
was available. This was recognised by UK Coal plc and the new partnership that
was established between the two companies has proved to be a successful
development.
Structural Steel
Billington Structures, despite a relatively slow start to the year, enjoyed a
record year for turnover in 2004. Billington benefited from its continued
emphasis on building long term, mutually beneficial relationships with a limited
number of major clients and contractors.
The company operates out of two modern production facilities at Wombwell near
Barnsley and Yate near Bristol.
During 2004 Billington was named Specialist Contractor of the Year at the
Contract Journal Awards, as well as picking up the Information Technology Award
and being shortlisted in the Health and Safety and Product Manufacturer
categories.
The Health and Safety and Product Manufacturer nominations were for the
development of the "easi-edge" edge protection systems for the construction and
engineering industries. Bolting to the exposed structural steelwork with a
simple fixing, the "easi-edge" barrier system offers workers protection from
falling.
During 2004 the company undertook a multitude of different contracts including a
number of MOD facilities as part of the SLAM consortium, the passenger terminal
at the new Doncaster-Sheffield Robin Hood Airport and the conversion of the old
Post Office building in Leeds into a new residential, retail and leisure
development. In addition the company was involved in designing a massive
transfer structure to support the corner section of an office development above
the Liverpool underground system.
Hollybank Engineering continues to specialise in the design and manufacture of
structural steel underground supports, junction structures and ancillaries for
the mining and civil engineering industries. Its business has inevitably been
affected by the reducing demand from the UK coal industry.
Property Development
In 2004 Amco Developments further consolidated its position in the Yorkshire and
North East property development markets and a number of projects came on-stream
during 2004 with more anticipated to follow in 2005.
Retail projects in Kingston-upon-Hull and Stockton-on-Tees were successfully
completed in the year and work was started on a large mixed use scheme in
Newcastle-upon-Tyne. This scheme, which is being undertaken in joint venture
with Ashtenne, involves the construction of residential, retail and leisure
space and is scheduled for phased completion from the final quarter of 2005.
Planning approval was secured in early 2005 for a residential scheme in central
Sheffield 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 Tolent
PLC. The first building was completed and sold during 2004 and further phases
are now underway or about to start. Strong interest has been registered from
potential tenants/owner occupiers and it is envisaged that the business park
will be built out over the next few years.
Engineering
Dosco continues to develop its activities and services away from its traditional
core market which centred on the UK coal mining industry. This market has now
effectively been replaced through its expanding activities servicing the civil
engineering tunnelling market, export mining and material handling markets.
Although the business provided by the UK coal mining industry will continue to
be important to the company, Dosco has had to look outside this market to
provide the opportunity for continuing, structured and sustainable growth. The
success achieved in changing its market base now provides a sound basis for
Dosco to continue to expand its products and services around the world.
Orders in 2004 were insufficient to fully utilise the company's production
facilities and further rationalisation was necessary. Machine sales were made to
a U.S. gold mine and to a Russian coal mine. However the company is anticipating
a more productive 2005 and has recently successfully negotiated a #2.5m contract
to supply three roadheading machines to the Chinese coal mining market. This is
in addition to a confirmed sale and several in final negotiation to the Siberian
coalfields in Russia.
Manufacturing
During 2004 Amco Plastics continued to focus on the expansion of its extrusion
business with the development of new products to serve a wide cross-section of
industry applications. Long term relationships with customers were fostered to
promote supply partnerships as a platform for stable growth. The company now has
the capacity to extrude and laminate polymer profiles to customers' precise
specifications and can also laminate a wide range of materials, including
recycled 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 additional
construction, structural steel and property development activities. In addition
the 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 of
loss making contracts in Amalgamated Construction adversely affected the result
in 2003 with one continuing to adversely affect the 2004 figures. The Group
generated profits of #0.2m from its share of the operating profits from the
Checkhire joint venture.
Taxation
The tax charge of #0.3m in the year equates to an effective corporation tax
credit rate of 10.3% on the Group's profits. The reasons for the low tax charge
relate 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 of
26.0p 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) related
to 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 with
the rest invested in plant and equipment throughout the Group. The depreciation
charge for the year was #2.5m which, together with sundry disposals, caused the
total 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 from
the net debt position of #3.3m at the end of 2003. Bank overdrafts were
eliminated by the year end with the Group having total cash at bank of #5.6m at
31st December 2004, a cash inflow of #4.6m in 2004. Bank and other loans
increased by #1.6m and the repayment of #1.7m of finance leases exceeds by #0.2m
the inception of #1.5m of new leases. The gearing of the Group at the end of
2004 was 1.1% (2003 - 19.5%), calculated on net debt of #0.2m and net assets
excluding the pension liability of #18.4m.
Pension Schemes
The deficit on the Group's pension schemes as calculated by FRS 17 increased
during the year by #2.2m to #11.8m after allowing for deferred tax. This
increase in the deficit was a result of changes in the actuarial assumptions
underlying the present value of the scheme liabilities. The actual return on the
scheme assets of #3.9m was #1.5m in excess of the anticipated return and the
Group 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 before
deferred 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 #000
Turnover including share of joint ventures 134,498 104,084
(Decrease)/increase in work in progress (331) 2,170
134,167 106,254
Share of turnover in joint ventures (2,542) (912)
Group turnover 131,625 105,342
Raw materials and consumables 46,945 41,436
Other external charges 34,548 26,528
(81,493) (67,964)
50,132 37,378
Staff costs 42,215 34,785
Depreciation 2,539 3,196
Other 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 178 521
Total operating profit/(loss) 3,216 (3,920)
Net interest (187) (177)
Other finance income/(cost) 2 (332)
Profit/(loss) on ordinary activities before
taxation 3,031 (4,429)
Tax on profit/(loss) on ordinary activities (312) 1,360
Profit/(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 December
2004
2004 2003
Profit/(loss) for the financial year 2,719 (3,069)
Unrealised surplus on revaluation of
properties 0 3,284
Actuarial (loss) /gain recognised in the
pension scheme (4,032) 3,227
Movement on deferred tax relating to pension
liability 929 (1,236)
Current tax relating to pension liability 281 291
Total recognised (losses)/gains for the year (103) 2,497
Consolidated balance sheet at 31st December 2004
2004 2003 (restated)
#000 #000 #000 #000
Fixed assets
Tangible assets 14,649 16,216
Investments 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 17,330
Current assets
Stock and work in progress 10,801 10,876
Amounts recoverable on contracts 8,098 5,034
Debtors 13,209 12,139
Cash at bank and in hand 5,618 3,748
37,726 31,797
Creditors: amounts falling due
within one year (33,634) (30,600)
Net current assets 4,092 1,197
Total assets less current liabilities 20,236 18,527
Creditors: amounts falling due
after more than one year (1,830) (2,169)
Net assets excluding pension liability 18,406 16,358
Pension 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 #000
Net cash inflow from operating activities 3,277 688
Dividends from joint ventures 125 0
Returns 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 on
Investments and servicing of finance (187) (165)
Taxation 153 143
Capital 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 22
Net cashflow from capital expenditure and
financial investment 1,260 (35)
Net cash inflow before financing 4,628 631
Financing
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 in
accordance with the accounting policies set out in the financial statements of
Amco Corporation Plc for the year ended 31st December 2003, which have remained
unchanged for the financial year ended 31st December 2004, except for the
adoption of UITF 38, Accounting for ESOP Trusts, which has been treated as a
prior 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 as
defined by Section 240 of the UK Companies Act 1985. The summarised consolidated
balance sheet at 31 December 2004, the summarised consolidated profit and loss
account, the summarised consolidated cash flow statement and the summarised
statement of total recognised gains and losses for the year then ended have been
extracted from the Group's 2004 statutory financial statements upon which the
auditors' opinion is unqualified. The statutory financial statements for the
year ended 31 December 2004 were approved by the directors on 1 April 2005, but
have 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 profit
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
11,797,808 (2003 - 11,816,458).
4. Preliminary announcement
Copies of the preliminary announcement are available from the company's
registered office at Amco House, Cedar Court Office Park, Denby Dale Road,
Wakefield, WF4 3QZ. The Annual Report and Accounts for the year ended 31st
December 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
END
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