14th Apr 2008 07:00
AMCO Corporation PLC14 April 2008 Press Release 14 April 2008 Amco Corporation Plc Disposal of non-core assets Proposal to change of name to Billington Holdings plc Board changes Change of Registered Office Amco Corporation Plc ("Amco Corporation" or "the Group") is pleased to announcethat it has reached agreement to sell certain non-core operations, comprisingthe Group's construction, manufacturing and property investment and developmentbusinesses ("the exiting group"), to Amco Group Limited ("Newco") for a cashconsideration of £9.4 million, payable as to £8 million on completion and thebalance within 12 months. Amco Group Limited is owned by Endless LLP andcertain directors and employees. Reasons for the disposal Amco Corporation Plc is the holding company for a broad mix of companies servinga range of sectors, including structural steel, construction, property,engineering and manufacturing. Following the talks held in 2006 regarding apossible buy out of the entire Group, the Board has reviewed the strategicdirection of the Group. The Board has concluded that there are limitedsynergies between some parts of the Group and that shareholder interests wouldbe better served by a clear strategic focus. The transaction will transform the Group, with the Retained Group focussedwholly on the existing Structural Steel and Engineering businesses. Themajority of the Retained Group comprises Billington Structures Ltd, a large andprofitable structural steel business with a track record of growth. The exitinggroup includes businesses which have provided volatile results which detractfrom the consistency and visibility of the earnings stream from the RetainedGroup (being the Amco group companies following the sale of the exiting group). The independent directors (being the Directors of Amco Corporation apart fromMessrs Jackson and Swire) believe the Retained Group is capable of sustainedorganic growth, whilst the disposal proceeds provide the flexibility to investwhere appropriate to capitalise on organic opportunities and to consider growthby acquisition. Structural Steel comprises Billington Structures, the award-winning andnationally recognised steelwork contractor; easi-edge, a safety solutionsprovider, and Hollybank, a manufacturer of steel arches for the mining industry.Engineering comprises Dosco, an internationally known designer andmanufacturer of underground tunnelling and roadheading machinery. Related Party Transaction The disposal constitutes a related party transaction under the AIM Rules asDavid Jackson and Ian Swire, both directors of Amco Corporation, are interestedin Newco. Their combined interest in Newco exceeds 30% of the issued sharecapital in that company. The independent directors consider, having consulted with Brewin DolphinInvestment Banking, the nominated adviser, that the terms of the transaction arefair and reasonable insofar as its shareholders are concerned. Change of name At the AGM a resolution will be put to shareholders to change the company's nameto Billington Holdings plc. The independent directors believe that the new namewill better reflect the focus of the Group's activities and also signifies amajor change in the life of the Group. In addition, with immediate effect, theRegistered Office of Amco Corporation Plc will be relocated to the offices ofBillington Structures Limited at: Barnsley Road Wombwell Barnsley South Yorkshire S73 8DS Board changes David Jackson and Ian Swire, the present Executive Director and Finance Directorof Amco Corporation, have worked with Endless LLP on the disposal and areleaving Amco Corporation as part of the disposal. Accordingly, both haveresigned with immediate effect. Peter Hart and Mike Fewster are currently Finance Director and OperationsDirector for Billington Structures Ltd and accordingly have been appointedDirectors of Amco Corporation with immediate effect (further details are set outbelow). Preliminary results The results for the year ended 31 December 2007 will be announced by the end ofApril 2008. For the Group as a whole, these are expected to be in line withexpectations before non-recurring items. Profit after taxation for the RetainedGroup is expected to be £3.31 million (2006: £3.27 million). However, profitafter taxation relating to the exiting Group is expected to be £1.13 million(2006: £2.91 million) which is below management expectations following a one offprovision relating to a mining contract. In addition, the results are expectedto show a loss of £8.62 million relating to the disposal, being the differencebetween the consideration net of transaction costs and the net assets beingdisposed of. The overall result for the year is therefore expected to be a lossof £4.18 million (2006: profit of £6.19 million). The figures stated above areat present unaudited, but it is not anticipated that there will be any materialchange between these figures and the preliminary announcement. The final dividend for the year ended 31 December 2007 will be in line withexpectations at 7.5p per share. Current trading Structural Steel has a record forward order book in excess of £40 million. Theworkload is spread geographically across the length and breadth of the UKmainland with structural steelwork destined for projects that service a widevariety of building types and sectors. Current projects cover a wide spectrumof activities including education, military infrastructure, the arts, commercialpremises and industrial buildings. This coupled with a substantial blue chipcustomer base, provides a strong trading pipeline for our Structural Steelactivities to continue to develop through 2008 and beyond. The recent turmoil in the financial markets has led to a degree of generalnervousness in the construction sector, particularly affecting residential anddistribution projects. Neither of these building types feature highly inBillington's current portfolio and we continue to see strong demand from thevarious schools initiatives, power stations and general town centre regenerationprojects. The current buoyant conditions in the world mining industry mean that Dosco isexperiencing a steady demand in its spares business and has orders and enquiriesfor new and refurbished machines going through into 2009. For further information please contact: Amco Corporation PlcPeter Hems, Executive Chairman Tel: + 44 (0) 116 2575170 (Chairman's office) +44 (0) 1226 340666 (Billingtons) Brewin Dolphin Investment BankingAndrew Emmott Tel: +44 (0) 845 270 8610 Media enquiries: AbchurchSarah Hollins / Chris Lane Tel: +44 (0) 113 203 [email protected] www.abchurch-group.com Information about the Retained Group Billington Structures Ltd has been trading continuously since 1947 and nowemploys in excess of 300 people at its factories and offices in Barnsley (itshead office) and Bristol. Billington has an extremely experienced management team, led by Stephen Farehamas Managing Director, Mike Fewster as Operations Director and Peter Hart in therole of Finance Director. The senior management is backed and supported by astrong and experienced divisional team of managers operating in the roles ofCommercial Director (Martin Goddard age 41), Technical Director (Steve MasonAMIStructE age 54), Contracts Director (Mike Rowe MIOB age 50) and ProductionDirector (Kevin Campbell BEng MBA MIET age 42). Billington details, procures, fabricates and erects on site over 27,000 tonnesof steelwork for use in schools, hospitals, defence, commercial and industrialbuildings; its particular strength is its ability to deal with the more complexstructures sometimes avoided by its mass production rivals. All work iscontrolled by its Bilmis intranet and in accordance with its ISO 9001, 14001 and18001 accreditations. Some 20% of its sales revenue arises from additional contracting activity,including metal deck flooring, edge protection (utilising easi-edge), concretefloors, stairs, intumescent paint and cold rolled products. Production operateson a just-in-time basis meaning that stocks of main steel sections are kept to aminimum. Steel is supplied by Corus Distribution's sites at Leeds and Yate.This seamless electronic, arrangement has operated for over 14 years andBillington is now ranked as one of Corus Distribution's largest customers. A mix of stability, strong customer base, innovation and creativity has providedBillington Structures with year on year growth, coupled with a steady andreliable profit stream. The company's turnover has grown from £16 million in1997 to over £50 million today and profit before tax from £1.2 million to £4.5million in the same period. Billington Structures has a blue chip customer baseincluding Balfour Beatty, Bovis, HBG, ISG, Kier, Laing O'Rourke, Mace, Shepherd,Sir Robert McAlpine and Wates. Computer modelling has enabled Billington to successfully complete a whole hostof complex landmark buildings. Furthermore, Billington's achievements havereceived industry recognition winning Steelwork Contractor of the Year,Specialist Contractor of the Year and IT Innovator in recent years. Billington is seen as a leader in its market and as an example of its innovativeapproach it has developed easi-edge, a safety solutions provider to theconstruction industry, based in Tuxford and Bristol. Over 70 km of edgeprotection barriers are in daily hire use across the country delivering arecurring revenue stream. Other products in the easi portfolio includeTrailarrest, which protects operatives from falls from vehicles and Coresafe, agate system for lift shaft protection during construction. Manufacture isgenerally in-house and patents have been gained or are pending for the majorityof easi products. easi-edge is an associate member of the BritishConstructional Steelwork Association with whom it has achieved silver status forsustainability. It is a founder member of the Edge Protection Federation andhas Quality Assurance and Environmental accreditation to ISO 9001 and 14001respectively. The easi-edge safety solution business provides an opportunity for future growthwith an innovative and expanding product range in a growing market. The Groupwill be looking to expand operations in this area to take advantage of andexpand on the foothold gained into this market. Billington has managed Hollybank Engineering Ltd, based in Tuxford, NorthNottinghamshire, for a considerable number of years. Hollybank remains thesupplier of choice for steel underground support arches to the UK miningindustry. Recent times have seen an upsurge in the requirement for undergroundsteelwork to a wide variety of mining and civil engineering contractors.Additionally, Hollybank manufactures some of easi-edge's products, all inaccordance with its ISO 9001 and 14001 accreditations. Dosco Overseas Engineering Ltd, also based at Tuxford, has a worldwidereputation for the design and manufacture of roadheading and tunnellingequipment for the mineral mining and civil markets. The company was establishedin the early 1950's by Dominion Steel and Coal Company of Canada to market theDosco miner into the UK coal mining industry and since that time has gone on tomanufacture and supply over 3,000 machines to clients around the world. Sincethe demise of the UK coal mining industry the company has diversified itsmarkets and now generates some 85% of its business from overseas including themajor coal producing countries of China, Russia, USA and India. Dosco's products are not just limited to coal mining; they have also introducedmachines for use in high volume production of a range of minerals as well asmachines for various types of civil construction. Dosco is also accredited toISO9001 and as such maintains an independent quality assurance department,responsible for all aspects of a machines design, manufacture and installationin the field. Dosco is also accredited and certified to IS014001 demonstratingthe company's commitment to improving its environmental and conservationperformance by minimising waste, controlling pollution and protecting naturalresources. Board of Directors The Retained Group board will comprise: Peter Hems, Executive Chairman Stephen Fareham, Managing Director Peter Hart, Finance Director Mike Fewster, Operations Director John Gordon, Non-executive Director Mike Speakman, Non-executive Director Directors' Biographies Peter Hems - Executive Chairman Peter (aged 59) joined the board on 1 April 2007. He is a chartered accountantwho has spent most of his career as a business and advisory partner with GrantThornton until he resigned in March 2007 to take up this role. Steve Fareham - Managing Director Steve (aged 57) has 40 years experience in the steelwork industry. He is aChartered Structural Engineer, a Chartered Health and Safety Practitioner, has afirst class honours degree in Civil Engineering and a masters degree in Healthand Safety Management. He is a former president (2000-2003) of the UK steelcontractors trade body BCSA, a past chair of the National Steelwork ContractorsGroup, member of the BCSA H&S Committee, and a founder member of the EdgeProtection Federation. Peter Hart - Finance Director Peter (aged 59), a member of the Chartered Institute of Management Accountantshas 19 years experience with Billington, and had previously worked in the miningmachinery and aerospace industries. He is also Chairman of the Trustees ofDosco Overseas Engineering Ltd Pension Scheme and a member of the BCSASustainability Working Group. Mike Fewster - Operations Director Mike (aged 60) is a Chartered Civil and Structural Engineer with 25 yearsexperience in the steel construction industry. He is a member of many industrycommittees and is chairman of the Steel Connections Group and a past Chairman ofthe Northern BCSA. John Gordon - Non-executive Director John (aged 41) practised as a barrister from 1989 until 1999 when here-qualified as a solicitor. John is in private practice as a partner inCrichtons Solicitors LLP, specialising in commercial and property litigation.He was appointed to the board in 2007, and his legal-commercial background makeshim a valuable member of the team. Mike Speakman - Non-executive Director Mike (aged 72) is a Fellow of the Institute of Civil Engineers and a Fellow ofthe Chartered Institute of Building. He first joined the group Board in 1996and has had a number of roles both as an executive and later as a non executivedirector. Mike's experience over many years is wide ranging and he continues tobe an important member of the team. Prior to joining Amco Group, Mike was ChiefExecutive of the Stepney Group of Companies. Information about the exiting group The exiting group comprises the following principal companies and theirsubsidiaries: Company Activity Amco Property Investments Ltd Group property investmentsAmco Developments Ltd Property developmentAmalgamated Construction Ltd Specialist engineeringAmco Plastics Ltd Plastic productsAmco Interinvest Ltd Motor leasingAmco Insurance Co Ltd Provider of insurance to group companies The unaudited combined profit after taxation of these companies for the yearended 31 December 2007 was £1.1 million. The unaudited combined net assets ofthese companies as at 31 December 2007 was £17.0 million. This result is net of a provision of £1.2million (net of tax) for overseaswithholding tax that should have been deducted by a customer in relation to adrilling contract. The claim by the customer has been strenuously resisted, butafter commercial negotiation a new schedule of rates and an extension to thecontract term has been agreed in return for which Amalgamated Construction Ltdhas agreed to accept responsibility for the overpayment and to repay this to thecustomer over the revised term of the contract. The price agreed for the exiting group has been arrived at taking into accountthe assets and earnings of the underlying businesses and the new owners takingon responsibility for the relevant pension scheme. The exiting group hasassumed responsibility for the Amco Defined Benefit Pension Scheme which wasshowing a small surplus on an FRS17 basis at 31 December 2007 and a deficit ofbetween £5.3million and £8.0 million on a buy out basis depending on theassumptions used. Around 20% of this potential liability will remain with theRetained Group relating to employees of Billington Structures Ltd. Amco Corporation has an Employee Share Ownership Plan (the "ESOP") whose assetsat present are shares in the Company and cash. The terms of the disposalprovide for the apportionment of those assets (after settling certain costs andliabilities of the ESOP) as to two thirds remaining with the ESOP for thebenefit of Group employees and one third to a similar scheme to be establishedby Newco for the benefit of its employees. Such an apportionment will only bemade to the extent that the ESOP has cash. END This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Billington