Final Results

RNS Number:1109A
AMCO Corporation PLC
7 March 2001

            PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED

                               31 DECEMBER 2000


                 AMCO CORPORATION PLC ("AMCO" OR "THE GROUP")


                             CHAIRMAN'S STATEMENT


Introduction


Considerable progress was made during the year ended 31 December 2000 in the
repositioning of the activities of the group. In the United Kingdom we are
concentrating on three activities - contracting to the construction, civil
engineering and mining industries; structural steel; and property development.
During the year we completed the corporate merger of businesses into three
activities and we now have an integrated management structure controlling each
of the activities.


Other activities based in the United Kingdom are in Dosco tunnelling machines
for the civil engineering and mining industries and in the fabrication and
extrusion of plastic products. Both these activities were profitable during
the year and we intend to retain and expand these activities.


Overseas we are in mining contracting and mineral exploration drilling. During
the year we were awarded a substantial development contract at Konkola copper
mine, Zambia in a joint venture with Shaft Sinkers of South Africa. The group
has a 30% share in the joint venture contract which is spread over some five
years. We have also been selected as preferred bidder for a contract for the
operation of a coal mine in Italy, which if it proceeds will be for a fifteen
year period. Mineral exploration drilling is mainly in West Africa and Eastern
Europe.


Financial Summary


The results for the year ended 31 December 2000 showed a considerable
improvement compared with those for 1999. Normal continuing operations
returned an operating profit of just over #1 million. This was an improvement
of some #2 million compared with the previous year. Unfortunately we have had
to make a provision of #1.17 million in respect of claims arising from an
industrial disease - vibration white finger. I mentioned this at the half year
stage but the position worsened considerably on the government imposing a
deadline for claims of 30 September 2000. This provision, which relates mostly
to prior years, has been shown as an exceptional item.


The loss per share was 0.9 pence compared with 11.1 pence in 1999.


Net debt at 31 December 2000 represented 33.5% of net assets (capital and
reserves). This compares with a figure of 30.4% at 31 December 1999.


Net assets at 31 December 2000 were #1.24 per share compared with a mid-market
share price of 42.5 pence as at the close of business on 6 March 2001.


Dividend


Having regard to the results for the year we are not proposing the payment of
a final dividend for the year under review.


Operational Highlights


Contracting

The restoration of Standedge Tunnel for British Waterways was successfully
completed and the Birches Head tunnel contract for Severn Trent Water is
nearing completion. Significant contracts were awarded by RJB Mining, Scottish
Coal and Cleveland Potash.

Electrical Engineering involved contracts at Radcliffe Power Station, York
University and for the MOD.


Structural Steel

Steelwork for a 2000 tonne distribution depot for Ikea was erected in eight
weeks. Other major contracts were at the Magna project in Rotherham, the
Princess Margaret hospital in Swindon and an office block in Reading.


Property Development

Our first development, at Heanor, Derbyshire, was successfully piloted through
planning, financing and other stages during the year and the construction of
the Retail Park commenced in January 2001.


Dosco

Partnering agreements were concluded with RJB Mining, Schaeff and Miller Civil
Engineering and these formed the basis of a satisfactory and profitable year.




Employees


On behalf of the board of directors I would like to thank our subsidiary
company directors and all group employees for their efforts in 2000.


Outlook for 2001


For the first time for some years I am pleased to report a considerably better
outlook for our activities.

We anticipate profitable trading in all our activities in 2001 and a
considerable improvement in the earnings per share.




Stuart N. Gordon

Chairman

7th March 2001


                           CHIEF EXECUTIVE'S REVIEW


Introduction


To secure the future development and profitable growth of the Group, a new
business structure has been established with Construction, Structural
Steelwork and Property Development forming the focus of our future activities.
This restructuring is built on our actions over the past two years and will
allow us to achieve further operational economies, strengthen our senior
management teams, and broaden both our geographical resources and technical
services to respond to the needs of our expanding customer base and to new
market opportunities that continue to present themselves to us.


2000 represented an improved period of trading compared with our activities in
1999 and I am very pleased to be able to report that a profit on normal
continuing operations was achieved before exceptional costs were incurred for
further provisions against potential liabilities for industrial disease claims
arising out of our past mining activities. All ongoing activities now have the
potential for profitable trading in 2001 and beyond.


Investment in the Group has continued throughout the last year with the
development of new and existing activities and markets in the UK and overseas.
This investment will continue in 2001 whenever the right opportunities arise
to underpin the future growth and success of the Group.


The improvement of Health and Safety management standards and the creation of
a safe working environment continues to remain a high priority with a
continuous programme of health and safety training for staff and operatives
being delivered in support of these objectives.


The Group places great emphasis on its activities and their impact on the
Environment. Employee awareness, legislative compliance and continuous
environmental improvement in all our activities is high on our agenda and our
corporate approach to environmental matters is now well recognised by a
growing number of our major clients.


Steps towards the implementation of an effective corporate Training and
Development function have continued during 2000 but there is still work to be
done to provide a full range of services to group companies. The investment in
training and development, as in previous years, remains focused on job skills
training and staff development. Increased emphasis will be placed on the
issues of management and professional development of employees during 2001 in
order to beneficially exploit their potential as the group's most important
asset.


The Quality Management System of Billington Modern Structures Limited
("Billington") was fully integrated to cover activities at both the Wombwell
and Yate sites during the early part of the year and in October it underwent a
successful assessment against the requirements of BS EN ISO 9000.


Amalgamated Construction Co. Limited ("Amalgamated Construction"), Billington
and Dosco Overseas Engineering Limited ("Dosco") are currently undertaking a
complete review of their existing management systems with a view to developing
and introducing more efficient electronic business management systems in 2001.
These reviews will provide the ideal vehicle for the incorporation of the
requirements of the revised quality management standard BS EN ISO 9000:2000.


Construction Activities


During the year the activities and structure of Amalgamated Construction have
been broadened to incorporate the business activities of Amco Engineering
Limited and Amco Drilling (International) Limited as operating divisions
alongside those of mining and civil engineering. This reorganisation enables
Amalgamated Construction to operate across a wider client base and to benefit
from the synergy within the new operating divisions which are either
complementary or in related market sectors.


Amalgamated Construction is now structured to provide a multi-disciplined
client-focused service as a specialist contractor offering integrated,
innovative and competitive solutions. The respective specialist divisions
continue to target repeat business to a progressively increasing client base
within their selected market areas.


The business achieved its targeted growth in specialist civil engineering
activities which were well supported by improved turnover and performance from
our UK mining contracts. Their combined activities resulted in a 40% growth in
turnover from 1999 to 2000 and a return to profitability.


During the year the Civil Engineering division successfully completed the
restoration of the historic Standedge Tunnel for British Waterways with the
tunnel back flooded in December 2000 for final finishing works prior to
re-opening to navigation at Easter 2001 for the first time in over 50 years.
The division has also been successful in increasing the regional coverage of
their infrastructure maintenance works for Railtrack and in particular have
been re-awarded the East Coast Main Line Minor Works contract with an
increased scope for a minimum three year period. During 2000 infrastructure
maintenance contracts were awarded by the Coal Authority in Scotland and by
Edison First Power at Ferrybridge 'C' Power Station. The Birches Head tunnel
contract for Severn Trent Water is now nearing completion. Contract
opportunities continue to be pursued in infrastructure maintenance in all
sectors and capital works in the transportation, energy and water industry
sectors.


The company's capability and regional coverage was further boosted at the end
of the year with the addition of Amey Plc's tunnelling division, which was
formerly J.F. Donelon one of the UK's leading independent tunnelling
contractors. The business now operates as the Donelon division on a national
basis from a new regional office in the North West, in their traditional
sectors of tunnelling and below ground civil engineering works. They have
already been successful in securing new contracts for 2001 including an award
for the refurbishment of a cable tunnel running beneath the Thames at Tilbury
for the National Grid.


The Mining division was successful in increasing overall workload with their
major clients, RJB Mining and Scottish Coal. Continuing work at Boulby for
Cleveland Potash included the negotiation and execution of innovative major
repairs to the rock shaft, one of the deepest shafts in Europe. The division
has also secured preferred bidder status for the operation and management of
the Sulcis Coal Mine in Sardinia where we are presently providing technical
assistance to the indigenous mine management whilst the contract negotiations
are finalised.


The results for the Drilling division for 2000 have been particularly
disappointing. The delayed commencement of several ground stabilisation
contracts in England and Scotland, largely due to planning delays; the demise
of one of their major open-cast coal clients; and the performance of several
challenging overseas exploratory drilling contracts in a continuing difficult
market have depressed turnover and margin. However, the delayed ground
stabilisation contracts now have confirmed commencement dates for 2001 and
further geotechnical works have been secured to provide an encouraging start
to the year for the division's UK activities. Selective marketing within more
stable overseas minerals exploration locations for the major mining houses is
providing more reliable opportunities and tender success, justifying the
continuation of these activities.


The Engineering division has enjoyed a good year for contract performance. The
integration into Amalgamated Construction during the year significantly
reduced their fixed costs and they are now well positioned to expand their
activities within their target market sectors. Following sustained marketing
effort niche contract opportunities have been secured including joint
initiatives with the civil engineering division.


A number of significant contract awards during the year included the design
and construction of an upgrade to the water treatment plant at Ratcliffe Power
Station and high voltage schemes at York University and for the MoD. A
proposal, in joint venture, was submitted to the DETR for the UK Road Tolling
Demonstrator Project.


New long term facilities maintenance contracts were awarded by the National
Grid and South Yorkshire Passenger Transport Executive. These compliment and
extend the existing portfolio which includes PowerGen, National Power and the
Environment Agency. Facilities maintenance now forms a major part of this
business and we will continue to expand our activities in this sector.


Amco Robertson Mineral Services Limited provides wide ranging technical and
consultancy services to the mining industry, financial institutions,
governments and multi-lateral development agencies on a world wide basis.
These services include geological exploration and interpretation, mine and
mineral process engineering, and environmental expertise and our personnel are
skilled in the identification, exploration, evaluation and feasibility
assessment of new and existing mining projects.


The company is currently involved in a major coal exploration project in
Venezuela which, subject to positive results, will lead to project evaluation
next year. Having undertaken a preliminary exploration and evaluation study of
a high quality limestone deposit in Oman, the company will undertake further
exploration, leading to feasibility assessment, in 2001. Other current
opportunities include major exploration and evaluation studies for gold in
Egypt, Saudi Arabia and Portugal, diamonds in Congo and industrial minerals in
Ireland and the Middle East.


In 2001 this business will be aligned alongside our international exploration
drilling activities within Amalgamated Construction to provide a growing list
of clients with one focus for their exploration services.


Structural Steel Activities


Billington's business activities have grown significantly during the period,
with production throughputs well in excess of 350 tonnes per week from its
factories in Barnsley and Bristol. This combined with a strengthening of the
technical team and the board has promoted Billington into the top ten UK
suppliers of structural steelwork. The Company continues to operate across the
full spectrum of structural steelwork contracting, but their particular focus
and expertise is in leisure and city centre refurbishment.


Of particular note during the year, was the completion of a 2000 tonne
distribution warehouse for Ikea erected within an 8 week period and the
completion of the #1million plus, steelwork package for the Magna project in
Rotherham. Major works undertaken in the south west include work at the
Princess Margaret Hospital in Swindon and an office block in Reading.


2001 starts with the on site work at the 'Light' in Leeds, a major city centre
leisure project on a confined site, together with a wide variety of projects
located right across the country from Glasgow to Devon.


Particularly pleasing was the award in 2000 of B.S. EN ISO 14001 for
Billington Modern's environmental management system.


Hollybank Engineering Limited continues to be the UK's premier manufacturer of
underground steelwork for the coal mining industry and also services the civil
engineering industry with a variety of specialist underground steel support
structures.


Significant improvements have been made to the management of stock levels and
JIT production techniques have been introduced and the factory layout is in
the process of being revised to further improve efficiencies.


Property Development Activities


Our property development company Amco Tolent Developments Limited had a very
encouraging year and now has a number of projects at varying stages in the
development cycle. A retail park development at Heanor, Derbyshire started on
site in January 2001 and other development opportunities in Huddersfield,
Sheffield and Leeds are expected to make further progress during this year.


A joint venture arrangement has been established with the Stannifer Group to
explore the potential of major mixed use urban regeneration opportunities in
the North. As a result Stannifer Amco is currently assessing a number of
schemes in selected locations.


Other Activities


Dosco achieved a very satisfying improvement in sales and opportunities
throughout the year. A partnering agreement with RJB Mining to undertake the
repair and overhaul of their machines has seen benefits to both companies.


A sales and manufacturing licence has been agreed with Schaeff that will see
Dosco undertaking both the new build and repair and overhaul of the Webster
Schaeff range of machines. This agreement increases the range of the Dosco
fleet and has opened up new market applications for both mining and
tunnelling.


Opportunities for the sale of reconditioned and second hand machines are
buoyant in certain markets and are providing increased opportunities for down
stream spares sales.


Dosco has continued to increase resources and investment in overseas
opportunities and in 2000 recovered business in Canada and India. Increased
marketing activity in the USA has already identified potential opportunities
which will be followed through in 2001.


Civil tunnelling activity increased in 2000 with tunnelling machines
commissioned by both Amalgamated Construction and Miller Civil Engineering
Limited with whom we have successfully negotiated a partnering agreement.


Pipe conveyor installations at Vojany in the Slovak Republic and for EGI/MOL
in Hungary will be commissioned during 2001 and Birtley Projects are currently
completing the design and project management of a magnesia milling and
classification process plant for Britmag in Hartlepool. A number of
significant opportunities have recently presented themselves for both our
materials handling businesses in the UK market in 2001.


Amco Plastics Limited fabricates pvc products for civil and mining
engineering, industrial and leisure markets and is a custom extruder of
thermoplastic products to general industry.


The company continues to supply the civil tunnelling and mining industries
with flexible ventilation ducting whilst diversifying the sales of these
products into other markets including the supply of specialist ducting for
industrial use, particularly the temporary heat and air conditioning markets.
An outlet in Europe for our industrial ducting products is planned for 2001.


The company's extrusion business continues to expand and the introduction of
further automation of downstream functions will enable it to increase
production outputs. A factory extension and investment in additional extrusion
machines is planned for 2001 which will bring all the extrusion activities
together and increase production capacity to allow further development of this
growing activity.


At the end of 2000 an offer to purchase the assets of Amco Technical Services
Limited, for a nominal sum, was made by the management team, which included
its director Mr. David Fildes. This was accepted and the transaction was
completed at the end of February 2001.




Overseas activities


Mining contracting activities continue in Zambia where we have been successful
in obtaining a contract, in joint venture, at Konkola Copper Mine. Our other
overseas activities include exploration drilling in West Africa and Eastern
Europe, mineral exploration in Central Asia, the Middle East, South America
and Africa and our status as preferred bidder for the operation and
maintenance of the Sulcis coal mine in Sardinia.


O. H. Schmill

Group Chief Executive

7 March 2001


                         FINANCIAL DIRECTOR'S REPORT


Results


Turnover on continuing activities in the year ended 31 December 2000 increased
by 25.5% to #80.8m from #64.4m in the previous year. The total turnover in
2000 of #81.3m was a reduction from the #118.4m achieved in 1999 largely as a
result of the demerger of Tolent PLC in August 1999. A large proportion of the
continuing activities increase occurred in Amalgamated Construction which
reversed a number of years of declining turnover by expanding in existing and
into new markets. Turnover in the structural steel companies also increased in
the year as did activity in the Dosco workshops.


The continuing operations reported a normal operating profit for 2000 of #1.0m
which was a considerable improvement on the operating loss of #0.9m in 1999.
The result for the year, however, suffered from the necessity to provide
exceptional provisions against the industrial disease vibration white finger.
The provisions relate to alleged occurrences in earlier years but the claims
have only been notified to the Group during 2000.


The discontinued operations in 2000 related to the Group's IT business Amco
Technical Services which was disposed of in February 2001 having suffered
losses since 1999.


Net interest payable in the year remained at #0.3m and the loss before tax of
#0.6m in 2000 compares to a loss of #1.0m in 1999.


Taxation


There is a tax credit of #0.5m in 2000 as a result of the release of #0.3m of
excess deferred tax and an over provision for corporation tax in 1999. Loss
per share improved to 0.9p in 2000 from 11.1p in 1999.


Capital expenditure


The Group continued to invest in capital equipment with a further #3.7m (1999
- #2.9m) of capital expenditure in the year of which #1.7m (1999 - #1.5m)
related to replacements in the Group's motor vehicle fleet. Of the balance of
#2.0m, #1.4m was in respect of civil engineering equipment, #0.4m related to
property acquisitions and the balance was invested in plant and equipment
throughout the Group. The depreciation charge for the year was #3.0m and total
fixed assets in the Group increased from #14.8m to #15.0m during 2000.


Cashflow


The Group had net debt at the end of 2000 of #5.4m, an outflow of funds of #
0.5m from the net debt position of #4.9m at the end of 1999. Bank overdrafts
have reduced by #0.8m to #3.9m although cash at bank has also reduced by #0.3m
to #2.5m. Bank loans have increased by #0.6m and the inception of #1.7m of new
finance leases exceeds by #0.5m the #1.2m repayment of finance leases. The
gearing of the Group at the end of 2000 was 33.5%, calculated on net debt of #
5.4m and net assets of #16.1m.




Ian Swire

Group Financial Director

7 March 2001


Profit and loss account for the year ended 31st December 2000
                                                        2000          1999
                                                     #000    #000  #000    #000
Turnover
     Continuing operations                                 80,792        64,362
     Discontinued operations                                  464        54,072
                                                           81,256       118,434
     Decrease in work in progress                           (166)         (261)
                                                           81,090       118,173
Raw materials and consumables                      34,743         35,694
Other external charges                             10,153         40,606
                                                          (44,896)      (76,300)
                                                           36,194        41,873
Staff costs                                        28,942         32,208
Depreciation                                        3,049         2,789
Other operating charges                             4,512         6,756
                                                          (36,503)      (41,753)
                                                            (309)           120
Other operating income                                          0            42
Operating profit/(loss)
     Continuing operations - normal                 1,044         (934)
     Continuing operations - exceptional           (1,172)             0
                                                    (128)         (934)
     Discontinued operations                        (181)         1,096
                                                            (309)           162
Share of loss of associated business                            0         (149)
Exceptional Item - loss on disposal of                          0         (739)
discontinued business
Net interest                                                (290)         (316)
Loss on ordinary activities before taxation                 (599)       (1,042)
Taxation on loss on ordinary activities                       500         (248)
Loss on ordinary activities after taxation                   (99)       (1,290)
Minority interest                                              31            19
Loss for financial year                                      (68)       (1,271)
Dividends                                                       0       (3,561)
Loss charged to reserves                                     (68)       (4,832)
Loss per share                                             (0.9)p       (11.1)p





Consolidated balance sheet at 31st December 2000
                                                2000                1999
                                              #000       #000      #000    #000

Fixed assets
     Tangible assets                                   15,023            14,787
     Investments                                        1,119             1,094
                                                       16,142            15,881
Current assets
     Stock and work in progress              7,891                8,800
     Amounts recoverable on contracts        2,903                1,710
     Debtors                                11,957                9,612
     Cash at bank and in hand                2,468                2,735
                                            25,219               22,857
Creditors: amounts falling due            (23,114)             (21,037)

within one year
Net current assets                                      2,105             1,820
Total assets less current liabilities                  18,247            17,701
Creditors: amounts falling due             (2,153)              (1,204)

after more than one year
Provisions for liabilities and charges           0                (335)
                                                      (2,153)           (1,539)
                                                       16,094            16,162
Capital and reserves
     Called up share capital                            1,293             1,293
     Share premium                                      1,864             1,864
     Capital redemption reserve                           132               132
     Profit and loss account                           12,805            12,873
     Shareholders' funds                               16,094            16,162




Consolidated cashflow statement for the year ended 31st December 2000
                                                     2000            1999
                                                   #000    #000    #000    #000
Net cashflow from operating activities                    2,776           (574)
Returns on investments and servicing of finance
     Interest received                              200             192
     Interest paid                                (309)           (359)
     Finance lease interest paid                  (181)           (149)
     Net cash outflow from returns on                     (290)           (316)

     investments and servicing of finance
Taxation                                                    127             170
Capital expenditure and financial investment

     Purchase of tangible fixed assets          (1,996)         (1,321)
     Sale of tangible fixed assets                  592             815
     Employee Share Ownership Plan
      - purchase of shares                         (34)            (19)
      - disposal of shares                            9              35
     Net cash outflow from capital                      (1,429)           (490)

     expenditure and financial investment
Disposal
     Net cashflow on disposal of Subsidiary                   0           1,599

     Undertaking
Equity dividends paid                                         0           (550)
Net cashflow before financing                             1,184           (161)
Financing
     Bank loans                                     567           (824)
     Capital element of finance lease rentals   (1,240)         (1,983)
Net cashflow from financing                               (673)         (2,807)
Increase/(decrease) in cash                                 511         (2,968)



Notes


        1.     The financial information set out above does not comprise full
        accounts within the meaning of Section 240 of the Companies Act 1985.
        The financial information contained in this announcement in respect of
        the year ended 31 December 2000 has been extracted from the financial
        statements. Those financial statements have not yet been delivered to
        the Registrar of Companies.


        2.     Copies of the preliminary announcement are available from the
        company's Registered Office at Amco House, 25 Moorgate Road,
        Rotherham, South Yorkshire, S60 2AD. The Annual Report and Accounts
        for the year ended 31 December 2000 will be posted to shareholders on
        or about 1 May 2001.