Amco Corporation sells half operations to £9m mbo

Amco Corporation, the £140m-a-year turnover conglomerate, has waved cheerio to half of its operations in order to become a focused structural steel business.

As this steel business already trades as Billington Structures, the remaining group, which is quoted on the Stock Exchange, will change its name to Billington Holdings.

Peter Hems, executive chairman, said: “We were a conglomerate that had arisen by history, almost by accident if you like.

“When you are a quoted plc you are expected to deliver consistent profit, but property is a volatile operation whereas structural steel is steady and we think that is where our future is.”

Billington Structures is the UK’s number three player behind Severfield-Rowen and William Hare.

In the financial year to 31 December 2006, Amco’s turnover of £140m produced a pre-tax profit of £9m, though Hems said that much of that profit was property orientated.

Amco’s results for 2007 should be out next week. They will show an operating profit but overall there is likely to be a pre-tax loss of £4m as a result of the sort-out.

The new posts at Billington are:

• Peter Hems – executive chairman
• Steve Fareham – managing director
• Peter Hart – finance director
• Mike Fewster – operations director

The £9.4m management buy-out of what the Amco group determined to be non-core was led by David Jackson, until now the commercial director, and Ian Swire, finance director.

Both leave the group and envisage building a £100m-a-year turnover operation by the end of next year.

The mbo is backed by Endless, a Leeds-based venture capital outfit. Currently operating under the temporary name of Newco, its title will be switched to Amco Group Limited as soon as the seller switches its name to Billington Holdings.

Swire said: “We are a civil engineering and property group. Our construction clients include Network Rail, National Grid and United Utilities.

“We’re making a trading profit. We’ve bought our part of the group at less than net asset value.”

Next week’s results for the group will show a £1.2m provision for overseas withholding tax that should have been deducted by a customer in relation to a drilling contract in New Guinea. 

The existing group has assumed responsibility for Amco’s defined benefit pension scheme which showed a small surplus at 31 December 2007, when assessed on accounting standard FRS17.

On a buy-out basis, the deficit was assessed at between £5.3m and £8.0m, depending on the assumptions used.