Amco Corporation's structural steel business makes record profit

Amco Corporation’s structural steel division, now the lion’s part of the slimmed-down group as a result of a management buy-out of the “other half” of the construction-conglomeration-that-was, generated a pre-tax profit of £4.6m last year on turnover of £58m.

Amco’s latest results cover the 12 months to 31 December 2007.

They do not make for easy reading.

Even though the £9m mbo was post year-end (in fact it was only announced last week) accountancy rules stipulate that, as a result, the group’s 2007 turnover has to be divided between:

• continuing operations
• discontinued operations

And to muddy the water further, the split has triggered several one-off cost issues such as:

• the valuation of the non-core assets
• the “fair” division of the deficit in the group pension scheme (around £7m on a buy-out basis)

But to start with the surviving group where turnover of £70m produced a pre-tax profit of £4.8m.

The structural steel division produced the bulk of this, though the engineering operation (trading as Dosco) chipped in with an additional turnover of £12m.

Dosco added a wafer-thin pre-tax profit contribution of £130,000.

Billington Structures’ profit of £4.6m was slightly ahead of the £4.2m in the previous year and represented the company’s best-ever performance.

Peter Hems, now Amco’s executive chairman, said: “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.”

He said that Billington had started 2008 with its best-ever orderbook.

Amongst the discontinued activities, Amalgamated Construction’s pre-tax profit of £900,000 was in-line with budget before taking into account of a £1.8m loss provision. This 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. Part of this deal means Amalgamated has agreed to accept responsibility for the overpayment. It will be repaid to the customer over the revised term of the contract.