Billington: £5.2m pre-tax profit after shedding non-core operations

Billington Holdings, the structural steel and tunnelling machine manufacturer, has announced a pre-tax profit of £5.2m.

The name Billington Holdings was born in June 2008 following the disposal of the group’s non-core assets – i.e. the conventional construction division - to a £9m management buy-out.

With that change achieved, the previous name of Amco Corporation was dropped in favour of the new title.

Billington’s latest result is made up almost entirely of profits from continuing operations. The discontinued operations added only £27,000.

The latest figures cover the 12 months to 31 December 2008. Turnover ran to £77m.

In the previous year Billington’s pre-tax profit of £4.8m came from a turnover of £70m.

The slimmed-down business now contains three main elements:

Structural Steel - Billington Structures

A structural steel contractor with activities in industrial, public sector and commercial buildings. Listed as a preferred supplier to main contractors such as Balfour Beatty and Bovis, and regularly works on a 'back-to-back' basis in competitive tendering.

Safety Solutions – Easi-edge

A specialist in the development, production and rental or sale of edge protection systems and of other safety related products for the construction industry

Engineering – Dosco

Design and manufacture of road-heading and tunnelling machines for the mining and civil engineering industries worldwide.

Commenting on the results, executive chairman Peter Hems said: "I am pleased with the group's performance since the disposal of non-core assets in April 2008.

“Despite some uncertainty with lower activity levels and margins at Billington Structures, the forward order book remains strong. We are buoyed by our focus on the public sector, including schools and hospitals.” 

Structural Steel

Operating profit of £4.6m compared with £4.6m in the same period last year.

Billington Structures traded slightly below expectations for the year, and in the latter part of the year started to be impacted by the difficulties in the construction sector, most notably in terms of margins.

Billington Structures has a steady forward order book, particularly in relation to public sector work, although the margins available on all work are at a much reduced level. 

Specialist Engineering

Dosco achieved an operating profit of £700,000 for the year on revenue of £13m compared with £100,000 on revenue of £12m in 2007.

The factory has been particularly busy with the completion of an order for four machines for India and a boom and shield machine for a civil engineering project at Heathrow. The 2007 results were impacted by a poor performance on a pipe conveyor contract, an activity in which the group is no longer engaged.

Billington had a cash balance of £4m at the year-end compared with £6m a year earlier.

During the year the group received a total of £8m proceeds from the sale of non-core operations and decided not to have a bank overdraft facility, but to instead use part of the cash to fund the group’s working capital requirements.

The cash outflow from operating activities for the year amounted to £9m which is mainly attributable to an increase in work in progress and debtors during the latter part of the year.

Dosco and Billington Structures both saw a planned build up of both work-in-progress and debtors in the run up to the year end due to the timing of cash flows on a small number of large value contracts.

The working capital requirement has returned to a more normal level since the year-end and the cash balances at the beginning of March amounted to £11m.

Looking ahead, Hems said: “Current trading is challenging. The level of enquiries for Billington Structures has not been impacted to date, however the margins at which work can be won is at much lower levels than has been achieved in recent years.
 
“The impact of lower activity levels, combined with tighter margins for Billington Structures, gives rise to some uncertainty.”