In the spotlight: Billington Holdings

The company has been listed on the Stock Exchange’s AIM section since 1995 but there was a name change from Amco Group to Billington last year. Can you explain that?

Billington Structures was formed back in 1947 in Wombwell, near Barnsley, while Amco Group started trading in 1970 with activities in the coal mining sector.

Amco bought Billington Steel in 1982, listing on the Canadian Stock Exchange in the same year - it was the clever way to get a listing, making a reverse take-over for a dormant Canadian business.

Next came a move to a listing in Luxembourg, then a period off-market completely until we came onto AIM in 1995.

We acquired Tolent in 1995 and floated Tolent separately in 1999.

Your structural steel division accounts for 80% of Billington Holdings’ turnover. Is that division’s operation all known as Billington Structures?

Not quite. There is also a contribution in there from Hollybank Engineering which manufactures steel arch roof supports and is used in civils work by main contractors such as SES and Costain.

Also you’ll find we have Easi-Edge – it’s our own product and it replaces scaffolding on multi-storey construction sites as a round-the-edge protection system that makes life safer for workers.

Where does Billington sit in the UK structural steel market?

Severfield-Rowen and William Hare are bigger, with annual turnovers of £400m and £120m respectively. Then we come third at £60m. Other names you may be familiar with further down the top 10 include Cleveland Bridge, Conder Structures and Bone Steel.

The prediction is that the UK market for structural steel is set to dive by 30%, from 1,400t in 2008 to little more than 1,000t this year. Can you cope?

Well it’s not as bad as back in 1989 when there was a 50% drop in market size, from 1,400t to 700t. We survived that. Why the fall today? Well, there are not enough projects, the market has dried up and the big sheds have all gone.

If there is over-capacity, are margins tighter than 12 months ago?

Yes. We see some quoting suicidal prices. We’ve worked hard to reach a position whereby 80% of Billington’s turnover comes from being the main contractor’s preferred supplier. But even so, these guys are getting unsolicited quotes from anyone and everyone who calls saying ‘give us the spec’.

We are seeing some bid lists where the lowest bidder is coming in at 10%-20% lower than the average of the rest.

There are reports of turmoil in the steel market, of Corus adding to the havoc by flicking its prices up and down, making short-term adjustments to it price list. Have you been hit by this?

Steel prices went up steadily from the end of 2006 to the summer of 2008. Corus Distribution, our main supplier, was OK with us during that time as we are its largest single customer, so on most jobs we got the comfort of knowing that our quoted price would hold.

Most stockholders overbought in that period of rising prices and with that tonnage being unloaded now, that itself has been a factor in the recent fall in steel prices.

Structural steel prices are down 20% but other forms of steel have dropped by 50% in price and it is that bigger figure that catches the headlines. Some of our customers read the situation wrongly and then come to us asking to re-negotiate figures.

Are Billington’s shares fluid?

No. With 80% held by long-term investors, only 20% are available for regular traders.

The bulk are in the hands of a company founder, former employees and others with an association with the Billington group as well as the tranche held by the employee share ownership scheme.

The effect is that in difficult times, Billington’s share price stays relatively stable but in good times it can be a drag. Sometimes there is very little trading, indeed some weeks there are no trades at all.

With a group turnover of £80m you’ll be below the interest level for institutional buyers?

Yes, we are.

How does being quoted on AIM influence the things you do?

We need to make profits announcements, to stay quiet in our ‘closed periods’, watch what we say publically and operate with accounting standards that are more severe than for private companies.

In the past, Billington’s strategy has been to hide away as much as possible but since you guys took over there has been a change. Why the search for a higher profile?

Our view is that having changed the overall nature of the business, with having a greater focus where structural steel is at the heart of our activities, we want main contractors to know who we are. That’s why we’re speaking up.

Is winning high-profile projects seen as a way of lifting your profile?

Yes. For example we have the £3m steelwork subcontract for the Royal Shakespeare Company’s revamp of the theatre at Stratford-on-Avon where we are subcontracted to Mace, the project manager. So we get paid directly by the RSC.

We have other big orders – the one at Eldon Square shopping centre in Newcastle is worth £6m, while at Merchant Square in London’s Paddington Basin, we have a contract worth £7m.

One item in your five-year plan is to retain your strong balance sheet. Is financial standing becoming more of an issue?

Yes. Certain main contractors are starting to look closely at the viability of their suppliers. It’s no surprise – they want to protect their position and not place work with people who are likely to go bust when their project is half-build.