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Wescol Group PLC (WCL)

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Wednesday 13 October, 1999

Wescol Group PLC

Final Results, etc

WESCOL GROUP PLC
13 October 1999

                                  
Wescol Group plc


Preliminary Results for the year ended 31st July 1999

Salzgitter AG to take 26% holding


Wescol Group plc ('Wescol'), a specialist engineering company, based
in Halifax, West Yorkshire, announces its Preliminary Results for the
year ended 31 July 1999, joint venture with and investment by
Salzgitter AG.  Wescol is a market leader in the supply of structural
steelwork, including its own patented cellular beams, both in the UK
and overseas.

*     Operating profit rose 11% to £4.9 million (1998: £4.4 million)

*     Operating margin up 13% to 6.8%

*     Earnings per share 5.5 pence (1998: 5.4 pence), Gearing 14%

*     Turnover marginally down at £72.1 million (1998: £74.1 million)

*     Final dividend 1.2 p per share, giving 2.0 pence total (1998:
      1.9 pence)

*     Joint venture with Salzgitter AG,  Salzgitter to acquire 26% of
      the equity by tender offer @53p, open   until 3pm 20 October 1999

Peter Price, Chairman, Wescol Group plc, commented:

'These good results have been achieved by the group despite the
contract site start delays to which I referred both last December at
the company's annual general meeting, and in March in my interim
statement,..

'During the second half year volumes stabilised, and the group
finished the year in excellent shape. All group companies now have
very strong order books, which give a very positive start to the new
financial year ...

'With a strong balance sheet and significantly increased fabrication
capacity in place, the group is well positioned to compete
aggressively for market share in growing world markets.

'The board believes that the strategic investment by Salzgitter in
Wescol will bring long-term benefits to the group ... A joint venture
between Salzgitter and Westok has been set up to market and
manufacture the cellular beam within continental Europe. Salzgitter's
investment in the company will add greatly to the group's
credibility, and its market presence, connections and experience will
be invaluable.'

PH Price - Chairman
13th October 1999


Enquiries:
Wescol Group plc                    Tel.No. 0171 457 2020 (today)
Stephen Brown, Financial Director   Tel.No. 01905 723 481
(thereafter)

College Hill                         Tel.No. 0171 457 2020
Michael Padley / Richard Pearson
Chairman's Statement

Introduction

I am pleased to report that the company has achieved an increased
operating profit of £4.9 million (1998: £4.4 million) on turnover
slightly reduced at £72.1 million (1998: £74.1 million). At the pre-
tax level profit is unchanged at £4.6 million after net interest
charges of £0.3 million (1998: £0.1 million interest receivable).
Earnings per share for the period were 5.5 pence (5.5 pence diluted)
compared with last year's 5.4 pence (5.4 pence diluted).

These good results have been achieved by the group despite the
contract site start delays to which I referred both last December at
the company's annual general meeting, and in March in my interim
statement, and against a background of downward pressure on prices.

All group companies now have very strong order books, which give a
very positive start to the new financial year, compared to the
recessionary background at the time of our last Annual Report.

The board is recommending an increased final dividend of 1.2 pence
(1998: 1.1 pence) bringing the total dividend for the year to 2.0
pence (1998: 1.9 pence). This is 2.8 times covered by retained
earnings.

With a strong balance sheet and significantly increased fabrication
capacity in place, the group is well positioned to compete
aggressively for market share in growing world markets.

Major shareholding and Cellular beam joint venture:

I have great pleasure in announcing that German steel manufacturer
Salzgitter AG, a major supplier of steel to the group, is to invest
in a holding of 26% in Wescol Group. Salzgitter has indicated that
its investment is long term and strategic. The shareholding is to be
acquired by way of open tender offer to all shareholders of the
company, at a price of 53 pence per share. Irrevocable undertakings
to sell 14.6 million shares, representing 26.2% of the company's
issued share capital are already held by Salzgitter.

Salzgitter is the second largest steel producer in Germany with
annual turnover exceeding £2 billion, employing 12,000 people.  It
has worldwide trading and production links and exports 45% of its
output.  Its production plants in Germany employ state of the art
technology, being classified 'world class' by an independent
consulting company.  The possibilities for joint development and co-
operation with Salzgitter are considerable.

The board believes that this strategic investment by Salzgitter in
Wescol will bring long-term benefits to the group in two principal
ways:-

First, a joint venture between Salzgitter and Westok has been set up
to market and manufacture the cellular beam within continental
Europe. Initially, all fabrication of cellular beams will be in the
UK, with the first project undertaken by the joint venture being the
manufacture of 1,100 tonnes of roof beams for a production facility
for automotive manufacturer Daimler Chrysler. In the medium to longer
term, however, the joint venture will set up fabrication facilities
within continental Europe to ensure that the potential market can be
developed fully.

Secondly, and within the context of a growing continental market for
steel framed buildings, Wescol is intent on developing a broader
basis for co-operation within Europe for Wescol Glosford.
Salzgitter's investment in the company will add greatly to the
group's credibility in this context, and its market presence,
connections and experience will be invaluable.

Steel's share of the multi-storey construction framing market within
continental Europe is estimated to be less than 10%, compared to over
60% in the UK. This leaves significant potential over the medium to
longer term for steel to increase its market share at the expense of
its principal rival, reinforced concrete, even without strong new
economic growth in those markets.

In this context Westok, manufacturer of the group's patented cellular
beam, which has already effectively established itself in the UK as
the standard floor beam for use in long spanning multi-storey
construction, has recently been making increasing inroads into
continental markets. The group is keen to maximise the overall
benefits to the group which it believes can be generated within
Europe, not only in terms of developing the cellular beam to its
maximum potential, but also in terms of developing additional markets
for Wescol Glosford.

Gearing and cash flow:

Gearing at the year end was approximately 14%, with net borrowings
including hire purchase commitments of £2.4 million (1998: Net cash
balances £1.6 million), and interest was 17 times covered (1998:
Interest receivable). Reduced capital expenditure commitments during
the current year (see below) should help to improve gearing further
by the next year end, though the company expects to remain geared
during much of the year.

Capital expenditure:

With total capital expenditure of £2.9 million (1998: £3.9 million)
the major capital expenditure programme of the last two years has now
been completed. Principal areas of investment included:

*   The near doubling of capacity at Westok's Wakefield factory for
    cellular beams, coupled with significant improvements in the
    manufacturing process which are already generating productivity
    gains.
*   Completion of the redevelopment of Wescol Glosford's Brierley   
    Hill factory;
*   The start of an additional steel processing plant at Wescol
    Glosford's Halifax  factory, which will come on stream towards
    the end of 1999.

Whilst the company has a number of capital expenditure projects
planned for the current year, including the start of a rolling
replacement programme for older capital machinery, total capital
spend will be substantially less than it has been in the year just
ended.

Board Changes:

Following from their investment in the company, two additional non-
executive directors nominated by Saltzgitter will be appointed to the
board of Wescol. Full details of the new appointments will be made as
and when appropriate.

The board is actively planning to strengthen the company at executive
director level, and new appointments are likely during the coming
year.

Mr. Ken Jones resigned as a director of the company in March this
year. Mr. Jones played a major role in the merging of Wescol and
Glosford two years ago, and the board wish to record our appreciation
of his services.

Dividend:

The board is recommending a final dividend of 1.2p per share(1998:
1.1p) bringing the total dividend for the year to 2.0p (1998: 1.9p).
This dividend will be paid on 10th December 1999 to shareholders on
the register on 5th November 1999. At this level the dividend is 2.8
times covered by earnings.

Appreciation:

I would again like to take this opportunity on behalf of the board to
thank all our staff for the contribution they have made to a very
successful year for the group.

Current trading and prospects:

All three group companies have started the current year with
significantly stronger order books than last year, both in volume and
in work mix. Order intake and enquiry levels have remained
consistently strong throughout the summer months, with the result
that all three trading companies now have extremely healthy order
books and are operating at full capacity. Volumes look set to remain
high, but as I have noted above, prices remain under pressure,
emphasising the importance of maintaining both high production
volumes and steady downward pressure on input prices.

In the short and medium term, with its enhanced fabricating
facilities now generating the additional capacity the company has
been seeking, and with material prices under firm control, the group
is confident of achieving satisfactory progress in the coming year,
based principally on steady organic growth within the UK. In South
East Asia, the group's principal overseas market, activity has
started to recover from recent low levels, and we look forward to
resuming the growth of our Singapore operation.

In the longer term the group has laid down a solid platform for
future development, in particular the new links with Salzgitter,
which bring with them the potential for co-operation on a broad basis
in the much larger markets of continental Europe, giving the group
opportunities for major expansion.

Overall the group is well positioned for significant growth in the
current financial year and we look forward to the future with
confidence.


PH Price - Chairman
13th October 1999

Preliminary Results for the Year ended 31 July 1999

                                                  1999        1998
                                               audited     audited
Summarised Profit and Loss                        £000        £000
Account
Turnover - continuing activities                72,106      74,111
Operating profit - continuing                    4,916       4,441
operations
                                                        
Net interest                                      (289)        121            
            
Profit on ordinary activities                    4,627       4,562
before taxation
Taxation                                        (1,467)     (1,469)
Profit on ordinary activities                    3,160       3,093
after taxation
Minority interests                                (80)        (103)
Profit for the financial year                   3,080        2,990
Dividends                                      (1,111)      (1,053)
Retained profit transferred to                  1,969        1,937
reserves
                                                                  
Earnings per ordinary share                      5.60p       5.40p
(pence) - basic
                                                                  
Earnings per ordinary share                      5.50p       5.40p
(pence) - diluted
                                                                  
Dividend per ordinary share         Interim       0.8p        0.8p
(pence)                                paid
                                      Final       1.2p        1.1p
                                   proposed
                                      Total       2.0p        1.9p
                                                                  

                                               31 July     31 July
                                                  1999        1998
                                               audited     audited
Summarised Group Balance Sheet                    £000        £000
                                                                  
Fixed assets                                    14,709      12,899
                                                                  
Current assets                                                    
Stocks                                             244         249
Debtors                                         23,980      17,991
Cash at bank and in hand                         1,689       5,507
                                                25,913      23,747
                                                          
Creditors: amounts falling due                            
within one year  
Debt                                            (1,632)     (3,861)
Trade creditors                                (12,683)     10,540)
                                             
Other creditors                                 (5,569)     (6,081)
                                               (19,884)    (20,482)
                                            
Net current assets                               6,029       3,265
Total assets less current                       20,738      16,164
liabilities
                                                          
Creditors:amounts falling due                   (2,484)        (93)
after more than one year:
Provisions for liabilities and                    (750)       (641)
charges
Shareholders Funds                              17,504      15,430


                                                 1999             1998
                                              audited          audited
Summarised Group Cash Flow                       £000             £000    
Statement                                                    
                                                                  
Net cash inflow from operating                   1,293           5,529
activites 
Return on investment and                          (319)             77
servicing of finance
Taxation paid                                     (996)           (888)
                                                   (22)          4,718
Capital expenditure                                                    
Payments for tangible fixed                     (1,653)         (3,893)
assets
Receipts from sale of tangible                      67              91
fixed assets                                         
                                                (1,586)        (3,802)

Acquisitions                                              
Purchase of subsidiary                             (36)             0
undertaking
                                                   (36)             0
Equity dividends paid                           (1,053)          (886)
                                                          
Financing                                                 
New bank loans                                     2,500            0
Repayment of bank loans                                0         (992)
Capital element of finance lease                    (556)        (234)
payments
Issue of ordinary shares                               0           16
                                                   1,944       (1,210)

(Decrease)/increase in cash                         (753)      (1,180)
                                                                    
                                                                  
Notes:

1. Basis of preparation:

This preliminary statement, which has been agreed with the auditors
was approved by the Board on 12 October 1999.  It is not the
company's statutory accounts.  Statutory accounts will be sent to
shareholders shortly.

The statutory accounts for the year ended 31 July 1998 have been
delivered to the Registrar of Companies and received an audit report
which was unqualified and did not contain statements under s237(2) or
(3) of the Companies Act 1985.  The statutory accounts for the year
ended 31 July 1999 have not yet been approved, audited or filed.

2. The earnings per ordinary share is based on the profit
attributable to shareholders for the period of £3,080,000 (1998:
£2,990,000) and 55.5 million (1998: 55.4 million) ordinary shares.

3. The Annual Report is being posted to all shareholders. Copies are
available from the Secretary, Wescol Group plc, Westercroft Lane,
Northowram, Halifax HX3 7TY.

                                                                                                                                                                                               

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