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Wescol Group PLC (WCL)

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Monday 19 November, 2001

Wescol Group PLC

Final Results

Wescol Group PLC
19 November 2001

Issued on behalf of Wescol Group plc

Date: Monday, 19 November 2001     Embargoed: 7.00am



                               Wescol Group plc
                             Preliminary Statement
                            Year ended 31 July 2001



                  'Leaders in structural steel innovation'

            Preliminary Results for the year ended 31st July 2001




       Turnover £71.49 million            Operating Losses £4.94 million


      + Wescol, principal trading operation reorganised and restructured


          - trading profitably in the last two months of the financial year


      + Westok made excellent progress contributing in excess of £1million
        to Group operating results


      + New prestigious projects secured at acceptable margins include:


                 - GLA Headquarters, London

                 - The Deep Millennium Project, Hull

                 - Residential project at No.1 Deansgate, Manchester

                 - New Stadia for Leicester City and Hull City Football Clubs

                 - 'Avant Seine' project, Paris


      + Order Book remains strong for Westok and is at near record levels
        for Wescol


      + Management changes including the proposed appointment of a new
        Chairman and Managing Director


'Whilst the trading results for the period as a whole are disappointing, the
benefits from Board and senior management changes and operational
restructuring are beginning to have a positive impact on the business.


'Despite these results, the current underlying improvements made during the
year, coupled with the strong order book, place the Group in a satisfactory
position from which further progress should be made.'

                                                         Peter Price, Chairman

Enquiries:

Peter Price - Home Telephone Number                    01759 304657
Stephen Rudman - Office Telephone Number               01905 727300

Fiona Tooley
Citigate Dewe Rogerson                                 Tel: 0121 455 8370


                                     -2-




CHAIRMAN'S STATEMENT


This past year has proved to be one of significant change for the Group both
from a trading point of view and as a result of the changes in senior
management that have occurred over the last year.


Whilst the trading results for the period as a whole are disappointing, the
benefits from Board and senior management changes and operational
restructuring are having a positive impact on the business.


Financial Highlights

The loss before taxation in the year under review amounted to £5.85 million
(2000: loss £7.51million). This figure includes redundancy and reorganisation
costs of £1.27 million together with further losses arising from certain old
contracts in excess of £2.8 million totalling over £4.07 million or over 82%
of the operating losses of £4.94 million. The new management team have
implemented improved procedures to strengthen the controls over the business
which is reflected in a 60% increase in gross profit on a reduced turnover.


The financing of historical losses and the increased working capital
requirement for the funding of the Group's sizeable order book has put
predictable strain on the Group's financial resources.


At this point I would like to express the Board's thanks to the Group's
Bankers and our major shareholder, Salzgitter A.G. with whom we have a
continuous dialogue for their on-going financial support to the Group in these
challenging times.


Group turnover for the period was £71.49 million compared to £83.48 million in
2000. Earnings per share amounted to a loss of 10.6p. Shareholders Funds at
the year-end were £5.60 million (2000: £11.62 million).


In light of the foregoing, the Board is unable to recommend that a final
dividend is paid.


Operating Divisions Overview

Wescol

This principal trading subsidiary Wescol, formerly Wescol Glosford, currently
represents 68% of the Group's annual sales


As part of a strategic review arising from the trading performance of this
subsidiary, there has been a rationalisation of production facilities that has
resulted in cost reductions and significant improvements in production
efficiencies.


Wescol now focuses on more complex higher value-added projects that utilise
the skills and expertise available within the organisation.

continued...


                                     -3-




A number of prestigious projects with acceptable margins have been gained and
at the end of the financial year the Company had secured over 50% of its
current annual requirements. Some of these projects which illustrate the
diversity and skills base include:


  * The new Greater London Authority Headquarters


        This unique structure is believed to be one of the most complex
        buildings under construction in the Capital. It has strengthened our
        reputation in the market place and demonstrates our world-class
        capability and is a flagship development for Wescol.



  * Lion Plaza, Threadneedle Street


        A prestigious shopping mall and office block opposite the present
        London Stock Exchange Building.



  * GlaxoSmithKline Headquarters


        The £315m project is a landmark structure in West London where we have
        been manufacturers and suppliers of the structural steel and metal
        decking.



  * Wessex Water Headquarters


        Wescol received a commendation in this year's Structural Steel Design
        Awards for its detailing and design work.



  * The Deep Millennium Project, Hull


        An award winning £40m landmark structure and Europe's deepest
        aquarium.



  * New Stadia for Leicester City and Hull City Football Clubs


        This further illustrates the Company's continuing success in this
        developing market.



  * Deansgate, Manchester


        The high profile residential project has provided the opportunity to
        use steel as a better solution to traditional concrete utilising
        Wescol's steelwork as a permanent visual feature.


        We have gained considerable experience from our involvement in this
        sector, which offers further potential opportunities in the future.


These projects continue to demonstrate to our clients and shareholders the
Company's position as leaders in innovative steel solutions.


Westok

This year has seen a significant diversification in Westok's, formerly Westok
Structural Services, product range. The additional capacity generated by the
decision to manufacture non-UK cellular beam orders in Germany has allowed for
new product manufacture and by the year-end 25% of goods leaving the facility
were other than cellular beams.


Westok continued to make excellent progress during the year under review and
profitability was returned to its previous levels, contributing in excess of £
1 million to Group operating results.


Commercial office projects remain the strongest market for cellular beams,
though we are continuing to identify new areas to utilise our product range.
Demand for Westok's key product, cellular beams, remains at a satisfactory
level.



continued...


                                     -4-




UK projects are supplied from Westok's factory in Wakefield, whilst non-UK
cellular beam orders are manufactured in Peine near Hanover, Germany under the
expanding joint-venture arrangement with Salzgitter A.G.


Since the year end, we have successfully secured two of our largest ever
orders totalling circa £2 million, which represents 1500 tonnes for a
ten-storey office block in Times Square, London and 1700 tonnes for 'Avant
Seine', a prestigious office building project in Paris.


Marbank Construction

Marbank, the Group's 'design & build' contractor has sustained losses in the
current year. The Board has over a period of time reached the decision that
Marbank's activities are not core to the overall strategy of the Group and is
seeking to dispose of this subsidiary.


Management and Staff

Due to ill health, Richard Hill, Group Chief Executive resigned from the Board
in April 2001. Since that time, Geoff Adams, one of our non-executive
directors who joined the Group in November 2000 has played a more executive
role in the strategic planning of the Group.


Following my retirement at this year's Annual General Meeting on 20 December
2001, Geoff Adams will assume the role of Executive Chairman.


Mike Newton, Managing Director of the Group's principal trading subsidiary
will assume the role of Managing Director of Wescol Group plc with effect from
the AGM. Gordon Mandell, Company Secretary retired on 12th November and Harry
Cone has taken up this role. Mr Cone has considerable experience as a Company
Secretary more latterly with Northern Engineering Industries plc and Rolls
Royce Industrial Power Group.


I join with my fellow Directors in placing on record our thanks and
appreciation to the staff for their considerable contribution and loyalty in
this current environment


Prospects

Despite these results, the current underlying improvements made during the
year, coupled with the strong order book, place the Group in a satisfactory
position from which further progress should be made.



Peter Price

19 November 2001


                                     -5-


CONSOLIDATED PROFIT AND LOSS ACCOUNT

Year ended 31 July 2001

                           Note   Before
                                exceptional  Exceptional   2001
                                  items        Items       Total      2000
                                 £'000         £'000       £'000      £'000

Group turnover: continuing      71,488         -           71,488    83,478
operations

Cost of sales                   (64,533)       (210)       (64,743)  (79,248)

Gross profit                    6,955          (210)       6,745     4,230

                                
Distribution costs              (669)          -           (669)     (730)

Administrative expenses         (9,956)        (1,057)     (11,013)  (10,422)

                                (10,625)       (1,057)     (11,682)  (11,152)

Operating loss -                (3,670)        (1,267)     (4,937)   (6,922)
continuing operations

Net interest payable            (912)          -           (912)     (588)

Loss on ordinary                (4,582)        (1,267)     (5,849)   (7,510)
activities before taxation                       

Tax on loss on ordinary     1   (150)          -           (150)     1,583
activities

Loss on ordinary                (4,732)        (1,267)     (5,999)   (5,927)
activities after taxation

Minority interests                                          116       (25)

                                                          
Loss for the financial                                     (5,883)   (5,952)
year

Dividends                                                   -         -
                                                           
Retained loss for the year                                 (5,883)   (5,952)

Loss per share              2

Basic and diluted                                          (10.6p)   (10.7p)

Dividends per share                                        -         -




                                     -6-

SUMMARISED CONSOLIDATED BALANCE SHEET

as at 31 July 2001
                                                       2001           2000
                                                      £'000          £'000
Fixed assets

Intangible assets                                      -             34

Tangible assets                                       13,236         15,389


                                                      13,236         15,423


Current assets

Stocks                                                244            244

Debtors                                               25,715         26,728

Cash at bank and in hand                              2,514          404


                                                      28,473         27,376


Creditors: amounts falling due within one year

Debt                                                 (11,514)       (8,271)

Trade creditors                                      (19,439)       (18,001)

Other creditors                                      (4,804)        (3,200)

                                                     (35,757)       (29,472)

Net current liabilities                              (7,284)        (2,096)

Total assets less current liabilities                5,952          13,327

Creditors: amounts falling due after more than       (328)          (1,681)
one year

Provisions for liabilities and charges               (28)           (28)


                                                     5,596          11,618

Capital and reserves                                 5,534          11,416

Minority interests - equity                          62             202


Total                                                5,596          11,618




                                     -7-


SUMMARISED CONSOLIDATED CASH FLOW STATEMENT

Year ended 31 July 2001
                                                 2001              2000
                                                £'000             £'000

Net cash inflow/(outflow) from operating         353              (3,610)
activities

Returns on investment and servicing of finance   (936)            (588)

Taxation                                         233              (299)

Capital expenditure and financial investment     1,195            (1,513)

Equity dividends paid                              -              (668)

Financing                                        (1,690)          (1,116)

Decrease in cash                                 (845)            (7,794)




Reconciliation of operating loss to net cash inflow/(outflow) from operating
activities
                                                 2001            2000
                                                £'000           £'000

Operating loss                                  (4,937)         (6,922)

Amortisation and impairment                     34              2

Depreciation                                    1,327           1,249

Currency translation gain                       1               41

Loss/(profit) on sale of tangible fixed assets  257             (9)

Decrease/(increase) in debtors                  630             (2,365)

Increase in creditors                           3,041           4,394

Net cash inflow/(outflow) from operating        353             (3,610)
activities




Analysis of net debt
                                          Inception of finance leases
                                          and hire purchase contracts
                       31 July                                         31 July
                         2000     Cash                                   2001
                                  flow
                        £'000    £'000              £'000               £'000

Cash at bank and in
hand                   404      2,110                -                 2,514

Bank overdraft         (6,509)  (2,955)              -                 (9,464)

Net cash               (6,105)  (845)                -                 (6,950)

Loan notes             (644)    644                  -                  -

Bank loans             (1,875)  290                  -                 (1,585)

Finance leases and
hire purchase          (924)    756                 (625)              (793)
contracts

Borrowings             (3,443)  1,690               (625)              (2,378)

Net debt               (9,548)  845                 (625)              (9,328)




                                     -8-


NOTES TO THE PRELIMINARY STATEMENT

31 July 2001


1.     TAX ON LOSS ON ORDINARY ACTIVITIES

                                         2001                2000
                                        £'000               £'000
United Kingdom Corporation Tax

Current tax on income for the year      -                   804

Adjustment in respect of prior years    (150)               57
                                       
Current taxation                        (150)               861

Deferred taxation                       -                   722

                                        (150)               1,583



The Group has tax losses carried forward of some £9 million (2000 : £5 million).


2.      LOSS PER ORDINARY SHARE


             The basic loss per share is calculated on the loss after taxation
        and minority interests of £5,883,000 (2000: £5,952,000 loss), divided
        by 55.5 million ordinary shares (2000: 55.5 million ordinary shares),
        being the weighted average number of shares in issue during the year.


             Diluted earnings per share are calculated after allowing for the
        dilutive effect of conversion into ordinary shares of the weighted
        average number of share options outstanding during the year. In the
        years to 31 July 2001 and 2000, the options are not dilutive.


        3.     PRELIMINARY STATEMENT


             This preliminary statement, which has been agreed with the
        auditors, was approved by the Board on 19 November 2001. It is not the
        company's statutory accounts. The statutory accounts for the year
        ended 31 July 2000 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 2001 have not yet been
        approved, audited or filed.


        4.     The Report and Accounts will be posted to shareholders on
        Monday, 26 November 2001. Further copies on request from the Company's
        Registered Office: Westercroft Lane, Northowram, Halifax, HX3 7TY.


              

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