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Annual Report
> Chief Executive's Review > Group Statement
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In 2005, the AMC Group’s businesses have faced a range of market conditions, and have responded vigorously
to the opportunities and challenges that have arisen. These efforts have resulted in a strong performance
in each of the Group’s three Divisions.
The operating profit in the Trading and Merchanting Division was significantly up on last year, with each business in this Division achieving a satisfactory result. In 2004, the Canadian steel service centres in the Distribution and Processing Division reported exceptional profits, due in particular to surging steel prices, a product of industrial expansion in China. In 2005, steel prices fell sharply, although they remained well above the levels of a few years ago. Although volumes were broadly maintained, margins suffered. In these circumstances, profits in the steel service centres, and in the Division overall, were inevitably lower, but, with profit growth in its UK companies, the Distribution and Processing result was once again high by historical standards. The Manufacturing Division’s operating profit was significantly higher this year, supported in particular by advances in its Canadian and Thai businesses. Strong operating results were augmented by the profits on property sales, to give a pre-tax profit for the year of £31.6 million. The Group’s high profit, combined with a reduction in working capital in the year, gave rise to an operating cash inflow of £36 million. This inflow, plus the receipts from the property sales, more than covered payments for capital expenditure, interest, tax and dividends, so that net debt reduced by £19 million to £7 million. Against year end shareholders’ equity of £112 million, gearing remains moderate. The financial statements for 2005 reflect the full implementation of FRS17, Retirement benefits. The impact on the profit and loss account has been modest, and is shown in note 2. Defined benefit pension assets and liabilities are reported on the face of the balance sheet. There is an overall surplus, while the individual deficits are not considered to be of a size which would cause a significant funding burden to the Group. The overall result achieved in 2005 further strengthens AMC’s financial position and I should like to record my gratitude to all the Group’s staff for this achievement. The performances of individual businesses are detailed in the following eight pages of this report. V H Sher |
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+ Group Statement
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