Metnor profits down but future ‘positive’

Apr 25 2008 by Peter McCusker, The Journal

PROFITS have plunged at North East property and engineering company Metnor, partly as a result of a loss- making mobile phone venture.

The Newcastle group may have seen pre-tax profits for the year to December 31 drop to £3.1m from £5.4m a year earlier, but chief executive Stephen Rankin is bullish about the year ahead.

He said: “The business is underpinned by the quality and resilience of its core contracting and construction business”. The Killingworth-based company has managed to keep bringing in work despite the widespread property slump and turnover was flat at £84m compared to £86.6m in 2006. Mr Rankin said: “2007 has undoubtedly been a difficult year for the group. The property division performed badly, masking the effects of a strong profit stream from our contracting and construction businesses.”

The company lost £581,000 when it sold its Pandon Bank student accommodation project. Metnor blamed delays in engineering works at the Newcastle city centre site close to the East Coast Main Line and the Central Motorway, together with the withdrawal of the intended operator.

The company may not have completed any property developments last year but says it is now focused on care homes and student accommodation. It has begun work on a 120-bed care home development in Chelmsford, Essex. In September Metnor recorded a £10m climb in half-year sales, and unveiled plans to double the size of its construction arm by 2009. It said that sales for the six months to June 30 had risen by more than a third to £38.3m. Pre-tax profit in the period rose to £1m from £700,000 last time while the company now has £3m cash in the bank.

It also said that it expects growth to continue, with the construction division alone expected to contribute £60m to group revenues in two years’ time.

And managers said that the group’s overall prospects look very positive, with the property development arm having a five-year, £150m pipeline of projects lined up.

And on October 31 last year Metnor closed its mobile phone network subsidiary Metnor Infrastructure Services meaning a one-off loss of £493,000. Mr Rankin said: “Unfortunately, as expenditure on the mobile phone networks in the UK has dwindled, it has proved increasingly difficult to generate the volumes of work from the mobile network operators to cover costs.”

The company’s share price has fallen from a high of 364p in late 2006 to currently stand at 145p, but the chief executive and a group of other main shareholders, including his brothers and their wives, are looking to increase their stake. Early next month at an extraordinary general meeting the group – which comprises Stephen Rankin, his wife Kim, John Rankin, 49, and wife Hazel and Allan Rankin, 47, and wife Claire – will seek permission to increase its shareholding. As the group own over 30% of the shares they are asking shareholders to allow them to buy more without having to make a formal bid for the company.