MTG Metnor Grp.

 

TIDMMTG 
 
RNS Number : 2791M 
Metnor Group PLC 
27 January 2009 
 

Metnor Group plc 
("Metnor" or "the Group") 
 
 
Trading Update 
 
 
Metnor, the North East based property and construction services company, 
provides the following trading update in advance of the announcement of its 
results for the year ended 31 December 2008, to be released in early April 2009. 
 
 
Since announcing our Interim Results on 15 September 2008, there has been a 
continued and accelerating deterioration in the UK economy which is impacting on 
all companies in the sectors in which we operate. 
 
 
The shortage of credit in the banking sector means that potential customers have 
been unable to fund property purchases. As a result our development arm has been 
unable to complete the disposal of two sites, which had been expected to occur 
towards the end of 2008. We have already entered into a long term lease with a 
tenant to occupy one of these sites, and will hold this as an investment 
property, but we will be unable to book any profit in 2008. 
 
 
With regard to our other properties, we have made good progress towards 
obtaining planning consents and have specifically received consent for a 382 bed 
student scheme in Newcastle. Additionally we have submitted for planning 
consideration a further student scheme and a care home scheme. This will however 
be the extent of our investment during 2009 and we are not intending to commit 
further funds to developing the remainder of our sites until the market 
improves. 
 
 
Elsewhere in the Group our mechanical and electrical contracting business 
has suffered from a downturn of work, particularly in the North East. Margins 
also came under pressure during 2008 and accordingly the division has not 
performed to the levels anticipated. 
 
 
Finally, the dramatic decreases in interest rates by the Bank of England since 
the Interim Results announcement have had an adverse effect on swap arrangements 
entered into by the Group. Under IFRS reporting the full future impact of the 
interest rate movements must be reflected in the 2008 income statement 
and whilst this does not impact on our underlying trading position, this will 
result in a one-off charge of GBP600,000, some GBP300,000 higher than previously 
anticipated. 
 
On the positive side, both our construction and pressure testing businesses have 
continued to perform well, but their strong performance has been insufficient to 
offset the underperformance elsewhere in the Group. Accordingly we anticipate 
that our profit before tax for the year ended 31 December 2008 will be below 
market expectations, but will not be less than GBP2 million. 
 
 
We have reacted to the difficult conditions by removing considerable costs from 
the business but the full impact of these cost saving measures will not be felt 
until the second half of 2009. We will continue to monitor workload levels and 
review our cost base accordingly. 
 
 
The outlook for 2009 remains challenging and we do not anticipate profits 
returning to previous levels until the economy and banking system recovers and 
customers have the confidence to make capital expenditure decisions with 
certainty. 
 
 
We are fortunate in that we are not highly geared (as at 31 December 2008 the 
Group's net debt was GBP13.3m) and as we do not operate solely in the property 
market this should enable us to weather any further deterioration in the economy 
as 2009 progresses. 
 
 
For enquiries please contact: 
 
 
Metnor Group plc    0191 2684000 
Stephen Rankin - Chief Executive 
Keith Atkinson - Finance Director 
 
 
Teathers (Nominated Advisor)    020 7426 9000 
Gareth Price 
Simon Brown 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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