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Company spotlight: Heywood Williams

FINANCE

A SUM of £20 million from the sale of the materials firm's plastic system division is healthy for Heywood Williams.

The business only turned over £65.9 million last year, when operating losses totalled £4 million, but the deal includes £3 million cash.

Minus expenses, that leaves £1.6 million and more than a million of that will go into the firm's pension fund, which has an £11 million deficit.

Heywood Williams agreed in 2003 to pump £1.65 million a year for 10 years into the pension to rectify the deficit so the extra cash will at least accelerate that process.

Getting rid of the plastics business to window fabricator and installer Latium also enables Heywood Williams to dispose of the irksome liabilities for faulty chemicals that were supplied to the firm in the mid-1990s.

Those liabilities total £17 million and would have otherwise bled the group's profits for a decade.

That leaves the company with little in the pot for expansion but chief executive Robert Barr is aiming for mostly organic growth in the USA and at Heywood Williams' other operations in the UK, Ireland, the Baltic and Denmark.

The firm would like some small bolt-on acquisitions but is plotting a steadier course for shareholders than has been the case in recent years.

The board is confident that it will meet analysts' expectations of pre-tax profits of between £6 million and £7 million on turnover of at least £250 million.

The recent share price rise has removed some value but the stock is still rated a 'hold'.