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ALU Alumasc Group Plc

172.50
-1.50 (-0.86%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Alumasc Group Plc LSE:ALU London Ordinary Share GB0000280353 ORD 12.5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -1.50 -0.86% 172.50 170.00 175.00 174.00 172.50 174.00 18,644 09:00:05
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Construction Machinery & Eq 89.57M 6.6M 0.1844 9.35 61.77M

Alumasc Group PLC Half-year Report (5139V)

31/01/2017 7:00am

UK Regulatory


Alumasc (LSE:ALU)
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TIDMALU

RNS Number : 5139V

Alumasc Group PLC

31 January 2017

 
 IMMEDIATE RELEASE    31 January 2017 
 

THE ALUMASC GROUP PLC - INTERIM RESULTS ANNOUNCEMENT

Alumasc (ALU.L), the premium building products, systems and solutions group, announces interim results for the six months ended 31 December 2016.

 
Half year financial highlights 
Half year to 31 December           2016  2015  % change 
---------------------------------  ----  ----  -------- 
 
Revenue (GBPm)                     50.7  43.5    +17% 
 
Underlying profit before tax 
 (GBPm)*                            4.1   4.0    +2% 
 
Underlying earnings per share 
 (pence)*                           9.1   8.9    +2% 
 
Profit before tax (GBPm)            3.6   3.4       +6% 
 
Basic earnings per share (pence)    8.2   7.6       +8% 
 
Dividends per share (pence)        2.85  2.70     +5.6% 
 
Net cash at 31 December (GBPm)      5.2   0.5 
---------------------------------  ----  ----  -------- 
 

(*) Underlying profits and earnings per share are stated prior to the deduction of brand amortisation charges of GBP0.1 million (2015/16: GBP0.1 million), IAS 19 pension costs of GBP0.4 million (2015/16: GBP0.7 million) and, in 2015/16, profit from discontinued operations of GBP0.2 million.

Key points

   --      Alumasc's strategy is delivering continued outperformance of the UK construction market. 
   --      The group's fifth consecutive first half year of earnings growth. 
   --      Strong revenue growth reflects progress in all operating segments. 

-- Lower group margins reflect increased imported materials costs and continued investment to support growth.

   --      Benefits of pricing actions and operational gearing will see margins stronger in H2. 

-- Solar Shading & Screening achieved 46% revenue growth to GBP11.1m with operating profit up 37% to GBP0.6m after GBP0.7m additional annualised investment in people. Levolux is experiencing strong demand in North America and will benefit from completed contracts in H2.

-- Roofing & Walling revenue rose 13% to GBP20.9m. Roofing traded at record levels with margins reflecting increased imported materials costs which will be partially recovered in H2. Facades benefited from insulation refurbishment activity in Scotland. Growth in new build was not enough to offset falls in funded refurbishment activity in England and Wales. Divisional operating profit was down 8% to GBP1.6m. Selling price increases are expected to improve divisional margins in H2.

-- Water Management revenue was up 6% to GBP14.9m, driven principally by Gatic exports and sales of drainage systems under the Alumasc Water Management Solutions brand. Increases in imported materials and steel costs reduced margins in H1, with operating profit down 15% to GBP1.6m, although strong order books and selling price increases will benefit H2.

-- Housebuilding & Ancillary Products increased revenue by 8% to GBP4.4m and operating profit by 22% to GBP0.7m, reflecting a positive performance from Timloc's enlarged product range, including "Above the Roofline", and management actions to improve operating margins. Timloc's new purpose-built factory at Goole is on schedule for completion in the Autumn.

Paul Hooper, Chief Executive, commented:

"Group order books currently stand at GBP27.6 million, close to record levels. The majority of this relates to Levolux and to construction projects that are for the most part due to complete prior to the financial year end, which we expect will benefit profit and margin recognition in the second half year. Elsewhere we expect the group's positive trading momentum to continue in the remainder of the financial year. Therefore, the Board's expectations for full year performance remain unchanged.

Notwithstanding the ongoing economic uncertainties arising from the UK's intended exit from the European Union and the current weakness in Sterling, latest industry forecasts continue to anticipate modest growth in the UK construction market over the next few years. All of Alumasc's chosen specialist markets continue to benefit from one or more of the long term strategic growth drivers of energy management, water management, bespoke solutions and ease of construction. This, when combined with an encouraging pipeline of enquiries and quotations including for large international projects at Levolux and Gatic in particular, gives the board confidence that Alumasc should continue to make good progress beyond the current financial year."

Enquiries:

 
 The Alumasc Group plc                01536 383844 
 Paul Hooper (Chief Executive) 
  Andrew Magson (Finance Director) 
 
 Glenmill Partners Limited            07771 758517 
 

Simon Bloomfield

REVIEW OF INTERIM RESULTS

Performance Overview

Alumasc is pleased to announce the fifth consecutive first half year of earnings growth:

-- Group revenues advanced by 17% to GBP50.7 million (2015/16: GBP43.5 million), with all operating segments continuing to grow strongly;

-- Sales to domestic markets grew by 9% to GBP43.2 million. This compares with UK construction market growth of around 1% in the period, providing further evidence of the higher than industry average growth rates generated by Alumasc's specialist systems and solutions, with over two thirds of the group's business now focused on managing the scarce resources of water and energy in the built environment;

-- Export sales almost doubled to GBP7.5 million, led by continued penetration of the North American market for bespoke architectural, shading and screening solutions by Levolux; and increased sales of specialist access covers and civil drainage systems by Gatic in a number of countries;

-- Group operating margins reduced from 9.5% to 8.2%, mainly reflecting the increased cost of imported materials following the depreciation of Sterling over the last six months. In light of the investment already made by the group in resource and capability to support the continued expansion of the business, margins are expected to be higher in the second half year as the benefit of selling price increases and operational gearing, driven by the strong growth in revenues, is realised;

-- Underlying profit before tax (stated prior to IAS 19 pension charges, amortisation of acquired brands and discontinued operations in 2015/16) increased to GBP4.1 million from GBP4.0 million in the first half of last year, and underlying earnings per share increased to 9.1 pence (2015/16: 8.9 pence). A full reconciliation of underlying to statutory profit before tax is shown in note 4; and

-- Statutory profit before tax and basic earnings per share improved to GBP3.6 million from GBP3.4 million and to 8.2 pence from 7.6 pence, respectively, reflecting the better underlying results and lower IAS 19 pension charges.

Cash generation in Alumasc remains strong, underpinned by EBITDA of GBP4.8 million in the period. However, there was a net cash outflow in the first six months of the financial year of GBP3.4 million reflecting working capital absorption to support the significant growth in revenues and the expected un-wind of cash received last year in advance of profit recognition on construction contracts.

At 31 December 2016 Alumasc had net cash resources on its balance sheet of GBP5.2 million (31 December 2015: GBP0.5 million). The group intends to use these funds in the planned re-location and expansion of Timloc, the group's house building products business, in Autumn 2017, and of Alumasc Water Management Solutions, expected in 2019.

Strategic development

Encouraged by the group's first half performance both in the UK and internationally, the Board is working with divisional management teams to identify further initiatives to accelerate the profitable growth of the business by continuing to increase revenues faster than UK construction market growth and focus on margin improvement.

The Board believes Alumasc has significant UK growth potential in all its divisions, with further opportunities to expand internationally through Levolux and Alumasc's Water Management business in particular.

In addition, operating and EBITDA margin improvement will be driven through a combination of:

   --      continued product, system and service innovation; 

-- a more focused programme of capital investment including the modernisation and upgrade of plant, equipment and tooling;

-- efficiencies derived from the planned relocation and expansion of the Timloc and Alumasc Water Management Solutions businesses in the next 2-3 years, which will benefit once higher initial property costs have been absorbed;

-- using the group's cash resources to flex working capital ratios where needed to take advantage of procurement opportunities; and

-- the benefits of operational gearing, particularly at Levolux, which is beginning to generate double digit operating margins on a run rate basis.

Should the right opportunities arise at the right price, Alumasc intends to supplement this organic growth potential through selective complementary acquisitions and, following the divestment of non-core businesses in recent years, more senior management time is now being devoted to this area.

Operational review

(a) Solar Shading and Screening

Revenue GBP11.1 million (2015/16: GBP7.6 million)

Underlying operating profit GBP0.6 million (2015/16: GBP0.5 million)

Underlying operating margin 5.7% (2015/16: 6.1%)

The enlarged Levolux business, which now encompasses an established North American presence and a UK Balconies and Balustrading business in addition to the original UK Solar Shading operation, increased revenues by 46% in the period, benefiting as expected from the high order book at the beginning of the period. Whilst this led to an increase in underlying operating profit of 37% in the first half, the full benefit of this growth will not be realised until the second half of the current financial year when a number of construction contracts that were in their relatively early stages at 31 December 2016 are due to complete. As a result, we expect both profits and margins to be weighted towards the second half.

Approximately GBP0.7 million of annualised people cost, including international sales managers, designers, project managers and operational resources, have been added to support growth. We have doubled our own directly employed sales resources focused on the North American market from two to four over the last twelve months.

Order intake, enquiry and tender levels remain strong for both domestic and export markets.

(b) Roofing & Walling

Revenue GBP20.9 million (2015/16: GBP18.4 million)

Underlying operating profit GBP1.6 million (2015/16: GBP1.7 million)

Underlying operating margin 7.8% (2015/16: 9.5%)

Alumasc Roofing traded at new record levels of revenue and profit during the period and momentum going into the second half year is strong. Our strategy for growth, through enhancements made to our range of flat roofing solutions and extending our UK geographical presence by continuing to attract high quality technical sales resources, continues to bear fruit. Operating margins were impacted by a rise on the cost of imported materials and sales mix in the period.

Alumasc Facades continued to perform well in its exterior wall insulation refurbishment business in Scotland, underpinned by ongoing funding support from the Scottish government's HEEPS scheme. Refurbishment activity in England and Wales was lower than a year ago due to funding cuts to the ECO and Green Deal schemes which took place in November 2015. The business continues to invest in growing its new build presence, including through innovative solutions such as the Alumasc Base Coat and the Alumasc Ventilated System. However, initial successes in these areas were not sufficient to offset the fall in refurbishment activity.

Selling price increases already in place are expected to improve divisional margins in the second half year.

(c) Water Management

Revenue GBP14.9 million (2015/16: GBP14.0 million)

Operating profit GBP1.6 million (2015/16: GBP1.9 million)

Operating margin 10.9% (2015/16: 13.6%)

Divisional revenue growth of 6% was driven principally by increased export sales of Gatic systems and higher sales of building drainage systems including new products introduced under the Alumasc Water Management Solutions brand over the last year. Profitability was impacted by a combination of cost inflation from imported materials, significant increases in steel costs due to the global increase in steel prices following removal of surplus industry capacity last year and sales mix in the first half year. Again, selling price increases already implemented should mitigate some of this margin pressure in the second half of the year.

Order books across the division remain strong and Gatic's order books are at record levels, including a number of large international projects which are expected to benefit the second half year.

(d) Housebuilding & Ancillary Products

Revenue GBP4.4 million (2015/16: GBP4.1 million)

Operating profit GBP0.7 million (2015/16: GBP0.6 million)

Operating margin 15.8% (2015/16: 14.0%)

Timloc continues to make good progress. The sales team has been strengthened, the "Above the Roofline" product range launched last year is performing well and cost inflationary pressures have been mitigated through a combination of management actions including purchasing and supply chain initiatives and operational efficiencies. Revenue growth of 8% also enabled the business to better leverage fixed costs, improving operating margins.

Timloc's new purpose built leasehold manufacturing and warehousing facility is now under construction and scheduled to be operational in the Autumn. This will allow the business to further expand and provide additional manufacturing flexibility.

Balance sheet and pensions

Shareholders' funds of GBP16.6 million were a little higher at 31 December 2016 than they were at 30 June 2016 with retained profit over the last six months more than offsetting an increase in net of tax pension obligations calculated under IAS 19. Post tax return on investment remains strong at 23.0% (2015/16: 22.3%) and well above the group's weighted average cost of capital.

The group has now concluded the formal triennial valuation as at 31 March 2016 of its legacy defined benefit pension obligations on a technical provisions basis, a more prudent valuation methodology than that used for accounting purposes. On this basis of valuation, the pension deficit was calculated to be GBP33.0 million and is to be recovered over a period of ten years, with Alumasc making annual cash contributions of GBP3.2 million (previously GBP3.0 million), to include scheme running costs. This outcome is in line with the expectations set out in our 2016 Annual Report.

Outlook

Group order books currently stand at GBP27.6 million, close to record levels. The majority of this relates to Levolux and to construction projects that are for the most part due to complete prior to the financial year end, which we expect will benefit profit and margin recognition in the second half year. Elsewhere we expect the group's positive trading momentum to continue in the remainder of the financial year. Therefore, the Board's expectations for full year performance remain unchanged.

Notwithstanding the ongoing economic uncertainties arising from the UK's intended exit from the European Union and the current weakness in Sterling, latest industry forecasts continue to anticipate modest growth in the UK construction market over the next few years. All of Alumasc's chosen specialist markets continue to benefit from one or more of the long term strategic growth drivers of energy management, water management, bespoke solutions and ease of construction. This, when combined with an encouraging pipeline of enquiries and quotations including for large international projects at Levolux and Gatic in particular, gives the board confidence that Alumasc should continue to make good progress beyond the current financial year.

Dividend

In view of all the above the Board has decided to increase the interim dividend by 5.6% to 2.85 pence per share (2015/16: 2.7 pence) to be paid on 7 April 2017 to shareholders on the register at 24 February 2017.

Paul Hooper, Chief Executive

31 January 2017

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

for the half year to 31 December 2016

 
                                                    Half year         Half year       Year 
                                                        to 31    to 31 December      to 30 
                                                     December              2015       June 
                                                         2016                         2016 
                                                  (Unaudited)       (Unaudited)  (Audited) 
Continuing operations:                    Notes       GBP'000           GBP'000    GBP'000 
 
    Revenue                                 5          50,743            43,468     92,233 
    Cost of sales                                    (34,898)          (28,904)   (61,434) 
                                                  -----------   ---------------  --------- 
    Gross profit                                       15,845            14,564     30,799 
 
    Net operating expenses                           (11,837)          (10,849)   (23,101) 
 
    Operating profit                        5           4,008             3,715      7,698 
 
    Finance expenses                        7           (403)             (473)      (939) 
                                                  -----------   ---------------  --------- 
    Profit before taxation                              3,605             3,242      6,759 
 
    Tax expense                             8           (704)             (663)    (1,581) 
                                                  -----------   ---------------  --------- 
    Profit for the period                               2,901             2,579      5,178 
 
Discontinued operations: 
Profit after taxation for 
 the period from discontinued 
 operations                                 6               -               132      1,306 
 
Profit for the period                                   2,901             2,711      6,484 
                                                  ===========   ===============  ========= 
 Other comprehensive income 
 
Items that will not be recycled 
 to profit or loss: 
  Actuarial (loss)/gain on defined 
   benefit pensions                         2         (1,663)               542    (3,412) 
  Tax on actuarial loss/(gain) 
   on defined benefit pensions              8              50             (517)        240 
                                                      (1,613)                25   (3,172) 
                                                  -----------   ---------------  --------- 
Items that are or may be recycled 
 subsequently to profit or 
 loss: 
  Effective portion of changes 
   in fair value of cash flow 
   hedges                                                (20)               170       (22) 
  Exchange differences on retranslation 
   of foreign operations                                   41               (4)          1 
  Tax on cash flow hedge                    8               4              (35)        (1) 
                                                           25               131    (22) 
                                                  -----------   ---------------  --------- 
 
Other comprehensive (loss)/profit 
 for the period, net of tax                           (1,588)               156   (3,194) 
                                                  -----------   ---------------  --------- 
Total comprehensive profit 
 for the period, net of tax                             1,313             2,867      3,290 
                                                  ===========   ===============  ========= 
 
Earnings per share                                      Pence             Pence      Pence 
 
Basic earnings per share 
- Continuing operations                                   8.2               7.2       14.5 
- Discontinued operations                                   -               0.4        3.7 
                                           11             8.2               7.6       18.2 
                                                  ===========   ===============  ========= 
Diluted earnings per share 
- Continuing operations                                   8.0               7.0       14.3 
- Discontinued operations                                   -               0.4        3.6 
                                           11             8.0               7.4       17.9 
                                                  ===========   ===============  ========= 
 
 

Reconciliations of underlying to statutory profits and earnings per share are provided in notes 4 and 11 respectively.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

at 31 December 2016

 
                                                            31 December    31 December      30 June 
                                                                   2016           2015         2016 
                                                            (Unaudited)    (Unaudited)    (Audited) 
                                                                GBP'000        GBP'000      GBP'000 
 Assets 
 Non-current assets 
 Property, plant and 
  equipment                                                       5,202          5,310        5,250 
 Goodwill                                                        16,488         16,488       16,488 
 Other intangible assets                                          2,459          2,802        2,642 
 Financial asset investments                                         17             17           17 
 Deferred tax assets                                              3,915          3,509        4,080 
                                                      -----------------  -------------  ----------- 
                                                                 28,081         28,126       28,477 
 Current assets 
 Inventories                                                     10,613          9,686       10,238 
 Trade and other receivables                                     20,803         14,915       19,759 
 Cash and cash equivalents                                        6,109          5,404       10,540 
 Assets classified as 
  held for sale                                                       -          3,978            - 
                                                      -----------------  -------------  ----------- 
                                                                 37,525         33,983       40,537 
 
 Total assets                                                    65,606         62,109       69,014 
                                                      -----------------  -------------  ----------- 
 
 Liabilities 
 Non-current liabilities 
 Interest bearing loans 
  and borrowings                                                  (923)        (4,893)      (1,908) 
 Employee benefits payable                                     (23,031)       (19,492)     (22,668) 
 Provisions                                                       (898)        (1,129)      (1,064) 
 Deferred tax liabilities                                         (446)          (415)        (508) 
                                                      -----------------  -------------  ----------- 
                                                               (25,298)       (25,929)     (26,148) 
 Current liabilities 
 Trade and other payables                                      (22,326)       (16,832)     (25,351) 
 Provisions                                                       (514)          (396)        (478) 
 Corporation tax payable                                          (534)          (574)        (188) 
 Derivative financial 
  liabilities                                                     (289)           (77)        (269) 
 Liabilities classified 
  as held for sale                                                    -        (1,018)            - 
                                                      -----------------  -------------  ----------- 
                                                               (23,663)       (18,897)     (26,286) 
 
 Total liabilities                                             (48,961)       (44,826)     (52,434) 
                                                      -----------------  -------------  ----------- 
 
 Net assets                                                      16,645         17,283       16,580 
                                                      =================  =============  =========== 
 
 Equity 
 Called up share capital                                          4,517          4,517        4,517 
 Share premium                                                      445            445          445 
 Capital reserve - own 
  shares                                                          (640)          (968)        (931) 
 Hedging reserve                                                  (237)           (63)        (221) 
 Foreign currency reserve                                            91             45           50 
 Profit and loss account 
  reserve                                                        12,469         13,307       12,720 
 Total equity                                                    16,645         17,283       16,580 
                                                      =================  =============  =========== 
 
 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

for the half year to 31 December 2016

 
                                                           Half year      Half year         Year 
                                                                  to             to           to 
                                                         31 December    31 December      30 June 
                                                                2016           2015         2016 
                                                         (Unaudited)    (Unaudited)    (Audited) 
                                                Notes        GBP'000        GBP'000      GBP'000 
 Operating activities 
 Operating profit                                              4,008          3,715        7,698 
 Adjustments for: 
 Depreciation                                                    474            431          931 
 Amortisation                                                    206            194          364 
 Gain on disposal of property, 
  plant and equipment                                              -            (3)         (11) 
 (Increase)/decrease in inventories                            (375)            157        (400) 
 (Increase)/decrease in receivables                          (1,044)          3,936        (804) 
 (Decrease)/increase in trade 
  and other payables                                         (3,098)        (4,944)        2,958 
 Movement in provisions                                        (130)          (101)         (84) 
 Cash contributions to retirement 
  benefit schemes                                            (1,542)        (1,250)      (2,500) 
 Share based payments                                             50            123          181 
                                                       -------------  -------------  ----------- 
 Cash (absorbed)/generated 
  by operating activities 
  of continuing operations                                   (1,451)          2,258        8,333 
 
 Operating profit from discontinued 
  operations                                                       -            167           27 
 Depreciation and amortisation                                     -             70          141 
 Movement in working capital 
  from discontinued operations                                     -             26           15 
                                                       -------------  -------------  ----------- 
 Cash generated by operating 
  activities of discontinued 
  operations                                                       -            263          183 
 
 Tax paid                                                      (201)          (401)        (980) 
 Net cash (outflow)/inflow 
  from operating activities                                  (1,652)          2,120        7,536 
                                                       -------------  -------------  ----------- 
 
 Investing activities 
 Purchase of property, plant 
  and equipment - continuing 
  operations                                                   (476)          (520)        (869) 
 Purchase of property, plant 
  and equipment - discontinued 
  operations                                                       -           (97)        (148) 
 Payments to acquire intangible 
  fixed assets                                                  (11)          (160)        (255) 
 Proceeds from sales of property, 
  plant and equipment                                              -             18           21 
 Proceeds from sale of business 
  activity                                                         -              -        4,474 
 Net cash (outflow)/ inflow 
  from investing activities                                    (487)          (759)        3,223 
                                                       -------------  -------------  ----------- 
 
 Financing activities 
 Interest paid                                                  (35)          (112)        (221) 
 Equity dividends paid                                       (1,349)        (1,248)      (2,208) 
 Draw down of amounts borrowed                                     -          5,000            - 
 Repayment of amounts borrowed                               (1,000)        (5,000)      (3,000) 
 Refinancing costs                                                 -          (119)        (119) 
 Acquisition of own shares                                         -          (452)        (759) 
 Proceeds on exercise of 
  share based incentives                                          51             64          147 
 Net cash outflow from financing 
  activities                                                 (2,333)        (1,867)      (6,160) 
                                                       -------------  -------------  ----------- 
 
 Net (decrease)/increase 
  in cash and cash equivalents                               (4,472)          (506)        4,599 
 
 Net cash and cash equivalents 
  brought forward                                             10,540          5,914        5,914 
 Effect of foreign exchange 
  rate changes                                                    41            (4)           27 
 Net cash and cash equivalents 
  carried forward                                  12          6,109          5,404       10,540 
                                                       =============  =============  =========== 
 
 
 
                             CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
                                 for the half year to 31 December 2016 
                                                             Capital   Hedging     Foreign      Profit 
                                                             reserve              currency    and loss 
                                          Share    Share           -                           account 
                                        capital  premium  own shares   reserve     reserve     reserve    Total 
                                        GBP'000  GBP'000     GBP'000   GBP'000     GBP'000     GBP'000  GBP'000 
 
At 1 July 2016                            4,517      445       (931)     (221)          50      12,720   16,580 
Profit for the period                         -        -           -         -           -       2,901    2,901 
Exchange differences on retranslation 
 of foreign operations                        -        -           -         -          41           -       41 
Net loss on cash flow hedges                  -        -           -      (20)           -           -     (20) 
Tax on derivative financial 
 liability                                    -        -           -         4           -           -        4 
Actuarial loss on defined 
 benefit pension schemes, 
 net of tax                                   -        -           -         -           -     (1,613)  (1,613) 
Dividends                                     -        -           -         -           -     (1,349)  (1,349) 
Share based payments                          -        -           -         -           -          50       50 
Exercise of share based incentives            -        -         291         -      -            (240)       51 
At 31 December 2016                       4,517      445       (640)     (237)      91          12,469   16,645 
                                        =======  =======  ==========  ========  ==========  ==========  ======= 
 
                                                             Capital   Hedging     Foreign      Profit 
                                                             reserve              currency    and loss 
                                          Share    Share           -                           account 
                                        capital  premium  own shares   reserve     reserve     reserve    Total 
                                        GBP'000  GBP'000     GBP'000   GBP'000     GBP'000     GBP'000  GBP'000 
 
At 1 July 2015                            4,517      445       (618)     (198)          49      11,734   15,929 
Profit for the period                         -        -           -         -           -       2,711    2,711 
Exchange differences on retranslation 
 of foreign operations                        -        -           -         -         (4)           -      (4) 
Net gain on cash flow hedges                  -        -           -       170           -           -      170 
Tax on derivative financial 
 liability                                    -        -           -      (35)           -           -     (35) 
Actuarial gain on defined 
 benefit pension schemes, 
 net of tax                                   -        -           -         -           -          25       25 
Dividends                                     -        -           -         -           -     (1,248)  (1,248) 
Share based payments                          -        -           -         -           -         123      123 
Acquisition of own shares                     -        -       (452)         -      -                -    (452) 
Exercise of share based incentives            -        -         102         -      -             (38)       64 
At 31 December 2015                       4,517      445       (968)      (63)      45          13,307   17,283 
                                        =======  =======  ==========  ========  ==========  ==========  ======= 
 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the half year to 31 December 2016

1. Basis of preparation

The condensed consolidated interim financial statements of The Alumasc Group plc and its subsidiaries have been prepared on the basis of International Financial Reporting Standards (IFRS), as adopted by the European Union, that are effective at 31 December 2016.

The condensed consolidated interim financial statements have been prepared using the accounting policies set out in the statutory accounts for the financial year to 30 June 2016 and in accordance with IAS 34 "Interim Financial Reporting".

The consolidated financial statements of the group as at and for the year ended 30 June 2016 are available on request from the company's registered office at Burton Latimer, Kettering, Northants, NN15 5JP or at the website www.alumasc.co.uk.

The comparative figures for the financial year ended 30 June 2016 are not the company's statutory accounts for that financial year but have been extracted from those accounts. Those accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The comparative figures for the financial year ended 30 June 2016 and the six month period ended 31 December 2015 show Dyson Diecastings as a discontinued operation due to the sale of the business on 30 June 2016.

The condensed consolidated interim financial statements for the half year ended 31 December 2016 are not statutory accounts and have been neither audited nor reviewed by the group's auditors. They do not contain all of the information required for full financial statements, and should be read in conjunction with the consolidated financial statements of the group as at and for the year ended 30 June 2016.

These condensed consolidated interim financial statements were approved by the Board of Directors on

31 January 2017.

On the basis of the group's financing facilities and current financial plans and sensitivity analyses, the Board is satisfied that the group has adequate resources to continue in operational existence for twelve months from the date of signing this report and accordingly continues to adopt the going concern basis in preparing these condensed consolidated interim financial statements.

2. Estimates

The preparation of condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expense. Actual results may differ from these estimates.

Except as described below, in preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 June 2016.

During the six months ended 31 December 2016, management reassessed and updated its estimates in respect of retirement benefit obligations based on market data available at 31 December 2016. The resulting impact was a GBP1.7 million pre-tax actuarial loss, calculated using IAS 19 conventions, recognised in the six month period to 31 December 2016.

3. Risks and uncertainties

A summary of the group's principal risks and uncertainties was provided on pages 22 and 23 of Alumasc's Report and Accounts 2016. The Board considers these risks and uncertainties remain relevant to the current financial year.

Specific matters relating to the group's performance in the second half year are:

- changes, beyond Alumasc's control, to the phasing and timing of completion of large construction contracts, particularly at Levolux and Gatic, could impact timing of profit recognition and cash flows;

- the level of Euro and US Dollar exchange rates impacts the cost of imported materials and margin. Further depreciation of Sterling against the Euro in particular would put pressure on margins and vice-versa; and

- the European Union is currently in the early stages of conducting an industry-wide review of whether additional customs duties should be applied to certain products including some of those imported by our Water Management business. It is too early to assess the likely outcome of the review and its potential impact on the business should any changes be made.

4. Underlying to statutory profit reconciliation

 
                                  Half year  Half year 
                                      to 31      to 31   Year to 
                                   December   December   30 June 
Profit before tax                      2016       2015      2016 
                                    GBP'000    GBP'000   GBP'000 
 
 
Underlying profit before tax          4,082      4,003     8,261 
 
Less: Brand amortisation              (134)      (134)     (268) 
Less: IAS 19 pension scheme 
 administration costs                     -      (278)     (510) 
Less: IAS 19 net pension scheme 
 finance costs                        (343)      (349)     (724) 
 
Profit before tax - continuing 
 operations                           3,605      3,242     6,759 
 
Discontinued operations                   -        167       928 
 
Profit before tax                     3,605      3,409     7,687 
                                  =========  =========  ======== 
 
 
                                Half year  Half year 
                                    to 31      to 31   Year to 
                                 December   December   30 June 
Operating profit                     2016       2015      2016 
                                  GBP'000    GBP'000   GBP'000 
 
 
Underlying operating profit         4,142      4,127     8,476 
 
Less: Brand amortisation            (134)      (134)     (268) 
Less: IAS 19 pension scheme 
 administration costs                   -      (278)     (510) 
 
Operating profit - continuing 
 operations                         4,008      3,715     7,698 
 
Discontinued operations                 -        167        27 
 
Operating profit                    4,008      3,882     7,725 
                                =========  =========  ======== 
 

Following the 2016 triennial review and agreement of the revised deficit recovery plan, pension scheme administration costs are now paid directly by the pension schemes rather than being reimbursed by the company.

5. Segmental analysis - continuing operations

In accordance with IFRS 8 Operating Segments, the segmental analysis below follows the group's internal management reporting structure.

 
                                                                 Segmental 
                                                                 operating 
                                                       Revenue      result 
                              -------------------------------- 
                              External  Inter-segment    Total 
                               GBP'000        GBP'000  GBP'000     GBP'000 
Half Year to 31 December 
 2016 
 
Solar Shading & Screening       11,144              -   11,144         631 
Roofing & Walling               20,875             10   20,885       1,621 
Water Management                14,312            587   14,899       1,619 
Housebuilding & Ancillary 
 Products                        4,412              4    4,416         697 
                              --------  -------------  -------  ---------- 
Sub-total                       50,743            601   51,344       4,568 
 
Elimination/Unallocated 
 costs                               -          (601)    (601)       (426) 
 
Total                           50,743              -   50,743       4,142 
                              ========  =============  =======  ========== 
 
                                                                   GBP'000 
 
Segmental operating result                                           4,142 
Brand amortisation                                                   (134) 
 
Total operating profit from 
 continuing operations                                               4,008 
                                                                ========== 
 
 
                                                                          Segmental 
                                                                          operating 
                                                                Revenue      result 
                                       -------------------------------- 
                                       External  Inter-segment    Total 
                                        GBP'000        GBP'000  GBP'000     GBP'000 
Half Year to 31 December 
 2015 
 
Solar Shading & Screening                 7,620              -    7,620         462 
Roofing & Walling                        18,409              2   18,411       1,755 
Water Management                         13,342            688   14,030       1,907 
Housebuilding & Ancillary 
 Products                                 4,097              -    4,097         573 
                                       --------  -------------  -------  ---------- 
Sub-total                                43,468            690   44,158       4,697 
 
Elimination/Unallocated 
 costs                                        -          (690)    (690)       (570) 
 
Total                                    43,468              -   43,468       4,127 
                                       ========  =============  =======  ========== 
 
                                                                            GBP'000 
 
Segmental operating result                                                    4,127 
Brand amortisation                                                            (134) 
IAS 19 pension scheme administration 
 costs                                                                        (278) 
 
Total operating profit from 
 continuing operations                                                        3,715 
                                                                         ========== 
 
 
                                                                          Segmental 
                                                                          operating 
                                                                Revenue      result 
                                       -------------------------------- 
                                       External  Inter-segment    Total 
                                        GBP'000        GBP'000  GBP'000     GBP'000 
Full Year to 30 June 2016 
 
Solar Shading & Screening                17,359              -   17,359         954 
Roofing & Walling                        40,045              6   40,051       3,959 
Water Management                         26,269          1,299   27,568       3,489 
Housebuilding & Ancillary 
 Products                                 8,560             10    8,570       1,420 
                                       --------  -------------  -------  ---------- 
Sub-total                                92,233          1,315   93,548       9,822 
 
Elimination/Unallocated 
 costs                                        -        (1,315)  (1,315)     (1,346) 
 
Total                                    92,233              -   92,233       8,476 
                                       ========  =============  =======  ========== 
 
                                                                            GBP'000 
 
Segmental operating result                                                    8,476 
Brand amortisation                                                            (268) 
IAS 19 pension scheme administration 
 costs                                                                        (510) 
 
Total operating profit 
 from continuing operations                                                   7,698 
                                                                         ========== 
 

6. Discontinued operations

All results for the six month period to 31 December 2016 are derived from continuing building product operations. The results of Dyson Diecastings, an Engineering Products business disposed of on 30 June 2016 are presented in prior year comparatives as a discontinued operation, with details provided below:

 
                                     Half Year   Full Year 
                                to 31 December       to 30 
                                          2015   June 2016 
                                       GBP'000     GBP'000 
 
Revenue                                  3,465       6,556 
                               ---------------  ---------- 
 
Operating profit                           167          27 
Net gain on disposal 
 of discontinued operations                  -         901 
Tax (charge)/credit                       (35)         378 
 
Profit after taxation                      132       1,306 
                               ===============  ========== 
 

7. Finance expenses

 
                                                                 Half year     Half year      Year 
                                                                        to            to        to 
                                                               31 December   31 December   30 June 
                                                                      2016          2015      2016 
                                                                   GBP'000       GBP'000   GBP'000 
 
 Finance costs - Bank overdrafts                                        12            14        43 
                         - Revolving credit facility                    48           110       172 
                                                              ------------  ------------  -------- 
                                                                        60           124       215 
  - IAS 19 net pension 
   scheme finance costs                                                343           349       724 
                                                                       403           473       939 
                                                              ------------  ------------  -------- 
 
 
 
 8. Tax expense 
 
                                                              Half year   Half year      Year 
                                                                  to 31       to 31     to 30 
                                                               December    December      June 
                                                                   2016        2015      2016 
                                                                GBP'000     GBP'000   GBP'000 
 
 Current tax: 
 UK corporation tax 
  - continuing operations                                           546         545     1,433 
                         - discontinued operations                    -         (4)     (697) 
 Overseas tax                                                         -           4         5 
 Amounts over provided in previous 
  years                                                               -           -       (2) 
 Total current tax                                                  546         545       739 
 
 Deferred 
  tax: 
 Origination and reversal of 
  temporary differences: 
 
    *    continuing operations                                      198         150       247 
 
    *    discontinued operations                                      -          39       319 
 Amounts over provided in previous 
  years                                                               -           -      (48) 
 Rate change adjustment                                            (40)        (36)      (54) 
 Total deferred tax                                                 158         153       464 
 
 Total tax expense                                                  704         698     1,203 
                                                             ----------  ----------  -------- 
 
 Tax charge on continuing operations                                704         663     1,581 
 Tax charge/(credit) on discontinued 
  operations                                                          -          35     (378) 
 Total tax expense                                                  704         698     1,203 
                                                             ----------  ----------  -------- 
 
 
 
 Tax recognised in other comprehensive 
 income: 
 Deferred tax: 
 Actuarial (losses)/gains on 
  pension schemes                            (50)     517   (240) 
 Cash flow hedges                             (4)      35       1 
 Tax (credited)/charged to 
  other comprehensive income                 (54)     552   (239) 
 
 Total tax charge in the statement 
  of comprehensive income                     650   1,250     964 
                                            -----  ------  ------ 
 
 

9. Dividends

The directors have approved an interim dividend per share of 2.85p (2015/16: 2.7p) which will be paid on 7 April 2017 to shareholders on the register at the close of business on 24 February 2017. The cash cost of the dividend is expected to be GBP1.0 million. In accordance with IFRS accounting requirements, as the dividend was approved after the balance sheet date, it has not been accrued in the interim consolidated financial statements. A final dividend per share of 3.8p in respect of the 2015/16 financial year was paid at a cash cost of GBP1.3 million during the six months to 31 December 2016.

10. Share Based Payments

During the period the group awarded 120,000 options (2015/16: 180,000) under the Executive Share Option Scheme ("ESOS"). These options have an exercise price of 157.5p and require certain criteria to be fulfilled before vesting. 40,000 existing options (2015/16: 80,000) were exercised during the period and 50,000 existing options lapsed (2015/16: none).

Total awards granted under the group's Long Term Incentive Plans ("LTIP") amounted to 256,299 (2015/16: 194,413). LTIP awards have no exercise price but are dependent on certain vesting criteria being met. 154,661 existing LTIP awards (2015/16: nil) were exercised during the period and 103,008 existing LTIP awards lapsed (2015/16: none).

11. Earnings per share

Basic earnings per share is calculated by dividing the net profit for the period attributable to ordinary equity shareholders of the parent by the weighted average number of ordinary shares in issue during the period.

Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity shareholders of the parent by the weighted average number of ordinary shares in issue during the period, after allowing for the exercise of outstanding share options. The following sets out the income and share data used in the basic and diluted earnings per share calculations:

 
                                               Half        Half 
                                               year        year           Year 
                                              to 31       to 31             to 
                                           December    December        30 June 
                                               2016        2015           2016 
                                            GBP'000     GBP'000        GBP'000 
 
 Profit attributable to equity 
  holders of the parent - continuing          2,901       2,579          5,178 
 Profit attributable to equity 
  holders of the parent - discontinued            -         132          1,306 
 Net profit attributable to 
  equity holders of the parent                2,901       2,711          6,484 
                                         ----------  ----------  ------------- 
 
 
                                            Half          Half 
                                            year          year           Year 
                                           to 31         to 31             to 
                                        December      December        30 June 
                                            2016          2015           2016 
                                            000s          000s           000s 
 
 Basic weighted average number 
  of shares                               35,577        35,646         35,618 
 Dilutive potential ordinary 
  shares - employee share options            535           903            520 
 Diluted weighted average 
  number of shares                        36,112        36,549         36,138 
                                    ------------  ------------  ------------- 
 
 
   Calculation of underlying earnings per share 
   from continuing operations: 
 
                                            Half          Half 
                                            year          year           Year 
                                           to 31         to 31             to 
                                        December      December        30 June 
                                            2016          2015           2016 
                                         GBP'000       GBP'000        GBP'000 
 
 Profit before taxation from 
  continuing operations                    3,605         3,242          6,759 
 Add: brand amortisation                     134           134            268 
 Add: IAS 19 pension scheme 
  administration costs                         -           278            510 
 Add: IAS 19 net pension scheme 
  finance costs                              343           349            724 
 
 Underlying profit before 
  taxation                                 4,082         4,003          8,261 
 Tax at underlying group tax 
  rate of 20.6% 
  (2015/16 first half year: 
  21%; full year: 20.8%)                   (841)         (841)        (1,718) 
 Underlying profit after tax 
  from continuing operations               3,241         3,162          6,543 
                                    ------------  ------------  ------------- 
 
 Weighted average number of 
  shares                                  35,577        35,646         35,618 
                                    ------------  ------------  ------------- 
 
 Underlying earnings per share 
  from continuing operations                9.1p          8.9p          18.4p 
                                    ------------  ------------  ------------- 
 

12. Movement in cash net of borrowings

 
                               Cash and     Bank   Net cash 
                        bank overdrafts    loans 
                                GBP'000  GBP'000    GBP'000 
 
At 1 July 2015                    5,914  (5,000)        914 
Cash flow movements               (506)        -      (506) 
Non-cash movements                    -      107        107 
Effect of foreign 
 exchange rates                     (4)        -        (4) 
 
At 31 December 2015               5,404  (4,893)        511 
                       ================  =======  ========= 
 
 
 
                               Cash and     Bank   Net cash 
                        bank overdrafts    loans 
                                GBP'000  GBP'000    GBP'000 
 
At 1 July 2016                   10,540  (1,908)      8,632 
Cash flow movements             (4,472)    1,000    (3,472) 
Non-cash movements                    -     (15)       (15) 
Effect of foreign 
 exchange rates                      41        -         41 
 
At 31 December 2016               6,109    (923)      5,186 
                       ================  =======  ========= 
 

13. Related party disclosure

The group has a related party relationship with its directors and with its UK pension schemes. There has been no material change in the nature of the related party transactions described in the Report and Accounts 2016. Related party information is disclosed in note 30 of that document.

Responsibility Statement

The Directors confirm that, to the best of their knowledge:

a) the condensed consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU; and

b) the interim management report includes a fair review of the information required by:

-- DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

-- DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the group during that period; and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board

   G P Hooper                                                           A Magson 
   Chief Executive                                                     Group Finance Director 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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