We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 171.00 | 167.00 | 175.00 | 171.00 | 171.00 | 171.00 | 36,643 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Construction Machinery & Eq | 89.57M | 6.6M | 0.1844 | 9.27 | 61.23M |
From Apr 2019 to Apr 2024
TIDMALU
RNS Number : 2688L
Alumasc Group PLC
05 September 2019
IMMEDIATE RELEASE 5 September 2019
THE ALUMASC GROUP PLC
FULL YEAR RESULTS ANNOUNCEMENT
RESILIENT PERFORMANCE IN CHALLENGING MARKETS
Alumasc (ALU.L), the premium building products, systems and solutions Group, announces results for the year ended 30 June 2019.
Paul Hooper, Chief Executive, said:
"During the year our Roofing and Water Management and Housebuilding Products businesses delivered solid performances. We took prudent action to restructure and refocus Levolux, to provide greater cross-selling opportunities with shared operational and administrative resources within the recently formed Alumasc Building Envelope division.
We remain cautious about the current economic climate in relation to the new build construction markets,but have taken the right mitigating actions and believe that our strong market positions, innovative products and experience will stand us well for the year ahead."
Financial Review:
-- Group revenues up 4% to GBP90.1m (2018: GBP87.0m)
-- Underlying profit before tax* GBP5.6m (2018: GBP6.0m) reflecting the previously reported performance from Levolux
-- Basic earnings per share of 10.1 pence (2018: 12.0 pence)
-- Maintained total dividend for year of 7.35 pence (2018: 7.35 pence) reflecting the Board's confidence in the future and positive impact of the recent restructuring actions
-- Net debt of GBP5.1m (2018: GBP4.8m)
-- Core businesses which represent 80% of Group revenues: Roofing & Water Management and Housebuilding Products, performing strongly with YoY growth and margin improvement.
-- Pro-active management action to address Levolux's challenging markets:
o Restructuring of Levolux and its amalgamation into the new Building Envelope division, enables cross selling opportunities and shared operational and administrative resources;
o Investment in local technical sales in North America, to expand and enhance its current revenue streams of circa GBP4m p.a.
-- Implementation of a cost-efficient operating structure: o On track to deliver additional annualised GBP2m cost savings in FY 2019/20 o On target to deliver year end 2019/20 streamlined business with six operational sites.
-- Merger of pension schemes and simplified legal structure saving over GBP100k p.a. in pension scheme running costs and company administrative costs.
-- Focused investment in Housebuilding Products and Water Management divisions
o GBP1m invested in Timloc on new machinery and automation; and GBP0.6m in new Gatic Slotdrain manufacturing plant and machinery
o GBP1m investment commitment in the Water Management division for tooling held at strategic suppliers in Far East.
-- Recent acquisition and divestments have delivered a pro forma pre-tax return on investment of 28%.
Outlook:
o Against a backdrop of current economic and new build construction sector conditions, the Board has taken swift action to restructure Levolux, whilst investing and supporting the strongly performing Roofing & Water Management and Housebuilding Products divisions.
o The Board continues to believe that Alumasc's strong strategic and market positions, which underpin the Group's past track record, will ensure that the Group is well positioned to make progress in the current financial year and beyond.
* A reconciliation of underlying to statutory profit before tax is provided in note 5.
Enquiries:
Hot Features
Premium
The Alumasc Group plc:
Paul Hooper (Chief Executive) Tel: 01536 383821
Andrew Magson (Group Finance Tel: 01536 383844
Director)
finnCap Ltd (Nomad):
Julian Blunt Tel: 020 7220 0500
Peel Hunt (Broker):
Mike Bell Tel: 020 7418 8831
Ed Allsopp Tel: 020 7418 8831
Camarco:
Ginny Pulbrook Tel: 020 3757 4992
Tom Huddart Tel: 020 3757 4991
Email: alumasc@camarco.co.uk
Notes to Editors:
Alumasc is a UK-based supplier of premium building products, systems and solutions. Almost 80% of Group sales are driven by building regulations and specifications (architects and structural engineers) because of the performance characteristics offered.
The Group has three business segments with strong positions and brands in their individual markets: Roofing & Water Management; Architectural Screening, Solar Shading & Balconies; and Housebuilding Products.
Strategic Report
Chairman's Statement
Summary
In the year under review, our Roofing, Water Management and Housebuilding products businesses, representing 80% of Group revenues, performed well, growing revenues and profits, and delivered their strategic objective of outperforming the industry benchmark.
This was against the backdrop of growing political and economic uncertainty, which had a negative impact on business generally, and commercial construction in particular. Our business most exposed to this sector - Levolux - experienced numerous project delays as a consequence, and incurred losses as a result.
Swift action has been taken to mitigate these and a plan to restructure the business was announced in June 2019. Levolux continues to offer great potential in the UK and international markets and is one of Alumasc's strongest brands.
In light of the resilient performance by the majority of our business, our plans for development in the short and longer term and the strength of our balance sheet, the Board is recommending an unchanged final dividend of 4.4p per share which, if approved, gives an unchanged total dividend of 7.35p per share for the full year.
The Year Under Review
In the full year, Group revenues increased by 4% to GBP90.1 million, while underlying profit before tax fell by 7% to GBP5.6 million.
Alumasc again achieved its strategic objective of growing revenues faster than the UK construction market, with our Roofing & Water Management and Housebuilding products divisions, together representing 80% of the Group, significantly outperforming. This growth did not translate into increased overall profit for the year due to the operating losses incurred at Levolux, reflecting the decline in UK commercial construction activity and project delays during the period. A significant strategic refocussing and restructuring of Levolux was announced in June, aimed at returning the business to sustainable profit as soon as possible. Details are in the Chief Executive's review.
Other operational highlights of the year included:
-- The Wade drainage business acquired in January 2018 was strongly earnings enhancing in its first full year in the Group, with surplus space at its freehold property utilised to enable us to save property rental costs elsewhere.
-- Capital investment of GBP2.4 million was made during the year, some GBP0.7 million in excess of the depreciation charge, reflecting our confidence in the growth potential of Timloc, our housebuilding products business, and our Water Management business in particular. These investments meet our key investment criteria of increasing manufacturing capacity while improving efficiency and reducing cost.
-- We continued to benefit from our innovation and new product development programmes. New product launches included Timloc's InvisiWeep, a virtually invisible wall weep, and the Adapt-Air system, which provides an integrated wall ventilation solution; and Gatic's launch of new generation access cover and slotdrain products.
-- The factors which underlie Timloc's reputation for excellent customer service are being implemented elsewhere in the Group.
The Group had modest net debt of GBP5.1 million at 30 June 2019, with committed banking facilities of GBP20 million. The Group's legacy pension liabilities had reduced to GBP13.0 million at 30 June 2019, the lowest for some time.
Our previously announced plans to continue to drive efficiency and reduce fixed costs across the Group, planned to benefit the 2019/20 financial year by GBP2 million, are on track to be delivered.
Strategic Developments
Following the acquisition of Wade, a business complementary to our Water Management Division, during the previous financial year, the Board took the decision to sell our Facades business in October 2018 to a purchaser providing a stronger strategic fit. The freehold manufacturing and warehousing facilities at St Helens were retained and are central to our plans for site rationalisation.
This move streamlined Alumasc's portfolio into three new operating divisions effective from 1(st) July 2019: Building Envelope, Water Management and Housebuilding Products. This in turn enables the operational team to focus on the significant cross selling opportunities that exist across Alumasc's strong client base while exploiting operational efficiencies.
Timloc's activities were successfully consolidated for the first full year onto its new site at Howden, East Yorkshire and, as highlighted above, significant investment was made in manufacturing facilities in support of its service-led housebuilding product range.
Following the acquisition of Wade, related manufacturing activities have been transferred to its freehold site from leasehold properties elsewhere, accompanied by service enhancing investment.
In addition to the commercial gains being targeted from the more integrated selling approach, the rationalisation of property usage is a significant contributor to the Group's previously announced plans to reduce total fixed costs by GBP2 million in the new financial year, without compromising capacity or service.
By the end of 2019/20, we will have achieved our objective of reducing the number of operational sites from ten to six, saving some GBP0.6 million of leased property costs in the process.
Board Succession
Richard Saville, who served as a Director of The Alumasc Group for 17 years, many as Chairman of The Audit Committee, retired during the year. My colleagues and I wish to express our sincere thanks to Richard for his support and wisdom.
Two Non-executive appointments were made during the year: Stephen Beechey, an executive director of The Wates Group, and Vijay Thakrar, whose career included partnerships at Deloitte and Ernst & Young, will bring valuable new perspectives to our Board and I welcome them on your behalf.
I am delighted to announce that Gilbert Jackson and Michael Leaf, Divisional Managing Directors of our Roofing and Housebuilding Products divisions respectively, have today accepted the invitation of the Board to become Directors of The Alumasc Group. We believe that these appointments will help to accelerate the delivery of the exciting plans that exist for their businesses and will benefit our deliberations on further group development.
Corporate Actions
During the year, the Board decided to relist Alumasc's shares on the AIM market, providing a more suitable base for the development of the business and a broader spectrum of investor interest. This was achieved on 25 June 2019.
Earlier in the year, the Company's two legacy pension schemes were merged, saving duplication and cost, and enabling the desirable restructuring of operations to take place.
In addition to the physical rearrangements referred to above, a simplification of the Group's corporate structure is under way, reducing administration and aligning legal structure with our commercial organisation.
Prospects
Given the mixed forecasts for UK construction while economic and political uncertainty prevails, the Board has taken mitigating steps both in the shorter term and to ensure that Alumasc will be in a strong position to exploit future market recovery.
In these circumstances, we stay close and listen to our customers and, where we have identified opportunities to add greater value, we are revising our product ranges and investing to reinforce excellent service as our key differentiator.
John McCall
Chairman
Chief Executive's Review
Financial Highlights and Overview
2018/19 2017/18 % change
Group performance:
Revenue (GBPm) * 90.1 87.0 +4%
Underlying profit before tax (GBPm) * 5.6 6.0 -7%
Statutory profit before tax (GBPm) 3.9 5.4 -27%
Underlying earnings per share (pence) * 12.4 13.4 -7%
Basic earnings per share (pence) 10.1 12.0 -16%
Dividends per share (pence) 7.35 7.35 -
Note - Roofing & Water Management and Housebuilding Products segments:
Revenue (GBPm) 71.3 65.1 +10%
Underlying operating profit (GBPm) 7.7 6.6 +16%
* Revenue and profit from continuing operations, excluding the revenues and profits of Alumasc Facades prior to its disposal on 31 October 2018 and its classification as a discontinued operation. A reconciliation of underlying to statutory profit before tax is provided in note 5 and earnings per share in note 10.
In recent years, the Alumasc management team's strategy has been to re-position the Group to become a dedicated supplier of premium building products to the UK construction industry and to seek opportunities to grow internationally.
Review of financial performance:
Alumasc's performance for the year was resilient against the background of a flat overall UK construction market which was impacted by the uncertain economic and political environment. The impact of this environment was reflected in a 7% reduction in activity in the UK commercial new build construction sector, which is an important end use market for the Group.
Despite this, Alumasc achieved its strategic objective of growing Group revenues faster than the UK construction market. Revenue growth was 4%. Adjusting for selling price inflation, sales volume growth was circa 2%, representing an outperformance of circa 2% against a broadly flat UK construction market.
This revenue growth did not translate into an overall improvement in profit due to operating losses incurred in our Architectural Screening, Solar Shading & Balconies division, Levolux. This division, which represents approximately 20% of Group revenues, impacted the Group's underlying profit before tax negatively by 32% and is the sole reason why the Group's overall underlying profit before tax was 7% lower than the prior year.
Following a strategic review, a significant restructuring of this business was announced in June 2019. Further detail is set out in the Strategic Development section below.
Significant progress was made in the Group's core Roofing & Water Management and Housebuilding Products divisions, which represent circa 80% of Group revenues. In these divisions revenue growth of 10% was considerably ahead of the UK construction market, with underlying operating profit growth of 16% exceeding revenue growth mainly due to the effect of operational gearing. Excluding the full year benefit of the successful acquisition of Wade International in January 2018, like-for-like revenues in these divisions were ahead by 5% with underlying profits up 7%.
Strategy and performance against strategic objectives
Alumasc's strategy is to:
1. Grow revenues on average faster than UK construction market growth by building specialised positions in growth markets
In 2018/19 the Group continued its track record over recent years of growing revenues ahead of the UK construction market on average.
2. Augment UK revenue growth through the development of selected export markets
Due to the timing of larger projects and project delays, export revenues which were circa 10% of overall Group revenues reduced by 25% against the prior year. However, market intelligence supports our view that there is meaningful growth potential in Levolux's North American markets and for Alumasc Water Management in the Middle and Far East. Prudent investment therefore continues to be made in local and export sales resources to realise this sales potential.
3. Grow profit at a faster rate than revenue by improving operating margins
Overall the Group's underlying operating margins reduced from 7.2% to 6.5% in the year reflecting the operating losses incurred at Levolux. In the remaining 80% of the Group operating margins improved from 10.1% to 10.7%. The Group has, in recent months, announced cost saving plans of approximately GBP2m which should, other things equal, benefit operating margins in 2019/20 by around 2 percentage points.
Accelerating strategic development
Management has increased the pace at which it is executing its priorities for strategic development. These are as follows:
1. Levolux business improvement plan
The overriding strategic priority that emerged in the second half year was the necessity to return Levolux to sustainable profit as soon as possible. Following a change of management and a strategic review, the Board announced in June 2019 that the revised strategy involves a re-focus of the business to those areas where it can clearly differentiate and add most value to customers and shareholders, including developing the more profitable areas of the business, simplifying operational delivery and reducing risk. The key elements are to:
-- incorporate Levolux solar shading, screening and balconies as major constituents in a new "Alumasc Building Envelope" division providing integrated solutions for developers and specifiers seeking high quality roofing and walling systems. A new, collaborative divisional sales approach will increase Levolux's existing market reach and leverage existing strong customer relationships.
-- focus on design and supply activities, as is the case in the rest of the Alumasc Group. In-house installation will only be offered where this service is particularly valuable to customers and Levolux. The expectation over time is that this will improve margin mix and enhance profit margins.
-- invest in local technical sales resources to accelerate growth in the profitable Levolux business in North America. Current revenues in this market are circa GBP3 million pa.
-- undertake a significant restructuring of the existing Levolux operational and overhead cost base, with fixed cost savings of GBP1 million expected in the Group's 2019/20 financial year, and further significant annualised savings in 2020/21. This will include the relocation of the business from Levolux's current two leasehold sites to Alumasc's freehold facility in St Helens. One-off restructuring costs of GBP2.5 million were booked in the 2018/19 financial year in connection with the above.
Alumasc continues to believe that Levolux is a business with great future potential and is one of the Group's strongest brands.
2. Develop further opportunities for specification cross selling, including the development of a "building envelope" division
In light of the strategic review of Levolux described above, we believe there is a further beneficial significant opportunity for the Group to increase sales by offering an integrated "Building Envelope" of exterior building products facilitating the integration of walling, roofing, balconies, solar shading and integrated aluminium detailing which not only provides a full external envelope solution but also mitigates both client's and contractor's risks by ensuring that the horizontal and vertical planes are detailed to remove tolerance and interfacing detail issues.
The wider well known Alumasc system brands will be brought together to provide a single source solution whilst working with clients, their agents and installers to design out construction risk along with a combined strength to provide cost savings through the avoidance of post construct legacy issues and providing certainty through build cost engineering to planned models.
The Group's management structure and specification sales teams have been re-aligned to approach the market in this way. The Group's divisional structure and segmentation of results will change in 2019/20 reports to reflect this and Alumasc's three operating divisions in future will comprise Building Envelope; Water Management; and Housebuilding Products.
3. Implementation of a more cost-efficient operating structure
Following the restructuring of Gatic described in our interim report and in the operational review section below, and the restructuring of Levolux described above, by the end of the 2019/20 financial year we will have achieved our previously announced objective of reducing the number of operational sites in the Group from ten to six. In doing so we will have saved circa GBP0.6 million per year in leased property costs through better utilisation of the Group's freehold properties.
Further, the Group has simplified both its internal legal and pensions structure. The Group's two legacy defined benefit pension schemes were merged in March 2019, which reduced the Group's pension deficit by GBP0.3 million and will save over GBP100k pa in pension scheme running costs. The pension scheme merger, in turn, enabled the combination of three of the Group's four active trading subsidiaries into one in June 2019.
Finally, as previously announced, the Group successfully completed the re-listing of its shares on the Alternative Investment Market "AIM" market in June 2019.
4. Prioritising and focusing investment to drive profitable growth
Alumasc continues to invest to exploit the significant growth potential of our businesses.
Capital investment is focused on those of our businesses with greatest manufacturing activity: Timloc, our Housebuilding Products business, and our Water Management business. Over the last two years capital investment has exceeded depreciation by GBP2.7 million reflecting the Board's confidence in future growth potential, and the plan is to invest in excess of depreciation again in the 2019/20 financial year. Of the Group's 2018/19 capital spend of GBP2.4 million, some GBP2.1 million was focused on these businesses, with GBP1 million spent at Timloc on new machinery and automation to improve efficiency and reduce cost; and GBP0.6 million in new Gatic Slotdrain manufacturing plant and machinery following the successful relocation of manufacturing to Wade's freehold premises. Investment of over GBP1 million has been committed in the Water Management division to renew tooling held at strategic suppliers in the Far East to enable reduced manufacturing cost, improved efficiency, better product quality and to assist our supply partners in reducing carbon emissions. The benefit of this investment is evident in the continued strong performance of these businesses, both in terms of revenue growth and margin improvement, and we continue to assess further projects with attractive payback characteristics.
Revenue investment in new people is focused on expanding our sales reach both in the newly formed Building Envelope division in the UK and in growing Levolux and Water Management divisional export sales.
5. Improving the Group's quality of earnings and operating margins through the proactive management of our portfolio of businesses
Although the Group did not make any further acquisitions in the year under review, in the last two years through the acquisition of the Wade drainage business and divestment of the Scaffolding Products and Alumasc Facades businesses, the Group has acquired net incremental operating profits of GBP0.7 million for a net purchase consideration of GBP2.5 million. This represents a pro forma pre-tax return on investment of 28%. Whilst we continue to seek to grow the Group through bolt-on acquisitions we have no plans to make further divestments.
Performance overview
(a) Continuing Operations
Revenue analysis
An analysis of the Group's year on year revenue growth from continuing operations is set out below:
% change 2018/19 versus 2017/18 Total
Roofing & Water Management +10%
Housebuilding Products +9%
------
Sub-total +10%
Architectural Screening, Solar
Shading & Balconies -15%
Total Group (headline) +4%
======
Note:
Roofing & Water Management like-for-like
* +5%
Group like-for-like * -
* Like-for-like information is adjusted for the full year impact in 2018/19 of the acquisition of Wade in January 2018. UK like-for-like revenues excluding Wade grew by 4%
Revenue
The table above illustrates that across the Group, except for the Architectural Screening, Shading and Balconies division (Levolux), Alumasc achieved revenue growth rates in excess of the UK construction market despite the downturn in new build commercial construction activity. This outperformance can be attributed to the Group's strategy of investing in businesses with strong market positions in specialised growth markets, including products and systems that manage the scarce resources of water and energy in the built environment.
The revenue reduction at Levolux reflects its strong alignment with the commercial new build market sector where UK output reduced by 7% over the period, exacerbated by project delays. These were associated with ongoing economic and political uncertainties and restricted credit availability across the building contracting sector in the UK. Levolux is the only business in Alumasc that largely installs its own products and therefore has this degree of exposure to building contracting. This model is now being changed, following the recent strategic review of the business, to retain Levolux's differentiated offering whilst reducing margin risk.
Gross margins
Gross margins reduced from 30.9% in 2017/18 to 29.8% in 2018/19 due to lower margin realisation at Levolux, reflecting lower recovery of fixed costs due to lower than expected revenues in part due to project delays; a higher proportion of lower margin balcony and balustrading work in the period; lower margins in the Gatic brand in the first half year; and higher annualised property costs at Timloc following its relocation to a larger factory in December 2017. Gatic's margins recovered in the second half following successful selling price increases.
Net operating expenses
Net operating expenses were well controlled during the year and amounted to 23.3% of revenues compared with 23.8% in the prior year. As the cost saving actions described in this report bear fruit, we expect this ratio to decrease further in the 2019/20 financial year.
Underlying operating profit
Underlying operating profit was GBP5.9 million compared with GBP6.2 million in the previous year. The reduction was entirely attributable to Levolux, where the operating losses incurred more than offset profitable growth in the rest of the Group.
Bank interest
Bank interest costs of GBP0.3 million were a little higher than in the previous year (GBP0.2 million) due to modestly higher levels of average net debt during the year following the debt-funded acquisition of Wade for GBP8.0 million in January 2018, which was not fully offset by the disposal of Alumasc Facades for GBP4.5 million in October 2018.
Underlying profit before tax
Underlying profit before tax was GBP5.6 million (2017/18: GBP6.0 million), reflecting the reduced underlying operating profit and higher bank interest charge.
Non-underlying, non-recurring items
Non-underlying and non-recurring items (relating to continuing operations) amounted to a GBP4.6 million net cost in the period compared with a GBP0.9 million net cost in the prior year. In 2018/19, the larger items in this category were restructuring and relocation costs of GBP3.0 million, mainly associated with the cost reduction programmes at Levolux and Gatic; net one off pension scheme charges of GBP0.8 million largely relating to the UK High Court decision in October in respect of guaranteed minimum pensions equalisation; and GBP0.2 million in connection with the re-listing of Alumasc's shares on the AIM market. Further details are given in the Financial Review.
(b) Discontinued Operations and profit (after tax) for the year
The net after tax gain from discontinued operations, reflecting the trading profit of the Alumasc Facades business prior to its disposal in October 2018 and the gain realised on the disposal transaction itself, was GBP2.9 million. The post-tax operating profit generated by Alumasc Facades in the prior year was GBP0.4 million.
The Group's resulting overall statutory profit (after tax) for the year was GBP3.6 million (2017/18: GBP4.3 million).
Operational review
(a) Roofing & Water Management
Revenue: GBP59.9 million (2017/18: GBP54.6 million)
Underlying operating profit*: GBP5.9 million (2017/18: GBP4.9 million)
Underlying operating margin*: 9.9% (2017/18: 9.0%)
Operating profit: GBP5.3 million (2017/18: GBP4.6 million)
* Prior to restructuring costs of GBP0.5 million in 2018/19, brand amortisation charges of GBP0.1 million in both years and Wade acquisition costs of GBP0.2 million in 2017/18.
Performance in this division benefited from the full year effect of the successful Wade acquisition in January 2018; growth in revenues in the Gatic brand driven by a number of larger projects in the UK infrastructure sector during the year; and the successful launch in the latter part of the prior year of new generation Access Cover and Slotdrain products. Wade was strongly earnings enhancing in its first full year in the Group.
The margin pressures in the Gatic brand experienced in the first half year were addressed by selling price increases in November 2018, which led to a full recovery of margin in the second half year.
Production of Gatic Slotdrain transferred successfully from leased premises in Dover to Wade's freehold premises in Halstead, Essex in June 2019. This is expected to yield circa GBP0.6 million of cost savings in 2019/20.
Elsewhere in the division, both Alumasc Roofing and Alumasc Water Management Solutions contributed solid performances, each matching prior year revenues. Alumasc Roofing worked hard to successfully evolve its mix of revenues towards refurbishment work from new build where commercial demand was lower in the 2018/19 financial year, reflecting market conditions.
As stated at the interim stage, a review of capacity at Alumasc Water Management Solutions concluded that with relatively modest capital spend at existing facilities there is no immediate need to relocate to a new site, saving significant capital cost relative to earlier plans.
During the year divisional sales teams were consolidated to promote more effectively our "Rain to Drain" strategy, where Alumasc offers solutions to manage and control the flow of water through buildings from the roof to the ground thereby alleviating pressure on public drainage systems and reducing risks of flash flooding from increasingly intense rainfall events. Action is also being taken to simplify product ranges across the division to reduce complexity and increase focus on the most profitable lines whilst exiting areas not making an adequate contribution.
The one-off costs of moving to a simplified divisional structure from the relocation of Slotdrain production and moving to a shared overhead structure at Wade and Gatic is the principal reason why divisional statutory operating profit was lower than underlying operating profit for the year.
(b) Architectural Screening, Solar Shading & Balconies
Revenue: GBP18.8 million (2017/18: GBP22.0 million)
Underlying operating (loss) / profit*: GBP(1.1) million (2017/18: GBP0.8 million)
Underlying operating margin*: (5.9)% (2017/18: 3.6%)
Operating (loss) / profit: GBP(3.7) million (2017/18: GBP0.6 million)
* Prior to restructuring costs of GBP2.5 million in 2018/19 and brand amortisation charges of GBP0.2 million in both years
Following the reduction in revenues and the significant operating losses incurred in the Levolux business during the year, a major restructuring programme was announced in June 2019 to recover profitability in this business as described in the strategic development section above.
Levolux's challenging year stemmed from a combination of:
-- lower commercial new build demand impacting UK architectural screening and solar shading project revenues;
-- project delays, both prior to and after receipt of sales orders, that we believe reflects the impact of the uncertain economic and political environment on customer investment decisions, exacerbated by the ongoing lack of credit in the UK building contracting industry;
-- increasing competition for architectural screening and solar shading in the UK; and
-- margin realisation issues in our embryonic balconies business that impacted the first half year in particular.
In future, Levolux will focus increasingly on design and supply work and only install where the customer recognises the value that we add from this activity and our risks can be better managed. We see significant opportunity for growth in architectural screening and solar shading in the USA, particularly California, and we intend to invest further in local sales resources to help realise this potential. We also see significant growth potential in balconies and balustrading, driven by increasing demand for apartments in the private rented sector. However, we need to do further work to prove we can execute this work at acceptable profit margins and a number of options are under evaluation to resolve this.
We believe that future demand for Levolux products more generally and conversion rates from customer enquiries to orders will both be enhanced by the business becoming part of the Building Envelope division, benefiting from the integrated specification sales strategy described above and the larger combined technical sales team.
One-off restructuring costs are the main reason why the statutory operating loss for this division was higher than the underlying operating loss.
(c) Housebuilding Products
Revenue: GBP11.4 million (2017/18: GBP10.5 million)
Operating profit: GBP1.7 million (2017/18: GBP1.7 million)
Operating margin: 15.2% (2017/18: 15.8%)
Timloc continues to go from strength to strength and delivered operating profit of GBP1.7 million, similar to the prior year, despite absorbing GBP0.3 million of incremental annualised property costs following the successful re-location to its new purpose built, higher capacity factory in December 2017. The payback from investment in the new factory is running ahead of initial expectations.
Once again, Timloc's revenue growth rate of 9% comfortably exceeded UK housebuilding market growth as management expanded the product range and grew market share.
Timloc's strong service ethos of guaranteed next working day delivery and low carriage paid order values again proved to be highly attractive to merchant and distributor customers, and this was effectively communicated by the "Trust Timloc to deliver next working day" marketing and social media campaign.
New product development, which has always been an important element of Timloc's success, included the launch of InvisiWeep, a virtually invisible wall weep, and the Adapt-Air system which provides an integrated solution for through wall ventilation. Further new product launches are planned in 2019/20 and some currently bought-in products will be manufactured in-house to further enhance margins.
Alumasc invested over GBP1 million in new injection moulding machines and automation during the year and the successful execution of these capital projects by Timloc's management team will yield cost savings in the 2019/20 financial year.
Outlook
In light of the current economic and construction sector backdrop (including Brexit uncertainties), the Board is taking a cautious view of revenue development in the 2019/20 financial year.
Notwithstanding the challenging market conditions, the actions taken to restructure those parts of the Group (particularly Levolux) that did not perform to expectation in the year under review should yield cost savings of circa GBP2 million in the 2019/20 financial year.
The Board believes Alumasc's strong strategic and market positions, which underpin our established track record over many years of outperforming the UK construction market, together with:
-- the formation of the Building Envelope division to drive specification cross-selling; -- the major restructuring of the Levolux business; -- focused investments in new products and manufacturing capability;
-- selective investments in sales resources to grow the business both in the UK and internationally; and
-- lower fixed costs and actions taken to deliver a more cost-effective operating structure across the Group
makes Alumasc well positioned to make progress in the current financial year and beyond.
Paul Hooper
Chief Executive
Financial Review
Reconciliation of underlying to statutory profit before tax
Underlying profit before tax for the 2018/19 financial year of GBP5.6 million exceeded statutory profit before tax of GBP3.9 million for the reasons shown in the table below:
2018/19 2017/18
GBPm GBPm
Underlying profit before tax 5.6 6.0
Brand amortisation (0.2) (0.2)
Net IAS 19 defined benefit pension
scheme costs (1.2) (0.5)
Restructuring & relocation costs (3.0) (0.3)
AIM listing / prior year acquisition
costs (0.2) (0.2)
Net gain from business disposals
(pre-tax) 2.9 0.2
Gain on disposal of available-for-sale
assets - 0.4
Statutory profit before tax 3.9 5.4
======== ========
The reconciling items were:
-- Amortisation of acquired brands of GBP0.2 million (2017/18: GBP0.2 million). This is a non-cash charge determined by management judgment in applying accounting standards. It does not affect the economic value of the Group.
-- Net IAS 19 defined benefit pension scheme costs of GBP1.2 million (2017/18: GBP0.5 million) are also non-cash charges. These relate to the Group's legacy defined benefit pension scheme, which has been closed to future accrual for almost ten years. The value of the charge is determined by actuarial assessment. In the 2018/19 financial year, the charge to the income statement was higher than usual, due to a one-off GBP1.1 million increase in liabilities following a UK High Court decision in October 2018 applicable to UK defined benefit pension schemes generally and relating to guaranteed minimum pension equalisation between men and women. This was partly offset by a one-off actuarial gain of GBP0.3 million arising from the merger of the Group's pension schemes during the year. The balance of the 2018/19 charge, and all the prior year's charge, represents the non-cash notional financing cost of the Group's pension deficit due to the time value of money.
-- One-off restructuring and relocation costs of GBP3.0 million incurred in 2018/19 will enable Alumasc to reduce fixed costs by circa GBP2 million p.a. in the current 2019/20 financial year, as described in the Chief Executive's review. These savings will accrue mainly in the Gatic brand within the Roofing & Water Management division and at Levolux which forms our Architectural Screening, Solar Shading & Balconies division. The costs comprise redundancy costs; the costs of relocating Gatic Slotdrain production from Dover to Wade's freehold factory in Essex; the costs of relocating certain Levolux functions and operations from two leased sites to our freehold factory and offices at St. Helens; and associated write downs in the value of certain plant and machinery in the premises being vacated. The cost in the prior year related to the relocation of Timloc, our Housebuilding Products business, to a new, purpose built, leased site in East Yorkshire.
-- AIM listing costs of GBP0.2 million in 2018/19 represent one-off professional fees incurred in connection with the re-listing of Alumasc's shares from the Main Market of the UK Stock Exchange to the Alternative Investment Market ("AIM") in June 2019. The acquisition costs of GBP0.2 million in the prior year related to professional fees incurred in connection with the acquisition of the Wade specialist drainage business.
-- The net gain from business disposals comprises the gain on sale of the Alumasc Facades business on 31 October 2018, together with its operating profit from the beginning of the 2018/19 financial year to the date of disposal. The prior year comparator represents its operating profit for that financial year and the loss on sale of the Scaffolding Products business in July 2017.
-- The one-off gain of GBP0.4 million on realisation of an available-for-sale asset in the prior year related to the disposal of the Group's legacy 20% trade investment in Amorim Isolamentos, a Portuguese cork producer.
Taxation
The Group's underlying effective tax rate was 20.4% (2017/18: 20.2%), slightly above the UK statutory rate of tax of 19% applicable to the Group's financial year due to certain costs that are disallowable for tax purposes. We expect the Group's underlying tax rate to be circa 20% in the 2019/20 financial year.
The Group's effective tax rate on statutory profit before tax was 7.4% (2017/18: 19.7%). Reconciliations from the actual to statutory rates of tax are provided in note 8 to the financial statements. The reconciling items chiefly relate to the tax treatment of the one-off items in the Group's income statement described above.
Earnings per share
Underlying earnings per share for the year was 12.4 pence (2017/18: 13.4 pence). This reduction is consistent with the lower underlying profit before tax for the year for the reasons described in the Chief Executive's review.
Basic earnings per share of 10.1 pence (2017/18: 12.0 pence) reflected the reduction in underlying profit before tax for the year and the higher level of net one-off costs in 2018/19 relative to 2017/18 described above.
Dividends
The Board has decided to recommend to shareholders an unchanged final dividend of 4.4 pence per share (2017/18: 4.4 pence), applicable to members on the share register on 27 September and to be paid on 31 October. This takes the total dividend for the year to 7.35 pence, again unchanged on the prior year.
Alumasc has a progressive dividend policy that seeks to grow the dividend broadly in line with underlying earnings growth, having regard to the extent to which dividend payments are covered by underlying earnings, after taking into account pension scheme funding commitments.
Investment in growth, cash flow and net debt
Summarised Cash Flow Statement
2018/19 2017/18
GBPm GBPm
EBITDA * 7.4 7.6
Change in working capital (1.2) (1.6)
Operating cash flow 6.2 6.0
Capital expenditure (2.4) (3.3)
Interest (0.2) (0.2)
Tax (0.6) (0.7)
Pension deficit funding (3.2) (3.2)
Dividend payments (2.6) (2.6)
Sub total (2.8) (4.0)
Wade acquisition consideration - (8.0)
Facades / SCP business disposal
proceeds/other 2.5 1.1
Net cash flow (0.3) (10.9)
=========== ==========
Net debt at the year end 5.1 4.8
=========== ==========
* EBITDA: Underlying operating profit from continuing operations
before interest, tax, depreciation and amortisation
The Group recorded a small net cash outflow for the year of GBP0.3 million. This included capital investment of GBP2.4 million which was some GBP0.7 million in excess of the depreciation charge for the year. This investment was made principally in the Group's Housebuilding Products and Water Management businesses to enable future growth and support margin improvement through greater automation and efficiency.
At 30 June 2019 the Group continued to have a modest level of net debt of GBP5.1 million (30 June 2018: GBP4.8 million).
Our twelve month rolling average ratio of trade working capital as a percentage of revenue from continuing operations improved from 14.6% in 2017/18 to 14.1% in 2018/19 due to continuous improvement initiatives. The increase of GBP1.2 million in working capital balances relating to continuing operations at 30 June 2019 compared with a year earlier reflected an increase in contract assets at Levolux following the implementation of IFRS15; and the higher levels of inventories put in place to manage potential Brexit risks. The latter in turn also led to a lower level of payables at the 2019 financial year end compared with a year ago.
Statement of financial position and return on investment
The Group's net assets and shareholders' funds increased from GBP24.4 million at the beginning of the financial year to GBP25.4 million at 30 June 2019, reflecting the net actuarial gain on the pension deficit described below, together with retained profit after tax and dividend payments for the year.
The Group defines its capital invested as the sum of shareholders' funds, together with the pension deficit (net of tax) and net debt. On this basis, capital invested was broadly unchanged at GBP41.3 million at 30 June 2019 compared with GBP41.8 million at the beginning of the financial year. This is explained by a modest increase in the value of property, plant and equipment reflecting the investments made in the business during the year described above, offset by lower combined trade and other working capital requirements at the year end, including provisions for committed restructuring costs at Levolux. Average levels of capital invested were higher in 2018/19 than in the prior year due to the relative value and timing of the acquisition of Wade in the prior year and the divestment of Alumasc Facades in 2018/19.
The combination of the lower underlying profit in the year and higher average levels of capital invested led to a reduction in underlying post-tax return on investment from 14.5% in the prior year to 11.4% in 2018/19. This is still well ahead of our estimated weighted average cost of capital.
Pensions
In March 2019 the Group merged its two former defined benefit pension schemes. This will simplify and reduce the ongoing costs of scheme administration by over GBP100k p.a. It also enabled a simplification of the Group's legal structure and a reduction in the number of the Group's active trading subsidiaries, yielding further administrative savings.
The valuation of Alumasc's defined benefit pension scheme deficit for accounting purposes at 30 June 2019 using IAS 19 valuation conventions was GBP13.0 million (30 June 2018: GBP15.1 million).
The year on year improvement reflected the benefit of pension deficit recovery payments made by the Group during the year of GBP2.7 million together with more favourable mortality assumptions and benefits from the merger of the Group's two pension schemes during the year. These benefits were partly offset by less favourable market valuation assumptions, including the rate at which future liabilities are discounted to present values using bond yields and the long term inflation rate; together with the GBP1.1 million increase in liabilities described above relating to the UK High Court decision on guaranteed minimum pension equalisation.
The formal triennial actuarial valuation of the merged Alumasc Group Pension Scheme at 31 March 2019 and its related deficit funding plan is currently being negotiated with the Pension Trustees. This valuation uses more prudent assumptions than those required by accounting standards in calculating the deficit recognised in the Group's statement of consolidated financial position. Early indications are that the triennial value of the scheme's deficit has reduced from circa GBP33 million in 2016 to the low/mid GBP20 million range in 2019. This suggests, other things equal, the Group is on track to repay the deficit during the remaining eight years of the existing funding plan.
Banking facilities
Alumasc's banking facilities were renewed as a matter of routine during the year and comprise:
-- An unsecured committed three-year revolving credit facility of GBP20 million, expiring in March 2022
-- Overdraft facilities, repayable on demand, of GBP4 million.
Going concern
After due enquiry and based on the information available at the date of this report, the Board believes that Alumasc will remain a going concern on the basis of the assumptions and relevant time horizons set out in the going concern assessment in note 1 to the financial statements.
Introduction of new accounting standards
The Group implemented IFRSs 9 and 15 during the financial year. In summary:
-- IFRS 9, Financial Instruments, did not have a material impact to the Group's financial statements
-- IFRS 15, Revenue Recognition, led to an on average earlier recognition of revenue and profit over time on construction contracts, as explained and disclosed in note 13.
The Group will implement IFRS 16, Leases, with effect from 1 July 2019. The Group will bring onto its statement of consolidated financial position leased property assets valued at GBP5 million, with a corresponding liability to pay future lease rentals. The Group's pro forma EBITDA will increase by circa GBP0.6 million, operating profit will increase by GBP0.1 million and profit before tax will reduce by circa GBP0.1 million, other things equal, for the 2019/20 financial year. This is because notional financing costs calculated under the accounting standard will be higher than currently reported as the Group's more material leases are closer to inception than expiry.
Andrew Magson
Group Finance Director
On behalf of the Board
Paul Hooper Andrew Magson Chief Executive Group Finance Director
The contents of this announcement have been extracted from the annual report and accounts for the year ended 30 June 2019 which will be despatched to shareholders on or around 20 September 2019 and will be available at www.alumasc.co.uk.
Principal risks and uncertainties
Risks and uncertainties Mitigating actions taken
Economic, construction
market and Brexit risks * Strategic positioning in markets/sectors anticipated
Comment to grow faster than the UK construction market.
Alumasc is a UK-based
group of businesses. 90%
of Group sales are made * Selected development of export sales opportunities,
to the construction sector especially for Levolux (particularly in North
in the UK. This market America) and Alumasc Water Management (particularly
can be cyclical in nature. in Europe, the Middle East and Far East).
There is relatively high
economic and political
uncertainty at the current
time, including surrounding * Revenues are derived from a variety of end use
the outcome of the Brexit construction markets.
negotiations.
* Development of added value systems and solutions that
are either required by legislation, building
regulation and/or specified by architects and
engineers (currently almost 80% of Group revenues).
* Continuous development and introduction of innovative
products, systems, solutions and services that are
market leading and differentiated against the
completion.
* The Group has exposure to currency risk, particularly
the Euro and US Dollar. These exposures are for the
most part hedged, with hedging percentages increased
in 2019 to manage potential FX volatility associated
with Brexit.
* Brexit developments being monitored closely, strong
relationships monitored and regular dialogue with key
European customers and suppliers. Contingency
planning for key residual risk areas, including
increased inventory holdings of materials/products
imported from the EU.
------------------------------------------------------------------
Strategic people risks
Comment * Market competitive remuneration/incentive
arrangements.
Including recruitment,
retention, succession,
people development. Risk
of loss of skills, ability * Employee numbers and changes monitored in monthly
to innovate and improve subsidiary Board meetings.
without attracting and
retaining the right people.
The UK recruitment market
is tight with some skills * Key, high performing and high potential employees
shortages. identified, monitored, coached and developed.
* Training and development programmes.
* Increasing focus of Board and Executive Committee in
managing this area, supported by Human Resource
professionals.
------------------------------------------------------------------
Product/service differentiation
relative to competition * Alumasc operates a devolved operating model with
not developed or maintained local management primarily responsible for developing
Comment a deep knowledge of our specialist markets and
identifying opportunities and emerging market trends.
Innovation and an entrepreneurial
spirit is encouraged in
all Group companies. Over
16% of Group revenues * Innovation best practice days held annually at group
relate to products launched level and more regularly in each business.
in the last three years.
* Annual group strategy meetings encourage innovation
and "blue sky" thinking.
* New product introduction/development KPI used to
monitor progress.
* Regular monitoring of the market for potentially new
and/or disruptive technologies.
------------------------------------------------------------------
Execution risk - strategic
development risks and * Close Group Board involvement in the Levolux and
change projects Gatic restructuring and in export development
strategy.
Comment
There are execution risks
around a number of current * Key strategic change projects are managed by
strategic change projects, Operating Unit Boards and Steering Committees,
including the Levolux supported by independent specialist consultants where
and Gatic Slotdrain restructuring, necessary, for example IT and property.
export development, business
simplification projects,
forthcoming factory moves
and various ERP and CRM * Key milestone plans, project risk reviews and
system implementations. detailed project plans updated and monitored
regularly.
* Use of proven reliable software solutions and
avoidance of bespoking wherever possible, with
careful documentation and challenge of legacy
business processes prior to implementation of new
systems.
* Pre-implementation system testing, training and
communication, with go-live delayed if implementation
risk is judged to be too high.
Loss of key customers.
Comment * Develop and maintain strong customer relationships.
Generally the Group has
a good track record of
customer retention and * Product, system and service differentiation.
has a diversified customer
base.
* Project tracking and enquiry/quote conversion rate
KPI.
* Increasing use of, and investment in, customer
relationship management (CRM) software.
* Organisational and cultural flexibility to adapt to
changing and emerging customer needs.
------------------------------------------------------------------
Legacy defined pension
obligations * Continue to grow the business so the relative
affordability of pension deficit contributions is
Comment improved over time. The pension deficit reduced
during 2018/19.
Alumasc's pension obligations
are material relative
to its market capitalisation
and shareholders' funds. * Maintain constructive relationship with Pension
Trustees.
* Meet agreed pension funding commitments.
* Regular review at group Board level.
* Use of specialist advisors.
* Investment performance and risk/return balance
overseen by an Investment Committee.
* Monitor and seek opportunities to reduce gross
pension liabilities. Use of derivatives to partly
hedge inflation and interest rate risk.
------------------------------------------------------------------
Supply chain risks
* Annual strategic reviews, including supplier
Comment concentration, quality, reliability and
sustainability.
Whilst the Group does
not have undue concentration
on any single or small
group of suppliers, certain * Regular key supplier visits, good relationships
Alumasc businesses do maintained including quality control reviews and
have key strategic suppliers, training.
some of whom are located
in the Far East.
International supply chain
risks are increasing through * Regular supplier quality, value for money and risk
increased tariffs/duties, reviews.
Brexit risks in Europe
and potential closure
of foundries in China
for environmental reasons. * Avoidance of strategic dependence on single sources
of supply.
* Contingency plans to manage Brexit and China sourcing
risks.
* Tooling investment programme to support the
efficiency of supply chain partners in China,
including their management of environmental risks.
------------------------------------------------------------------
Business continuity risks * Business continuity plans in place, or being evolved
where we are relocating operations, at each business.
Comment Work is ongoing to refine these plans and, where
possible, test them.
The Group has not previously
experienced any significant
loss of operational capability
causing business continuity * IT disaster recovery plans are in place, with close
issues. to real time back up arrangements.
Cyber security risks are
increasing globally.
* Awareness training and management briefings held on
cyber security risks and actions taken on
preventative measures.
* Regular reviews of cyber security, including external
penetration testing.
* Energy supply and contingency arrangements reviewed
periodically.
* Critical plant and equipment is identified, with
associated breakdown/recovery plans, including
assessment of engineering spares held on site.
* Business interruption insurance to cover residual
risks.
Product warranty/recall
risks * Robust internal quality systems, compliance with
Comment relevant legislation, building regulations and
industry standards (e.g. ISO, BBA etc), and product
The Group does not have testing, as appropriate.
a history of significant
warranty claims or product
recall.
* Group insurance programme to cover larger potential
risks.
* Back to back warranties obtained from suppliers where
possible.
* Specific local risk management procedures in group
brands that also install (as well as supply) building
products (i.e. Levolux and Blackdown).
------------------------------------------------------------------
Health and safety risks
Comment * Health and safety is the number one priority of
management and the first Board agenda item.
The Group has a strong
overall track record of
health & safety performance,
with the number of lost * Health and safety KPI's measured, reported and
time accidents significantly reviewed monthly including the Performance Rate
reduced over recent years. Index.
* Risk assessments are carried out and safe systems of
work documented and communicated.
* All safety incidents and significant near misses
reported at Board level monthly. Appropriate remedial
action taken.
* Group health and safety best practice days are held
twice a year, chaired by the Chief Executive.
* Annual audits of health and safety in all group
businesses by independent consultants.
* Specific focus on improving safety of higher risk
operations, with external consultancy support as
needed.
------------------------------------------------------------------
Credit risk
* Most credit risks are insured, including all
Comment contracting credit risk.
The Group has good recent
record in managing credit
risks. * Large export contracts are backed by letters of
credit, performance bonds, guarantees or similar.
* Any risks taken above insured limits are subject to
strict delegated authority limits.
* Credit checks when accepting new customers/new work.
* The Group employs experienced credit controllers and
aged debt reports are reviewed in monthly Board
meetings.
------------------------------------------------------------------
Consolidated STATEMENT of comprehensive income
For the year ended 30 June 2019
Year to 30 June 2018
Year to 30 June 2019 (restated)*
Non-underlying Non-underlying
Underlying Total Underlying Total
Continuing operations: Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 4 90,104 - 90,104 87,048 - 87,048
Cost of sales (63,255) - (63,255) (60,101) - (60,101)
---------- -------------- -------- ---------- -------------- --------
Gross profit 26,849 - 26,849 26,947 - 26,947
Net operating expenses
Net operating expenses
before non-underlying
items (20,984) - (20,984) (20,723) - (20,723)
IAS 19 past service
pension cost & settlement
gain 5 - (787) (787) - - -
Other non-underlying
items 5 - (3,439) (3,439) - (588) (588)
Net operating expenses (20,984) (4,226) (25,210) (20,723) (588) (21,311)
Operating profit 4, 5 5,865 (4,226) 1,639 6,224 (588) 5,636
Finance expenses (281) (373) (654) (212) (494) (706)
---------- -------------- -------- ---------- -------------- --------
Profit before taxation 5,584 (4,599) 985 6,012 (1,082) 4,930
Tax expense 8 (1,139) 883 (256) (1,214) 247 (967)
---------- -------------- -------- ---------- -------------- --------
Profit for the period
from continuing operations 4,445 (3,716) 729 4,798 (835) 3,963
Discontinued operations:
Profit after taxation
for the period from
discontinued operations 6 - 2,912 2,912 - 354 354
Profit for the period 4,445 (804) 3,641 4,798 (481) 4,317
========== ============== ======== ========== ============== ========
Other comprehensive
income:
Items that will not
be recycled to profit
or loss:
Actuarial gain on
defined benefit pensions,
net of tax 123 2,280
-------- --------
Items that are or
may be recycled subsequently
to profit or loss:
Effective portion
of changes in fair
value of cash flow
hedges, net of tax 263 (220)
Exchange differences
on retranslation of
foreign operations 4 2
267 (218)
-------- --------
Other comprehensive
gain for the period,
net of tax 390 2,062
-------- --------
Total comprehensive
profit for the period,
net of tax 4,031 6,379
======== ========
Earnings per share Pence Pence
Basic earnings per
share
- Continuing operations 2.0 11.0
- Discontinued operations 8.1 1.0
10 10.1 12.0
======== ========
Diluted earnings per
share
- Continuing operations 2.0 10.9
- Discontinued operations 8.1 1.0
10 10.1 11.9
======== ========
Alternative Performance
Measures:
Underlying earnings
per share (pence) 12.4 13.4
======== ========
*The results for the year to 30 June 2018 have been re-presented to show the Facades business as a discontinued operation. See note 6 for details.
Reconciliations of underlying to statutory profit and earnings per share are provided in notes 5 and 10 respectively.
consolidated statement of financial position
At 30 June 2019
Notes 2019 2019 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 11,693 10,661
Goodwill 7 18,705 18,705
Other intangible assets 3,416 3,913
Deferred tax assets 8 2,202 2,574
-------- --------
36,016 35,853
Current assets
Inventories 10,488 10,440
Trade and other receivables 21,384 23,755
Corporation tax receivable 283 -
Cash and cash equivalents 2,762 4,656
-------- --------
34,917 38,851
Total assets 70,933 74,704
======== ========
Liabilities
Non-current liabilities
Interest bearing loans
and borrowings (7,857) (9,468)
Employee benefits payable (12,951) (15,140)
Provisions (1,272) (1,525)
Deferred tax liabilities 8 (954) (905)
-------- --------
(23,034) (27,038)
Current liabilities
Trade and other payables (20,111) (22,413)
Provisions (2,333) (100)
Corporation tax payable - (405)
Derivative financial liabilities (10) (327)
-------- --------
(22,454) (23,245)
Total liabilities (45,488) (50,283)
======== ========
Net assets 25,445 24,421
======== ========
Equity
Called up share capital 4,517 4,517
Share premium 11 445 445
Capital reserve - own
shares 11 (416) (241)
Hedging reserve 11 (8) (271)
Foreign currency reserve 11 90 86
Profit and loss account
reserve 20,817 19,885
-------- --------
Total equity 25,445 24,421
======== ========
Paul Hooper Andrew Magson
Director Director
5 September 2019
Company number 1767387
consolidated STATEMENT of cash flows
For the year ended 30 June 2019
Year to Year to
30 June 30 June
2019 2018
Notes GBP'000 GBP'000
Operating activities
Operating profit 1,639 5,636
Adjustments for:
Depreciation 1,335 1,081
Amortisation 514 434
Gain on disposal of property, plant and
equipment (17) (18)
Loss on disposal of business assets - 218
Gain on disposal of available-for-sale assets - (426)
IAS 19 past service pension cost 5 1,111 -
IAS 19 settlement gain on merger of pension
schemes 5 (324) -
(Increase)/decrease in inventories (1,722) 580
Increase in receivables (48) (1,110)
Increase/(decrease) in trade and other payables 1,229 (1,444)
Movement in provisions 1,637 242
Cash contributions to retirement benefit
schemes (3,202) (3,203)
Share based payments (65) 160
-------- --------
Cash generated by operating activities of
continuing operations 2,087 2,150
Operating profit from discontinued operation 163 444
Depreciation and amortisation 60 123
Movement in working capital from discontinued
operation (396) (316)
Cash generated by operating activities of
discontinued operation 6 (173) 251
Tax paid (634) (679)
Net cash inflow from operating activities 1,280 1,722
-------- --------
Investing activities
Purchase of property, plant and equipment
- continuing operations (2,296) (2,967)
Purchase of property, plant and equipment
- discontinued operations 6 (15) (75)
Payments to acquire intangible fixed assets (115) (229)
Proceeds from sales of property, plant and
equipment 116 26
Acquisition of subsidiary undertaking, prior
to payment for cash acquired - (7,807)
Net proceeds from sale of business activity 6 3,886 767
Proceeds from sale of available-for-sale
assets - 443
Net cash inflow/(outflow) from investing
activities 1,576 (9,842)
-------- --------
Financing activities
Interest paid (232) (185)
Equity dividends paid (2,628) (2,594)
(Repayment)/draw down of amounts borrowed (1,500) 6,500
Refinancing costs (156) -
Purchase of own shares (238) -
Exercise of share based incentives - 39
Net cash (outflow)/inflow from financing
activities (4,754) 3,760
-------- --------
Net decrease in cash and cash equivalents (1,898) (4,360)
Net cash and cash equivalents brought forward 4,656 9,014
Net decrease in cash and cash equivalents (1,898) (4,360)
Effect of foreign exchange rate changes 4 2
Net cash and cash equivalents carried forward 2,762 4,656
======== ========
consolidated STATEMENT of changes in equity
For the year ended 30 June 2019
Hedging Foreign Profit Total equity
Capital reserve reserve currency and loss
Share - reserve account
Notes Share capital premium own shares reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2017 4,517 445 (541) (51) 84 15,983 20,437
Profit for the
period - - - - - 4,317 4,317
Exchange differences
on retranslation
of foreign
operations - - - - 2 - 2
Net loss on cash
flow hedges - - - (265) - - (265)
Tax on derivative
financial liability - - - 45 - - 45
Actuarial gain on
defined benefit
pensions, net of
tax - - - - - 2,280 2,280
Dividends 9 - - - - - (2,594) (2,594)
Share based payments - - - - - 160 160
Own shares used to
satisfy exercise
of share awards - - 300 - - - 300
Exercise of share
based incentives - - - - - (261) (261)
At 1 July 2018, as
previously
reported 4,517 445 (241) (271) 86 19,885 24,421
Impact of change in
accounting
policy - IFRS 15
(see note 1) - - - - - (76) (76)
Adjusted balance at
1 July 2018 4,517 445 (241) (271) 86 19,809 24,345
Profit for the
period - - - - - 3,641 3,641
Exchange differences
on retranslation
of foreign
operations - - - - 4 - 4
Net gain on cash
flow hedges - - - 317 - - 317
Tax on derivative
financial liability - - - (54) - - (54)
Actuarial gain on
defined benefit
pensions, net of
tax - - - - - 123 123
Dividends 9 - - - - - (2,628) (2,628)
Share based payments - - - - - (65) (65)
Own shares used to
satisfy exercise
of share awards - - 63 - - - 63
Acquisition of own
shares - - (238) - - - (238)
Exercise of share
based incentives - - - - - (63) (63)
At 30 June 2019 4,517 445 (416) (8) 90 20,817 25,445
------------- -------- --------------- --------- ---------- --------- -------------
Notes
1 basis of preparation
The Alumasc Group plc is incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on the Alternative Investment Market ("AIM").
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union as they apply to the financial statements of the Group for the year ended 30 June 2019, and the Companies Act 2006.
The financial information set out in this announcement does not constitute the group's statutory information for the years ended 30 June 2019 or 2018, but is derived from the group's 2019 statutory financial statements. The group's consolidated financial information has been prepared in accordance with accounting policies consistent with those adopted for the year ended 30 June 2018 except for the adoption of the new financial reporting standards disclosed in note 3. Statutory accounts for 2018 have been delivered to the registrar of companies and those for 2019 will be delivered following the group's Annual General Meeting. The auditor has reported on these accounts, their reports were unqualified and did not contain statements under the Companies Act 2006, s498(2) or (3).
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report. The financial position of the Group, its cash flows and liquidity position are set out in these financial statements.
The Group has a committed GBP20 million revolving credit facility which has an initial expiry date of April 2022 and two single year extension periods. The Group has the option to cancel and repay elements of the committed facility at short notice should it wish to do so. The extension periods are subject to request by the Group and acceptance by the lender. In addition, the Group has overdraft facilities totalling GBP4.0 million. At 30 June 2019 the Group's net debt was GBP5.1 million (2018: GBP4.8 million).
On the basis of the Group's financing facilities and current operating and financial plans and sensitivity analyses, the Board is satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future and accordingly continues to adopt the going concern basis in preparing the financial statements.
2 judgments and estimates
The main source of estimation uncertainty that could have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities at 30 June 2019 within the next financial year are the valuation of defined benefit pension obligations, the valuation of the Group's acquired goodwill and the recognition of revenues and profit on contracts with customers where revenue is recognised over time.
Measurement of defined benefit pension obligations requires estimation of future changes in inflation, mortality rates and the selection of a suitable discount rate.
Goodwill is tested at least annually for impairment, with appropriate assumptions and estimates built into the value in use calculations to determine if an impairment of the carrying value is required. See note 7 for further disclosure of the assumptions and estimates applied.
Revenue and associated margin recognised over time on contracts with customers is recognised using the input method under the new standard and therefore progressively as costs are incurred, having regard to latest estimates of cost to complete and expected project margins. Contract revenue includes an assessment of contract variations when their recovery is considered highly probable. Judgment is therefore required in the application of the Group's policy regarding revenue and profit recognition relating to estimates of costs to complete contracts, the final profit margin on those contracts and the inclusion of potential contract variations prior to these being fully agreed.
3 Summary of significant accounting policies
Changes in accounting policy
The following new standards, amendments and interpretations are effective for the period beginning on or after 1 July 2018 and have been adopted for the Group financial statements:
IFRS 9: Financial Instruments; and
IFRS 15: Revenue from Contracts with Customers.
IFRS 15 Revenue from Contracts with Customers
The directors have completed their assessment of the impact of IFRS 15 "Revenue from Contracts with Customers" and the Group has adopted the new standard for the financial year ending 30 June 2019 using the cumulative effect method, as the net impact of adopting the new standard is not significant. As a result of adopting the input method of revenue recognition under the new standard as opposed to the output method in the old standard, the Group has re-stated its opening equity position as at 1 July 2018 by reducing its profit and loss reserve by GBP76,000 to reflect the impact of transitioning to IFRS 15, see note 13. The comparative information for the twelve month period to 30 June 2018 has not been re-stated and continues to be reported under IAS 18 Revenue and IAS 11 Construction contracts, the accounting policies stated in the annual report for the year ended 30 June 2018.
IFRS 15 has impacted the Group in the following ways:
Architectural Screening, Solar Shading & Balconies:
All revenue within the Architectural Screening, Solar Shading & Balconies division, for which revenue was previously recognised over time measured by reference to the stage of completion of the contract on an output cost method based on Quantity Surveyor assessments, will now be recognised on an input cost method over time.
Revenue and associated margin are therefore recognised progressively as costs are incurred, having regard to latest estimates of cost to complete and expected project margins. The Group has determined that this method more fairly reflects progress in satisfying customer performance obligations.
Other revenue streams:
The Group has concluded that the impact of adopting IFRS 15 in our Roofing & Water Management and Housebuilding Products divisions at 30 June 2018 is immaterial because the point at which performance obligations to customers were satisfied under IFRS 15 at that date was similar to the point at which risks and rewards were transferred under IAS 18. It is possible that, should the value of bespoke contract work in the Roofing & Water Management division become material in the future, IFRS 15 could result in earlier recognition of revenue and profit over time. Revenue relating to supply and install contracts at Blackdown Greenroofs in the Roofing & Water Management division was recognised over time using an output method during the 2018/19 financial year but will move to an input method going forwards.
IFRS 9 Financial Instruments
The Group has adopted IFRS 9 "Financial Instruments" from 1 July 2018. IFRS 9 replaces IAS 39 "Financial Instruments: Recognition and Measurement" and specifies how an entity should classify and measure financial assets and liabilities. The most significant area of change which could potentially impact the Group's reported results is the introduction of an "expected loss" model for impairment provisioning of receivables, which now also includes contract assets recognised under the adoption of IFRS 15 "Revenue from Contracts with Customers". Based on an assessment of historic credit losses and the likelihood of the occurrence of future credit losses on existing financial assets, and the existence of credit insurance for the majority of Group receivables, the directors consider that there are no further material impairment losses to be recognised against the Group's financial assets as a result of the transition to IFRS 9.
4 segmental analysis
In accordance with IFRS 8 "Operating Segments", the segmental analysis below follows the Group's internal management reporting structure.
The Chief Executive reviews internal management reports on a monthly basis, with performance being measured based on the segmental operating result as disclosed below. Performance is measured on this basis as management believes this information is the most relevant when evaluating the impact of strategic decisions because of similarities between the nature of products and services, routes to market and supply chains in each segment.
Inter-segment transactions are entered into applying normal commercial terms that would be available to third parties. Segment results, assets and liabilities include those items directly attributable to a segment. Unallocated assets comprise cash and cash equivalents, deferred tax assets, income tax recoverable and corporate assets that cannot be allocated on a reasonable basis to a reportable segment. Unallocated liabilities comprise borrowings, employee benefit obligations, deferred tax liabilities, income tax payable and corporate liabilities that cannot be allocated on a reasonable basis to a reportable segment.
The Group sold the Alumasc Facades business on 31 October 2018. This has been treated as a discontinued operation (see note 6). Revenues and operating results from this business have been excluded from the segmental analysis below. This business was formerly part of the Group's Roofing & Walling operating segment in prior years. Due to changes to internal management reporting responsibilities to the Chief Operating Decision Maker in respect of the Roofing business following the sale of Alumasc Facades, this business is now included within the Roofing & Water Management segment.
Segmental
operating
Revenue result
GBP'000 GBP'000
Full Year to 30 June 2019
Roofing & Water Management 59,917 5,918
Architectural Screening, Solar Shading & Balconies 18,789 (1,107)
Housebuilding Products 11,398 1,732
------- ----------
Sub-total 90,104 6,543
Unallocated costs (678)
Total from continuing operations 90,104 5,865
======= ==========
GBP'000
Segmental operating result 5,865
Brand amortisation (238)
Past service cost in respect of GMP equalisation
(see note 5) (1,111)
Settlement gain on merger of pension schemes (see
note 5) 324
Restructuring & relocation costs (see note 5) (3,021)
AIM re-listing costs (see note 5) (180)
Total operating profit from continuing operations 1,639
=======
Capital expenditure
-----------------------
Segment Segment Property, Other Deprecia-tion Amortisa-tion
Assets Liabilities Plant & Intangible
Equipment Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Roofing & Water Management 36,211 (14,027) 1,341 49 810 188
Architectural Screening,
Solar Shading & Balconies 18,089 (5,997) 149 55 61 290
Housebuilding Products 10,003 (3,191) 1,041 11 399 36
Sub-total 64,303 (23,215) 2,531 115 1,270 514
Unallocated/discontinued 6,630 (22,273) 78 - 125 -
Total 70,933 (45,488) 2,609 115 1,395 514
======== ============= ========== =========== ============== ==============
Segmental
operating
Revenue result
GBP'000 GBP'000
Full Year to 30 June 2018
Roofing & Water Management 54,608 4,935
Architectural Screening, Solar Shading & Balconies 21,957 786
Housebuilding Products 10,483 1,660
------- ----------
Sub-total 87,048 7,381
Unallocated costs (1,157)
Total from continuing operations 87,048 6,224
======= ==========
GBP'000
Segmental operating result 6,224
Brand amortisation (239)
Loss on disposal of SCP assets (218)
Profit on disposal of available-for-sale assets 426
Restructuring & relocation costs (322)
Wade acquisition costs (235)
Total operating profit from continuing operations 5,636
=======
Capital expenditure
-----------------------
Segment Segment Property, Other Deprecia-tion Amortisa-tion
Assets Liabilities Plant & Intangible
Equipment Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Roofing & Water Management 33,795 (11,555) 536 158 689 132
Architectural Screening,
Solar Shading & Balconies 19,647 (5,317) 100 21 63 258
Housebuilding Products 9,426 (3,612) 2,187 57 305 43
Sub-total 62,868 (20,484) 2,823 236 1,057 433
Unallocated & discontinued 11,836 (29,799) 257 1 147 1
Total 74,704 (50,283) 3,080 237 1,204 434
======== ============= ========== =========== ============== ==============
Analysis by geographical segment 2018/19
United North Middle Far Rest of
Kingdom Europe America East East World Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Sales to external
customers 80,677 2,695 3,149 972 2,392 219 90,104
Segment non-current
assets 33,814 - - - - - 33,814
Analysis by geographical segment 2017/18
United North Middle Far Rest of
Kingdom Europe America East East World Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Sales to external
customers 74,508 3,006 5,552 839 2,849 294 87,048
Segment non-current
assets 32,671 - - - - - 32,671
Segment revenue by geographical segment represents revenue from external customers based upon the geographical location of the customer. The analyses of segment non-current assets are based upon location of the assets and exclude discontinued operations.
5 UNDERLYING to Statutory profit before tax reconciliation
2018/19 2017/18 (restated)
------------------ --------------------
Operating Profit Operating Profit
profit before profit before
tax tax
GBP'000 GBP'000 GBP'000 GBP'000
Underlying operating profit/profit
before tax 5,865 5,584 6,224 6,012
Brand amortisation (238) (238) (239) (239)
IAS 19 net pension scheme finance
costs - (373) - (494)
IAS 19 Past service cost in respect
of GMP equalisation (1,111) (1,111) - -
IAS 19 Settlement gain on merger
of pension schemes 324 324 - -
Restructuring & relocation costs (3,021) (3,021) (322) (322)
AIM re-listing costs (180) (180) - -
Loss on disposal of the SCP business - - (218) (218)
Profit on disposal of available-for-sale
assets - - 426 426
Wade acquisition costs - - (235) (235)
Operating profit of Alumasc Facades* 163 163 444 444
Gain on disposal of Alumasc Facades* - 2,782 - -
Statutory operating profit/profit
before tax 1,802 3,930 6,080 5,374
========= ======= =========== =======
Statutory profit analysed by continuing and discontinued operations:
Continuing 1,639 985 5,636 4,930
Discontinued (note 6) 163 2,945 444 444
Statutory operating profit/profit
before tax 1,802 3,930 6,080 5,374
===== ===== ===== =====
*Alumasc Facades meets the definition of a discontinued operation under international accounting standards. See note 6. The gain on sale of this operation is therefore excluded from underlying operating profit and underlying profit before tax from continuing operations.
In the presentation of underlying profits, management treats the amortisation of acquired brands and IAS 19 pension costs consistently as non-underlying items because they are material non-cash and non-trading items that typically would be excluded in assessing the value of the business.
In addition, management has presented the following specific items that arose in 2018/19 and 2017/18 financial years as non-underlying as they are non-recurring items that are judged to be significant enough to affect the understanding of the year-on-year evolution of the underlying trading performance of the business:
- The one off IAS 19 past service pension cost relating to Guaranteed Minimum Pension ("GMP") equalisation between men and women, following a High Court decision on 26 October 2018;
- The one off settlement gain arising from the merger of the Group's pension schemes on 5 March 2019;
- One-off costs of material restructuring and relocation of separate businesses within the Group in 2018/19 and 2017/18;
- The one-off professional fees incurred in connection with the re-listing of Alumasc's shares from the main market to the Alternative Investment Market ("AIM") on 25 June 2019;
- The loss on disposal of the Scaffold and Construction Products ("SCP") business, which was sold on 31 July 2017;
- The profit on disposal of the Group's share of Amorim Isolamentos S.A on 21 November 2017, a previously available-for-sale asset; and
- Acquisition costs relating to the purchase of Wade International Limited on 31 January 2018.
6 discontinued operations
Discontinued operations relate to the Alumasc Facades business which was divested by the Group on 31 October 2018.
The results of Alumasc Facades included in the consolidated statement of comprehensive income are as follows:
Year to 30 Year to 30
June 2019 June 2018
GBP'000 GBP'000
Revenue 3,763 11,359
Operating profit 163 444
Net gain on disposal of discontinued operation 2,782 -
Profit before taxation 2,945 444
Tax charge (33) (90)
Profit after taxation 2,912 354
========== ==========
GBP'000
Gross sales proceeds 4,500
Transaction costs of disposal (100)
Cash cost of consequential restructuring/decommissioning (514)
Net sales proceeds at 30 June 2019 3,886
Provisions for restructuring and plant decommissioning
costs (343)
Sales proceeds after restructuring and plant decommissioning 3,543
Net assets disposed of:
Plant & equipment (84)
Working capital at completion (677)
Net gain on disposal 2,782
=======
The net cash flows attributable to discontinued operations are as follows:
Operating cash flows 223
Movement in working capital (396)
Investing cash flows - proceeds from sale of business 3,886
Investing cash flows - purchase of property, plant and
equipment (15)
Net cash inflow 3,698
=====
The business sale agreement included a clause that deferred consideration could become payable to Alumasc based on the sales revenue of the business in its first twelve month period under new ownership of up to GBP1.5 million. This period ends on 31 October 2019. The extent of, if any, deferred consideration will be calculated based on actual sales achieved relative to pre-agreed target levels set out in the agreement. On the basis of the limited data that the Buyer is required to provide at the time and the degree of remaining uncertainty as to the level of sales likely to be achieved in the period to 31 October, no accrual for potential deferred consideration has been made in these financial statements.
7 GOODWILL
2019 2018
GBP'000 GBP'000
Cost:
At 1 July 19,428 17,211
Acquisition of Wade - 2,217
At 30 June 19,428 19,428
Impairment:
At 1 July and 30 June 723 723
====== ======
Net book value at 30 June 18,705 18,705
====== ======
Goodwill acquired through acquisitions has been allocated to cash generating units for impairment testing as set out below:
2019 2018
GBP'000 GBP'000
Alumasc Roofing 3,820 3,820
Timloc 2,264 2,264
Levolux 10,179 10,179
Rainclear 225 225
Wade 2,217 2,217
------- -------
At 30 June 18,705 18,705
======= =======
Impairment testing of acquired goodwill
The Group considers each of the operating businesses that have goodwill allocated to them, which are those units for which a separate cashflow is computed, to be a cash generating unit (CGU). Each CGU is reviewed annually for indicators of impairment. In assessing whether an asset has been impaired, the carrying amount of the CGU is compared to its recoverable amount. The recoverable amount is the higher of its fair value less costs to sell and its value in use. In the absence of any information about the fair value of a CGU, the recoverable amount is deemed to be its value in use. Each of the CGUs are either operating segments as shown in note 4, or sub-sets of those operating segments.
For the purpose of impairment testing, the recoverable amount of CGUs is based on value in use calculations. The value in use is derived from discounted management cash flow forecasts for the businesses, based on budgets and plans covering a five year period. The growth rate used to extrapolate the cash flows beyond this period was 1% (2018: 1%) for each CGU.
Key assumptions included in the recoverable amount calculation are the discount rate applied and the cash flows generated by:
(i) Revenues (ii) Gross margins (iii) Overhead costs
Each assumption has been considered in conjunction with the local management of the relevant operating businesses who have used their past experience and expectations of future market and business developments in arriving at the figures used.
The range of pre-tax rates used to discount the cash flows of these cash generating units with on-balance sheet goodwill was between 11% and 12% (2018: between 11% and 12%). These rates were based on the Group's estimated weighted average cost of capital (W.A.C.C.), which was risk-adjusted for each CGU taking into account both external and internal risks. The Group's W.A.C.C. in 2019 was similar to the rate used in 2018.
The surplus headroom above the carrying value of goodwill at 30 June 2019 was significant in the case of Timloc, Rainclear, Wade and Alumasc Roofing, with no impairment arising from either a 2% increase in the discount rate; a growth rate of -1% used to extrapolate the cash flows; or a reduction of 25% in the cash flow generated in the terminal year.
The surplus headroom above the carrying value of goodwill at 30 June 2019 for Levolux was not significant and the following change to each of the key assumptions would lead to an impairment:
- a 2% increase in the discount rate; - a growth rate of -1% used to extrapolate the cash flows; - a 21% reduction in the cash flow generated in the terminal year.
Business Combinations
On 31 January 2018 the Group acquired 100% of the share capital of Wade International Limited ("Wade"), a leading manufacturer and supplier of high quality metal drainage products and access covers with a well-established premium brand, for an enterprise value of GBP8,000,000. See Report and Accounts 2018 for full disclosure.
8 TAX EXPENSE
(a.) Tax on profit on ordinary activities
Tax charged in the statement of comprehensive income
2018/19 2017/18
GBP'000 GBP'000
Current tax:
UK corporation tax - continuing operations (69) 469
- discontinued operations 33 90
Overseas tax 3 33
Amounts over provided in previous years (21) (2)
Total current tax (54) 590
======= =======
Deferred tax:
Origination and reversal of temporary differences 406 491
Amounts (over)/under provided in previous years (20) 5
Rate change adjustment (43) (29)
------- -------
Total deferred tax 343 467
Total tax expense 289 1,057
======= =======
Tax charge on continuing operations 256 967
Tax charge on discontinued operations 33 90
Total tax expense 289 1,057
=== =====
Tax recognised in other comprehensive income
Deferred tax:
Actuarial gains on pension schemes 24 467
Cash flow hedge 54 (45)
Tax charged to other comprehensive income 78 422
=== =====
Total tax charge in the statement of comprehensive
income 367 1,479
=== =====
(b.) Reconciliation of the total tax charge
The total tax rate applicable to the tax expense shown in the statement of total comprehensive income of 7.4% is lower than (2017/18: 19.7% was higher than) the standard rate of corporation tax in the UK of 19.0% (2017/18: 19.0%).
The differences are reconciled below:
2018/19 2017/18
GBP'000 GBP'000
Profit before tax from continuing operations 985 4,930
Profit before tax from discontinued operations 2,945 444
Accounting profit before tax 3,930 5,374
Current tax at the UK standard rate of 19.0% (2017/18:
19.0%) 747 1,021
Expenses not deductible for tax purposes 265 62
Use of capital losses (639) -
Rate change adjustment (43) (29)
Tax over provided in previous years - current tax (21) (2)
Tax (over)/under provided in previous years - deferred
tax (20) 5
289 1,057
======= =======
(c.) Unrecognised tax losses
The Group has agreed tax capital losses in the UK amounting to GBP16.6 million (2018: GBP20 million) that relate to prior years. Under current legislation these losses are available for offset against future chargeable gains. The capital losses are able to be carried forward indefinitely. Revaluation gains on land and buildings amount to GBP1 million (2018: GBP1 million). These have been offset against the capital losses detailed above. A deferred tax asset has not been recognised in respect of the net capital losses carried forward of GBP16 million (2018: GBP19 million) as they do not meet the criteria for recognition.
(d.) Deferred tax
A reconciliation of the movement in deferred tax during the year is as follows:
Pension
Accelerated Short term Total deferred
capital temporary deferred tax
allowances differences Brands Hedging tax liability asset
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2017 339 (32) 299 (11) 595 (3,501)
Charged/(credited)
to the statement
of comprehensive
income - current
year 58 (15) (41) - 2 460
(Credited)/charged
to the statement
of comprehensive
income - prior year (12) 17 - - 5 -
Charged to equity - - - (45) (45) 467
Acquisition of subsidiary 50 - 298 - 348 -
At 30 June 2018 435 (30) 556 (56) 905 (2,574)
============ ============= ======= ======== =============== ==========
Charged/(credited)
to the statement
of comprehensive
income - current
year 125 (36) (74) - 15 348
Credited to the statement
of comprehensive
income - prior year (20) - - - (20) -
Charged to equity - - - 54 54 24
At 30 June 2019 540 (66) 482 (2) 954 (2,202)
============ ============= ======= ======== =============== ==========
Deferred tax assets and liabilities are presented as non-current in the consolidated statement of financial position.
Deferred tax assets have been recognised where it is probable that they will be recovered. Deferred tax assets of GBP2.7 million (2018: GBP3.2 million) have not been recognised in respect of net capital losses of GBP16 million (2018: GBP19 million), see note 8 (c).
(e.) Factors affecting the tax charge in future periods
In the Budget on 16 March 2016, the UK Government announced its intention to further reduce the main rate of UK corporation tax to 17% with effect from 1 April 2020. Existing temporary differences on which deferred tax has been provided may therefore unwind in future periods at this reduced rate. This rate change was substantively enacted at the 30 June 2018 balance sheet date. Deferred tax assets and liabilities have therefore been calculated based on the rate of 17% substantively enacted at both the 30 June 2018 and 30 June 2019 balance sheet dates.
9 dividends
2018/19 2017/18
GBP'000 GBP'000
Interim dividend for 2019 of 2.95p paid on 8
April 2019 1,045 -
Final dividend for 2018 of 4.4p paid on 31 October
2018 1,583 -
Interim dividend for 2018 of 2.95p paid on 6
April 2018 - 1,056
Final dividend for 2017 of 4.3p paid on 31 October
2017 - 1,538
2,628 2,594
======= =======
A final dividend of 4.4 pence per equity share, at a cash cost of GBP1,574,000, has been proposed for the year ended 30 June 2019, payable on 31 October 2019. In accordance with IFRS accounting requirements this dividend has not been accrued in these consolidated financial statements.
10 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:
2018/19 2017/18
GBP'000 GBP'000
Net profit attributable to equity holders of
the parent - continuing operations 729 3,963
Net profit attributable to equity holders of
the parent - discontinued operations 2,912 354
3,641 4,317
======= =======
000s 000s
Weighted average number of shares 35,956 35,830
Dilutive potential ordinary shares - employee
share options 153 361
36,109 36,191
======= =======
2018/19 2017/18
Basic earnings per share: Pence Pence
Continuing operations 2.0 11.0
Discontinued operations 8.1 1.0
10.1 12.0
======= =======
Diluted earnings per share: 2018/19 2017/18
Pence Pence
Continuing operations 2.0 10.9
Discontinued operations 8.1 1.0
10.1 11.9
======= =======
Calculation of underlying earnings per share:
2018/19 2017/18
GBP'000 GBP'000
Reported profit before taxation from continuing
operations 985 4,930
Brand amortisation 238 239
IAS 19 net pension scheme finance costs 373 494
Pension GMP equalisation 1,111 -
Winding up lump sums (324) -
Restructuring & relocation costs 3,021 322
AIM re-listing costs 180 -
Loss on disposal of the SCP assets - 218
Profit on disposal of available-for-sale assets - (426)
Wade acquisition costs - 235
Underlying profit before taxation from continuing
operations 5,584 6,012
Tax at underlying Group tax rate of 20.4% (2017/18:
20.3%) (1,139) (1,220)
------- -------
Underlying earnings from continuing operations 4,445 4,792
------- -------
Weighted average number of shares 35,956 35,830
Underlying earnings per share from continuing
operations 12.4p 13.4p
======= =======
11 movements in equity
Share capital and share premium
The balances classified as share capital and share premium are the proceeds of the nominal value and premium value respectively on issue of the Company's equity share capital net of issue costs.
Capital reserve - own shares
The capital reserve - own shares relates to 369,245 (2018: 161,411) ordinary own shares held by the Company. The market value of shares at 30 June 2019 was GBP348,936 (2018: GBP217,905). These are held to help satisfy the exercise of awards under the Company's Long Term Incentive Plans. During the year 42,166 shares with a cost of GBP63,000 were used to satisfy the exercise of awards and 250,000 shares with a cost of GBP238,000 were purchased by the Trust. A Trust holds the shares in its name and shares are awarded to employees on request by the Group. The Group bears the expenses of the Trust.
Hedging reserve
This reserve records the post-tax portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.
Foreign currency reserve
This foreign currency reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.
12 Related party disclosure
The Group's principal actively trading subsidiaries at 30 June 2019 are listed below:
Country of % of equity interest
Principal subsidiaries Principal activity incorporation and votes held
2019 2018
Alumasc Building Products
Limited Building products England 100 100
Levolux Limited Building products England 100 100
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made at arms-length market prices. Outstanding balances at the year end are unsecured and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables.
Transactions with other related parties
Key management personnel are determined as the Directors of The Alumasc Group plc.
13 IFRS 15 impact of transition
Transition
The Group has taken advantage of the relief in IFRS 15 to reflect the aggregate effect of all modifications that occurred before the transition date of 1 July 2018 as an adjustment to the Group's profit and loss account reserve at 1 July 2018. This is because the net impact of adopting the new standard, being a reduction in the profit and loss account reserve and therefore net assets at that date of GBP76,000 is not significant.
Impact on year to 30 June 2019
Had the Group continued to report in accordance with IAS 18 "Revenue" for the twelve months ended 30 June 2019, it would have reported the following amounts in these financial statements:
As would have Effect As reported
been reported under IFRS
15
GBP'000 GBP'000 GBP'000
Income statement extract (continuing
operations):
Revenue 88,254 1,850 90,104
Underlying profit before tax 4,801 783 5,584
Statutory profit before tax 202 783 985
Tax expense (96) (160) (256)
Statutory profit after tax 106 623 729
Statement of financial position
extract:
Contract assets/Accrued income
(included in Trade & other receivables) 2,668 334 3,002
Contract liabilities/Deferred income
(included in Trade & other payables) (1,578) 1,283 (295)
Inventory - Work in progress 834 (834) -
The main reasons for the differences are:
- Recognition of revenue and profit on an input cost method over time, measured by reference to the stage of completion of the contract, rather than on an output cost method over time based on Quantity Surveyor assessments;
- Resultant changes in the tax expense arising from the above adjustment.
Financial
Summary 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-----------
Income Statement
Summary
Continuing
operations:
Revenue 58,259 66,842 63,028 69,950 73,005 88,368 87,048 90,104
Underlying
operating
profit 2,667 5,345 5,099 6,341 7,010 8,703 6,224 5,865
Underlying
operating
margin 4.6% 8.0% 8.1% 9.1% 9.6% 9.8% 7.2% 6.5%
Net interest
cost on
borrowings (706) (767) (521) (592) (215) (132) (212) (281)
Underlying
profit before
tax 1,961 4,578 4,578 5,749 6,795 8,571 6,012 5,584
Non-underlying
items* (889) (2,984) (1,168) (1,434) (1,502) (888) (1,082) (4,599)
Profit before
taxation 1,072 1,594 3,410 4,315 5,293 7,683 4,930 985
Taxation (236) (598) (706) (1,120) (1,319) (1,492) (967) (256)
Profit for the
year from
continuing
operations 836 996 2,704 3,195 3,974 6,191 3,963 729
Discontinued
operations
- (Loss)/profit
after tax (423) 890 1,337 1,181 2,510 349 354 2,912
Profit for the
year 413 1,886 4,041 4,376 6,484 6,540 4,317 3,641
----------------- -------------- ------------- ------------- ------------- ---------- ---------- ----------- -----------
Underlying
earnings per
share from
continuing
operations
(pence) 3.8 9.5 9.7 12.6 15.1 19.1 13.4 12.4
Basic earnings
per share
(pence) 1.2 5.3 11.3 12.3 18.2 18.3 12.0 10.1
Dividends per
share (pence) 2.0 4.5 5.0 6.0 6.5 7.15 7.35 7.35
Balance Sheet
Summary at
30 June
Shareholders'
funds 18,928 22,443 17,042 15,929 16,580 20,437 24,421 25,445
Net debt/(cash) 13,229 7,687 7,666 (914) (8,632) (6,076) 4,812 5,095
Pension deficit
(net of
tax) 11,050 7,748 14,338 16,748 18,588 17,095 12,566 10,749
Discontinued
operations (13,943) (12,897) (11,769) (3,708) (479) (334) (714) 359
Capital Invested
- continuing
operations 29,264 24,981 27,277 28,055 26,057 31,122 41,085 41,648
----------------- -------------- ------------- ------------- ------------- ---------- ---------- ----------- -----------
Underlying
return on
capital
invested
(post-tax)** 6.3% 14.4% 14.8% 17.9% 20.5% 24.2% 13.8% 11.3%
Underlying tax
rate 31.6% 25.7% 24.2% 22.0% 20.8% 20.6% 20.2% 20.4%
Notes
* Non-underlying items comprise brand amortisation and IAS 19 pension costs
in all years. 2012/13 also includes an impairment charge and restructuring
costs. Further details of the 2017/18 and 2018/19 non underlying items can
be found in note 5.
** Underlying operating profit after tax from continuing operations calculated
using the underlying tax rate, as a percentage of average capital invested
from continuing operations.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR LLFLDALISIIA
(END) Dow Jones Newswires
September 05, 2019 02:00 ET (06:00 GMT)
1 Year Alumasc Chart |
1 Month Alumasc Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
