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Alumasc Group PLC Interim results

04/02/2021 7:00am

UK Regulatory (RNS & others)


Alumasc (LSE:ALU)
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From Feb 2021 to Aug 2021

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TIDMALU

RNS Number : 9307N

Alumasc Group PLC

04 February 2021

Thursday 4 February 2021

The Alumasc Group plc

Interim results

Outstanding H1 performance

Alumasc (ALU.L) the sustainable building products, systems and solutions Group today announces results for the six months ended 31 December 2020.

Commenting on the interim results, Paul Hooper, Chief Executive of Alumasc said:

"The Group's substantially strong performance of an 11% increase in revenues, 23% increase in export sales and more than 100% increase in underlying pre-tax profit during the period, reflects the successful execution of our repositioning strategy launched in 2019. This has been achieved by the hard work of the employees, for which I would like to thank them.

Alongside an increasingly strong financial performance, the Group has undertaken a significant number of internal initiatives to act in an environmentally sustainable manner, including sourcing 50% of the Group's electricity from sustainable sources. We are also in the process of setting internal metrics to monitor performance and aligning our ESG programme to TCFD and the UN Sustainability Goals. Many of our products contribute to carbon and water efficiency in the built environment and our internal initiatives contribute further to helping our customers mitigate their environmental impact.

Reflecting the Board's confidence in the year ahead, the underlying strength of the business and the strategic growth opportunities available to us, we have today proposed an interim dividend of 3.25 pence per share.

Our long-term strategy remains to continue to deliver profitable growth through our strategic positions in sustainable building products, while growing our export market. In spite of some potential industry headwinds, we will focus on delivering this to generate sustainable returns for all our stakeholders."

Financial Highlights:

Against a background of the continuing presence of COVID-19 and uncertainty surrounding the likelihood of a Trade Agreement being secured with the UK's exit from the EU, Alumasc's performance in H1 was outstanding.

- Group revenues were up by 11% to GBP45.6 million (2019: GBP41.1 million), with UK revenues 9% ahead and exports (representing 13% of Group revenues) 23% ahead

- Underlying operating margins were ahead by 7.5 percentage points to 13.6% (2019: 6.1%) reflecting increased sales, improved margins and the benefit of the prior year cost reduction programme in lower overheads

   -    Underlying profit before tax was GBP6.0 million (2019: GBP2.3 million) 
   -    EBITDA was GBP7.4 million (2019: GBP3.5 million) 
   -    Statutory profit before tax was GBP5.5 million (2019: GBP2.1 million) 

- Underlying earnings per share were 13.4 pence (2019: 5.1 pence) and basic earnings per share 12.2 pence (2019: 5.0 pence)

- Net bank debt at 31 December was GBP0.2 million (30 June 2020: GBP4.3 million), benefitting from strong focus on working capital management

- Pension deficit at 31 December was GBP12.8 million (30 June 2020: GBP19.3 million), benefitting from a strong investment performance

- An interim dividend of 3.25 pence per share is planned for payment in April 2021, reflecting the Board's confidence in the underlying strength of the business and strategic growth opportunities available to it. This would be an increase from the 2.95 pence per share interim dividend that was planned for April 2020 but which was cancelled in light of the Pandemic's onset.

Operational Highlights:

The Water Management Division, representing 42% of Group revenues, made a profit of GBP3.5 million (18% operating margin), GBP1.1 million (44%) ahead of the prior year first half, driven by GBP1.6 million (9%) volume increases, gross margin improvements and cost savings.

The Building Envelope Division, representing 46% of Group revenues, delivered a record performance, returning to profit of GBP2.5 million (12% operating margin), GBP2.8 million ahead of the prior year. This benefitted both from market share gains at Roofing and from a much improved performance at Levolux, where more disciplined opportunity qualification, project management and reduced overheads led to a profit in every month of H1.

Housebuilding Products Division, representing 12% of Group revenues, grew profit by 29% to GBP1.2 million (22% operating margin), testament to the success of new product introductions, outstanding service and stringent cost controls. The achievement of 100% On Time In Full delivery performance in H1 was clearly appreciated by its customers.

The Levolux restructuring and turnaround performance created a much improved performance in which it achieved a profit in each month of H1. As anticipated, revenues have fallen in line with our decision to strategically position it as a specialist provider of solar shading, architectural screening and modular balconies, with an increasing bias towards design and supply work. Its performance was largely driven by the growth of export sales to the US in this design and supply category. Improved opportunity qualification, and project management along with higher than budgeted cost reductions also contributed to the turnaround as the business continues to operate with a more professional approach to tender opportunity selection. The new approach is beginning to show a healthy pipeline of targeted projects for the future.

In addition, following a search using consultants we have identified a new Group Finance Director, who will join us on 1 March 2021, and have issued a separate RNS on this today.

Outlook

Underlying profit before tax at 13% of sales demonstrates what Alumasc can achieve in its chosen marketplace. The Group has a strong balance sheet, with a healthy cash position, and a well defined growth path. One mark of our confidence in the future is the resumption of the interim dividend today.

While it is encouraging that an EU Free Trade Agreement has been agreed, we wait to see how frictionless this is in practice and what the impact of the proposed cessation of the Help to Buy and Stamp Duty government initiatives in our Q3 might be. In spite of COVID-19 and its mutations which have put the UK into a third lockdown construction, at least at this stage, is being allowed to continue to operate. It is hoped that the roll-out of vaccines should result in a more stable situation in our Q4. Nevertheless, despite the above risks and uncertainties, the Group is now in a very strong position to move further forward.

 
  Enquiries: 
   The Alumasc Group plc Paul Hooper, CEO    + 44 (0) 1536 383844 
 
 
   Peel Hunt (Broker) 
   Mike Bell + 44 (0)207 418 8831 
 
   finnCap (NOMAD) 
   Julian Blunt + 44 (0)207 220 0500 
   Camarco: 
   Ginny Pulbrook + 44 (0)203 757 4992 
   Tom Huddart + 44 (0)203 757 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. The three segments are: Water Management; Building Envelope; and Housebuilding Products.

REVIEW OF INTERIM RESULTS

Overview

Financial Overview

-- Against a background of the continuing presence of COVID-19 and uncertainty surrounding the likelihood of a Trade Agreement being secured with the UK's exit from the EU Alumasc's performance in H1 was outstanding.

- Group revenues were up by 11% to GBP45.6 million (2019: GBP41.1 million), with UK revenues 9% ahead and exports (representing 13% of Group revenues) 23% ahead

   -   Gross margins were 36.7% (2019: 29.8%) 

- Underlying operating margins were ahead by 7.5 percentage points to 13.6% (2019: 6.1%) reflecting increased sales, improved margins and the benefit of the prior year cost reduction programme in lower overheads

   -    Underlying profit before tax was GBP6.0 million (2019: GBP2.3 million) 
   -    EBITDA was GBP7.4m (2019: GBP3.5m) 
   -    Statutory profit before tax was GBP5.5 million (2019: GBP2.1 million) 

- Underlying earnings per share were 13.4 pence (2019: 5.1 pence) and basic earnings per share 12.2 pence (2019: 5.0 pence)

- Net bank debt at 31 December was GBP0.2 million (30 June 2020: GBP4.3 million), benefitting from strong focus on working capital management.

-- An interim dividend of 3.25 pence per share is planned for payment in April 2021, reflecting the Board's confidence in the underlying strength of the business and strategic growth opportunities available to it. This would be an increase from the 2.95 pence per share interim dividend that was planned for April 2020 but which was cancelled in light of the COVID-19 Pandemic's onset.

-- Government grant income of GBP0.1 million was repaid during the period in relation to Coronavirus Job Retention Scheme income that had been claimed in the previous financial period for employees that have, unfortunately, subsequently been made redundant.

Operational Overview

-- The 11% uplift in our revenues to GBP45.6 million reflects an increase in our market share won particularly in our Roofing business and Water Management Division. Following a refocus of the customer profile our Housebuilding Products Division's revenue grew slightly, bolstered by the success of several new products across the last twelve months.

-- Export sales grew by 23% to GBP6.2 million, 13.5% of the total (2019: 12.1%), driven by sales to North America by Levolux.

-- The Water Management Division, representing 42% of Group revenues, made a profit of GBP3.5 million (18% operating margin), GBP1.1 million (44%) ahead of the prior year first half, driven by GBP1.6 million (9%) volume increases, gross margin improvements and cost savings. The division continued to deliver Rain to Drain solutions, enabling customers to benefit from rainwater and drainage products that capture, retain and control the flow of rainwater inside and outside buildings from origination source to water course, sewer or ground.

-- The Building Envelope Division, representing 46% of Group revenues, delivered a record performance, returning to profit of GBP2.5 million (12% operating margin), GBP2.8 million ahead of the prior year. This benefitted both from market share gains at Roofing and from the successful execution of the Levolux strategy, where more disciplined project management and reduced overheads led to a profit in every month of H1. The Roofing business has increased focus on a high end specification offer supported by the highest standards on a customer focused service level which meets the client's requirements on providing carbon reducing systems combined with safety in installation; all backed by bona fide long term warranties which combine to increase market share growth across all sectors.

-- Housebuilding Products Division, representing 12% of Group revenues, grew profit by 29% to GBP1.2 million (22% operating margin), testament to the success of new product introductions, outstanding service and stringent cost controls. The achievement of 100% On Time In Full delivery performance in H1 was clearly appreciated by its customers.

-- The Levolux restructuring and turnaround performance created a much improved performance in which it achieved a profit in each month of H1. As anticipated, revenues have fallen in line with our decision to strategically position it as a specialist provider of solar shading, architectural screening and modular balconies, with an increasing bias towards design and supply work. Its performance was largely driven by the growth of export sales to the US in this design and supply category. Improved opportunity qualification, and project management along with higher than budgeted cost reductions also contributed to the turnaround as the business continues to operate with a more professional approach to tender opportunity selection. The new approach is beginning to show a healthy pipeline of targeted projects for the future.

Outlook

-- Underlying profit before tax at 13% of sales demonstrates what Alumasc can achieve in its chosen marketplace. The Group has a strong balance sheet, with a healthy cash position, and a well defined growth path. One mark of our confidence in the future is the resumption of the interim dividend today.

-- While it is encouraging that an EU Free Trade Agreement has been agreed, we wait to see how frictionless this is in practice and what the impact of the proposed cessation of the Help to Buy and Stamp Duty government initiatives in our Q3 might be. In spite of COVID-19 and its mutations which have put the UK into a third lockdown construction, at least at this stage, is being allowed to continue to operate. It is hoped that the roll-out of vaccines should result in a more stable situation in our Q4. Nevertheless, despite the above risks and uncertainties, the Group is now in a very strong position to move further forward.

Strategy Update

-- The significant improvement in the Group's fortunes emanates from the execution of the strategy which includes the stated objectives of:

   --     Recovery of Levolux's financial performance back into a run rate profit 
   --     Continuing to simplify, streamline and reduce fixed costs across the Group. 

-- Over GBP1.8 million of costs (versus a target GBP1.5 million) were taken out of Levolux in the prior year and, when combined with its embryonic focus on supply only, improved project management and developing North America further, this has been successful with the aforementioned profit achieved in every month of H1 and a significant increase of sales into North America.

-- Alongside these short-term areas of focus the Group has continued to progress its long-term strategy to deliver profitable growth through leveraging its strong strategic positions in sustainable building products and to outperform the UK construction market while continuing development of export markets. The Group's 11% revenue increase, including the 23% growth in export revenue, is testament to that.

-- Alumasc is also in a very strong position to benefit from the environment/green/sustainability agenda both in terms of its own actions and through the development of further products to manage energy in buildings, to produce a greener built environment, to take CO(2) out of the atmosphere and to manage the scarce resource of water following changes in rainwater patterns in the UK. Many internal initiatives have also been taken to act in an environmentally sustainable manner, including the sourcing of electricity from renewable sources for over 50% of the Group's electricity.

Operational Review

Water Management

Revenue: GBP19.2 million (2019/20: GBP17.6 million)

Operating profit: GBP3.5 million (2019/20: GBP2.4 million)

Operating margin: 18.3% (2019/20: 13.8%)

Alumasc Water Management Division delivered another strong performance in the first half year, significantly increasing profit and operating margin. The drivers of the 44% improvement in operating profit to GBP3.5 million (18.3% operating margin) were the continued control of operating costs including the benefit of the Slotdrain manufacturing move from Dover to the Halstead facility along with improved productivity at the Burton Latimer facility. This was accompanied by a GBP1.6 million (9%) revenue increase which will have taken market share with all parts of the Division ahead. Within this the E-commerce business, Rainclear, delivered a significant, 30%, revenue growth following increased marketing activity and, as has been seen in many parts of the UK economy, greater activity has taken place online. Gatic and Wade performed very strongly in H1. Although not registered as revenue yet the first shipment to Chek Lap Kok's Airport Runway 3 will be recognised at the start of Q3.

Alumasc Water Management Solutions performed well with encouraging Alumasc Rainwater, Harmer Drainage and Skyline sales along with a strong Wade and Gatic Slotdrain performance. This followed successful marketing and sales initiatives in this Division.

Building Envelope

Revenue: GBP21.1 million (2019/20: GBP18.2 million)

Underlying operating profit/(loss): GBP2.5 million (2019/20: GBP(0.3) million)

Underlying operating margin: 12.0% (2019/20: (1.5)%)

Operating profit/(loss): GBP2.4 million (2019/20: GBP(0.4) million)

The Building Envelope Division had a significant turnaround in H1 from a small loss in the prior year to a GBP2.5 million (12% operating margin) operating profit.

Alumasc Roofing had an outstanding first half year and, in particular, benefitted from the further investment in its sales team particularly in areas that had been historically weak for it. It also had increased activity focussed into the refurbishment market. The COVID-19 impact meant that there was more demand for external work, for instance, on schools rather than on internal refurbishment. Alumasc benefitted from this while taking market share. New Build work also held up well during H1.

It was very pleasing to see the result of much hard work at Levolux turning into profit for every month including December. The strategy, to focus on good value added projects in the UK, preferably supply only, and better project management while developing the strong opportunity further in North America is showing encouraging early signs. This is very much the case despite the UK new commercial market being a little challenging.

Specification sales opportunities are growing from the new integrated Building Envelope sales approach with some combined project wins already achieved.

Housebuilding Products

Revenue: GBP5.3 million (2019/20: GBP5.3 million)

Underlying operating profit: GBP1.2 million (2019/20: GBP0.9 million)

Operating margin: 22.2% (2019/20: 17.3%)

Operating profit: GBP1.1 million (2019/20: GBP0.9 million)

Timloc, our Housebuilding Products business, continues to perform well. It really benefitted from the introduction of several new products across the last year and also from its acclaimed 100% OTIF delivery performance.

Its new products, such as Adapt-Air, InvisiWeep, Meter boxes, Fire-rated Cavity Closer and Rad-Seal, have been very successful. There has been an increased focus on operational efficiency improvements which has led to cost reductions in H1. Continued investment in new equipment with much improved energy consumption, delivering excellent paybacks, has been a significant contribution to assisting the reduction in the Group's greenhouse gas emissions. In addition, Timloc has now sourced all its energy requirements from renewable sources.

Financial Review

The Group's net cash inflow was GBP4.1 million in the period, with net bank debt decreasing to GBP0.2 million at 31 December 2020 compared with GBP4.3 million at 30 June 2020. Capital expenditure was GBP1.0 million in the period, in line with depreciation and non-brand amortisation. The Group continues to invest in new plant and machinery to support new product development and to improve operational efficiency and environmental performance, and the expectation is that capital investment will exceed depreciation in the shorter term to continue with these improvements.

The Group's net assets and shareholders' funds increased from GBP19.8 million at the beginning of the financial year to GBP27.6 million at 31 December 2020, reflecting the impact of pension scheme actuarial gains and the retained profit after tax in the first half year, offset by the payment of the prior year's final dividend in October. The Group's IAS 19 pension liability was GBP12.8 million at 31 December 2020, GBP6.4 million lower than at 30 June 2020, with an increase in the valuation of gross pension liabilities due to reduced gilt yields more than offset by a good investment performance and company deficit reduction contributions. Post tax return on investment was 13.9% (2019: 10.6%) reflecting the higher year on year operating profit.

Board

A new Group Finance Director, Simon Dray, will join the Board on 1 March 2021. After qualifying as a Chartered Accountant Simon moved into industry where he served 6 years at Halma plc becoming Group Financial Controller before joining Low and Bonar plc where he moved from Group Financial Controller to Interim CFO before becoming Director of Group Strategy and M&A. Simon brings with him much experience in running the finance side of a PLC along with significant M&A experience which will assist Alumasc in its next phase of strategy growth.

Paul Hooper, Chief Executive

4 February 2021

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

for the half year to 31 December 2020

 
                                                                                                               Year to 
                                  Half year to 31 December                  Half year to 31 December            30 June 
                                            2020                                      2019                       2020 
 
                                       Non-underlying                            Non-underlying 
                           Underlying                        Total   Underlying                        Total       Total 
                          (Unaudited)     (Unaudited)  (Unaudited)  (Unaudited)     (Unaudited)  (Unaudited)   (Audited) 
Continuing         Notes                      GBP'000      GBP'000      GBP'000         GBP'000 
operations:                   GBP'000                                                                GBP'000     GBP'000 
 
Revenue              5         45,551               -       45,551       41,099               -       41,099      75,992 
Cost of sales                (28,851)               -     (28,851)     (28,854)               -     (28,854)    (53,413) 
                          -----------  --------------  -----------  -----------  --------------  -----------  ---------- 
Gross profit                   16,700               -       16,700       12,245               -       12,245      22,579 
 
Net operating 
expenses 
  Net operating 
   expenses 
   before 
   non-underlying 
   items                     (10,497)               -     (10,497)      (9,718)               -      (9,718)    (19,386) 
  Other operating 
   income                           -               -            -            -               -            -         968 
  IAS 19 past 
   service 
   pension cost      4              -           (150)        (150)            -               -            -           - 
  Other 
   non-underlying 
   items             4              -           (178)        (178)            -           (313)        (313)     (1,045) 
Net operating 
 expenses                    (10,497)           (328)     (10,825)      (9,718)           (313)     (10,031)    (19,463) 
 
                    4, 
Operating profit     5          6,203           (328)        5,875        2,527           (313)        2,214       3,116 
 
Finance expenses     6          (251)           (134)        (385)        (247)           (160)        (407)       (757) 
                          -----------  --------------  -----------  -----------  --------------  -----------  ---------- 
Profit before 
 taxation                       5,952           (462)        5,490        2,280           (473)        1,807       2,359 
 
Tax expense          7        (1,167)              33      (1,134)        (447)              81        (366)       (442) 
                          -----------  --------------  -----------  -----------  --------------  -----------  ---------- 
Profit for the 
 period 
 from continuing 
 operations                     4,785           (429)        4,356        1,833           (392)        1,441       1,917 
 
Discontinued 
operations: 
Profit after 
 taxation 
 for the period 
 from 
 discontinued 
 operations                         -               -            -            -             339          339         339 
 
Profit for the 
 period                         4,785           (429)        4,356        1,833            (53)        1,780       2,256 
                          ===========  ==============  ===========  ===========  ==============  ===========  ========== 
 
 Other 
 comprehensive 
 income: 
 
Items that will 
not 
be recycled to 
profit 
or loss: 
  Actuarial 
   gain/(loss) 
   on defined 
   benefit 
   pensions, net 
   of tax                                                    4,373                                   (1,271)     (6,473) 
                                                       -----------                               -----------  ---------- 
 
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                                                       (300)                                     (167)         176 
  Exchange 
   differences 
   on 
   retranslation 
   of 
   foreign 
   operations                                                 (41)                                       (8)          11 
                                                             (341)                                     (175)     187 
                                                       -----------                               -----------  ---------- 
 
Other 
 comprehensive 
 gain/(loss) for 
 the 
 period, net of 
 tax                                                         4,032                                   (1,446)   (6,286) 
                                                       -----------                               -----------  ---------- 
 
Total 
 comprehensive 
 profit /(loss) 
 for 
 the period, net 
 of 
 tax                                                         8,388                                       334     (4,030) 
                                                       ===========                               ===========  ========== 
 
Earnings per                                                 Pence                                     Pence       Pence 
share 
 
Basic earnings 
per 
share 
- Continuing 
 operations                                                   12.2                                       4.0         5.4 
- Discontinued 
 operations                                                      -                                       1.0         0.9 
                    10                                        12.2                                       5.0         6.3 
                                                       ===========                               ===========  ========== 
Diluted earnings 
per 
share 
- Continuing 
 operations                                                   12.1                                       4.0         5.4 
- Discontinued 
 operations                                                      -                                       1.0         0.9 
                    10                                        12.1                                       5.0         6.3 
                                                       ===========                               ===========  ========== 
 
Alternative 
Performance 
Measures: 
 
Underlying 
 earnings 
 per share 
 (pence)            10                                        13.4                                       5.1         8.2 
                                                       ===========                               ===========  ========== 
 
 

Full reconciliations of underlying to statutory profits and earnings per share are provided in notes 4 and 10 respectively.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

at 31 December 2020

 
                                              31 December    31 December      30 June 
                                                     2020           2019         2020 
                                              (Unaudited)    (Unaudited)    (Audited) 
                                     Notes        GBP'000        GBP'000      GBP'000 
 Assets 
 Non-current assets 
 Property, plant and equipment 
  - owned assets                                   11,210         11,652       11,089 
 Property, plant and equipment 
  - right of use assets                             5,474          4,820        5,856 
 Goodwill                                          18,705         18,705       18,705 
 Other intangible assets                            3,389          3,335        3,352 
 Deferred tax assets                                2,441          2,217        3,661 
                                            -------------  -------------  ----------- 
                                                   41,219         40,729       42,663 
 Current assets 
 Inventories                                        9,779         10,732        8,596 
 Trade and other receivables                       14,987         12,712       13,868 
 Contract assets                                    2,416          2,758        2,402 
 Derivative financial assets                            -              -          207 
 Cash at bank                           11         19,759          9,773       16,143 
 Corporation tax receivable                             -             31          325 
                                                   46,941         36,006       41,541 
 
 Total assets                                      88,160         76,735       84,204 
                                            -------------  -------------  ----------- 
 
 Liabilities 
 Non-current liabilities 
 Interest bearing loans and 
  borrowings                            11       (19,935)       (10,883)     (19,909) 
 Lease liability                                  (4,914)        (4,506)      (5,244) 
 Employee benefits payable                       (12,847)       (13,043)     (19,269) 
 Provisions                                       (1,028)        (1,120)      (1,182) 
 Deferred tax liabilities                         (1,203)          (753)      (1,007) 
                                            -------------  -------------  ----------- 
                                                 (39,927)       (30,305)     (46,611) 
 Current liabilities 
 Trade and other payables                        (17,194)       (13,719)     (14,413) 
 Contract liabilities                               (662)          (900)        (898) 
 Lease liability                                    (670)          (348)        (680) 
 Provisions                                       (1,172)        (1,512)      (1,194) 
 Corporation tax payable                            (758)              -            - 
 Derivative financial liabilities                   (163)          (211)            - 
 Bank overdraft                                         -        (5,535)        (567) 
                                                 (20,619)       (22,225)     (17,752) 
 
 Total liabilities                               (60,546)       (52,530)     (64,363) 
                                            -------------  -------------  ----------- 
 
 Net assets                                        27,614         24,205       19,841 
                                            =============  =============  =========== 
 
 Equity 
 Called up share capital                            4,517          4,517        4,517 
 Share premium                                        445            445          445 
 Capital reserve - own shares                       (416)          (416)        (416) 
 Hedging reserve                                    (132)          (175)          168 
 Foreign currency reserve                              60             82          101 
 Profit and loss account reserve                   23,140         19,752       15,026 
 Total equity                                      27,614         24,205       19,841 
                                            =============  =============  =========== 
 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

for the half year to 31 December 2020

 
                                                         Half year      Half year 
                                                                to             to      Year to 
                                                       31 December    31 December      30 June 
                                                              2020           2019         2020 
                                                       (Unaudited)    (Unaudited)    (Audited) 
                                              Notes        GBP'000        GBP'000      GBP'000 
 Operating activities 
 Operating profit                                            5,875          2,214        3,116 
 Adjustments for: 
 Depreciation                                                1,056            750        1,851 
 Amortisation                                                  157            334          313 
 Impairment of assets                                            -              -          300 
 Loss on disposal of property, plant 
  and equipment                                                  3             58            4 
 IAS 19 past service pension cost                              150              -            - 
 (Increase)/decrease in inventories                        (1,183)          (244)        1,892 
 (Increase)/decrease in receivables                        (1,133)          5,914        5,114 
 Increase/(decrease) in trade and 
  other payables                                             2,516        (5,452)      (4,564) 
 Movement in provisions                                      (176)          (973)      (1,229) 
 Cash contributions to retirement 
  benefit schemes                                          (1,307)        (1,601)      (2,254) 
 Share based payments                                          100              -            - 
                                                     -------------  -------------  ----------- 
 Cash generated by operating activities 
  of continuing operations                                   6,058          1,000        4,543 
 
 
 Tax received/(paid)                                           409           (34)         (93) 
 Net cash inflow from operating activities                   6,467            966        4,450 
                                                     -------------  -------------  ----------- 
 
 Investing activities 
 Purchase of property, plant and 
  equipment                                                  (804)          (645)      (1,342) 
 Payments to acquire intangible fixed 
  assets                                                     (194)          (253)        (417) 
 Proceeds from sales of property, 
  plant and equipment                                           41             50          143 
 Net proceeds from sale of business 
  activity                                                       -            339          339 
 Net cash outflow from investing 
  activities                                                 (957)          (509)      (1,277) 
                                                     -------------  -------------  ----------- 
 
 Financing activities 
 Bank interest paid                                          (141)          (150)        (297) 
 Equity dividends paid                                       (715)        (1,574)      (1,574) 
 Draw down of amounts borrowed                                   -          3,000       12,000 
 Principal paid on lease liabilities                         (340)          (173)        (346) 
 Interest paid on lease liabilities                           (90)           (76)        (153) 
 Net cash (outflow)/inflow from financing 
  activities                                               (1,286)          1,027        9,630 
                                                     -------------  -------------  ----------- 
 
 Net increase in cash at bank and 
  bank overdrafts                                            4,224          1,484       12,803 
 
 Net cash at bank and bank overdraft 
  brought forward                                           15,576          2,762        2,762 
 Net increase in cash at bank and 
  bank overdraft                                             4,224          1,484       12,803 
 Effect of foreign exchange rate 
  changes                                                     (41)            (8)           11 
 Net cash at bank and bank overdraft 
  carried forward                                11         19,759          4,238       15,576 
                                                     =============  =============  =========== 
 
 
                                CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
                                   for the half year to 31 December 2020 
 
                                                                            Hedging     Foreign      Profit 
                                                          Capital reserve              currency    and loss 
                                          Share    Share                -                           account 
                                        capital  premium       own shares   reserve     reserve     reserve    Total 
                                        GBP'000  GBP'000          GBP'000   GBP'000     GBP'000     GBP'000  GBP'000 
 
At 1 July 2020                            4,517      445            (416)       168         101      15,026   19,841 
Profit for the period                         -        -                -         -           -       4,356    4,356 
Exchange differences on retranslation 
 of foreign operations                        -        -                -         -        (41)           -     (41) 
Net loss on cash flow hedges                  -        -                -     (370)           -           -    (370) 
Tax on derivative financial liability         -        -                -        70           -           -       70 
Share based payments                          -        -                -         -           -         100      100 
Actuarial gain on defined benefit 
 pension schemes, net of tax                  -        -                -         -           -       4,373    4,373 
Dividends                                     -        -                -         -           -       (715)    (715) 
At 31 December 2020                       4,517      445            (416)     (132)      60          23,140   27,614 
                                        =======  =======  ===============  ========  ==========  ==========  ======= 
                                                                            Hedging     Foreign      Profit 
                                                          Capital reserve              currency    and loss 
                                          Share    Share                -                           account 
                                        capital  premium       own shares   reserve     reserve     reserve    Total 
                                        GBP'000  GBP'000          GBP'000   GBP'000     GBP'000     GBP'000  GBP'000 
 
At 1 July 2019                            4,517      445            (416)       (8)          90      20,817   25,445 
Profit for the period                         -        -                -         -           -       1,780    1,780 
Exchange differences on retranslation 
 of foreign operations                        -        -                -         -         (8)           -      (8) 
Net loss on cash flow hedges                  -        -                -     (201)           -           -    (201) 
Tax on derivative financial liability         -        -                -        34           -           -       34 
Actuarial loss on defined benefit 
 pension schemes, net of tax                  -        -                -         -           -     (1,271)  (1,271) 
Dividends                                     -        -                -         -           -     (1,574)  (1,574) 
At 31 December 2019                       4,517      445            (416)     (175)          82      19,752   24,205 
                                        =======  =======  ===============  ========  ==========  ==========  ======= 
 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the half year to 31 December 2020

1. Basis of preparation

The condensed consolidated interim financial statements of The Alumasc Group plc and its subsidiaries have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 that are effective at 31 December 2020.

The condensed consolidated interim financial statements have been prepared using the accounting policies set out in the statutory accounts for the financial year to 30 June 2020 and in accordance with AIM Rule 18, and the same accounting policies will be adopted in the 2021 annual financial statements.

The consolidated financial statements of the Group as at and for the year ended 30 June 2020 are available on request from the Company's registered office at Burton Latimer, Kettering, Northants, NN15 5JP or on the website www.alumasc.co.uk.

The comparative figures for the financial year ended 30 June 2020 are not the Company's statutory accounts for that financial year but have been extracted from those accounts. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The condensed consolidated interim financial statements for the half year ended 31 December 2020 are not statutory accounts and have been neither audited nor reviewed by the Group's auditors. They do not contain all of the information required for full financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 June 2020.

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

4 February 2021.

The Group has out-performed ahead of the Base Case trading scenario modelled as part of the 30 June 2020 year end Going Concern review, and also compared to the stress testing performed in relation to additional National lockdowns. On the basis of the Group's financing facilities and current financial plans and sensitivity analyses, the Board is satisfied that the Group has adequate resources to continue in operational existence for twelve months from the date of signing this report and accordingly continues to adopt the going concern basis in preparing these condensed consolidated interim financial statements.

2. Estimates

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

Except as described below, in preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 June 2020, namely the valuation of defined benefit pension obligations, the valuation of the Group's acquired goodwill, the recognition of revenue and profit on contracts with customers where revenue is recognised over time and the valuation of lease liabilities following the adoption of IFRS 16 on 1 July 2019.

During the six months ended 31 December 2020, management reassessed and updated its estimates in respect of retirement benefit obligations based on market data available at 31 December 2020. The resulting impact was a GBP5.4 million pre-tax actuarial gain, calculated using IAS 19 conventions, recognised in the six month period to 31 December 2020.

3. Risks and uncertainties

A summary of the Group's principal risks and uncertainties was provided on pages 20 and 21 of Alumasc's Report and Accounts for the year ended 30 June 2020. The Board considers these risks and uncertainties remain relevant to the current financial year.

Specific risks and uncertainties relating to the Group's performance in the second half year are:

   -       Continued economic uncertainty on a global basis surrounding the COVID-19 pandemic; 

- The impact of the cessation of government incentives on the construction industry, such as the Stamp Duty Land Tax holiday;

   -       Potential cost increases following Brexit; 
   -       Prolonged period of bad weather impacting the Group's construction markets. 

4. Underlying to statutory profit reconciliation

 
                                                Half year        Half year   Year to 
                                           to 31 December   to 31 December   30 June 
Profit before tax                                    2020             2019      2020 
                                                  GBP'000          GBP'000   GBP'000 
 
 
Underlying profit before tax                        5,952            2,280     3,665 
 
Brand amortisation                                  (119)            (119)     (238) 
IAS 19 net pension scheme finance costs             (134)            (160)     (261) 
IAS 19 past service cost in respect 
 of GMP equalisation                                (150)                -         - 
Restructuring & relocation costs                     (59)            (194)     (807) 
 
Continuing operations                               5,490            1,807     2,359 
 
Profits/gains relating to discontinued 
 operations                                             -              339       339 
Statutory profit before tax                         5,490            2,146     2,698 
                                          ===============  ===============  ======== 
 
 
                                            Half year        Half year   Year to 
                                       to 31 December   to 31 December   30 June 
Operating profit                                 2020             2019      2020 
                                              GBP'000          GBP'000   GBP'000 
 
Underlying operating profit                     6,203            2,527     4,161 
 
Brand amortisation                              (119)            (119)     (238) 
IAS 19 past service cost in respect 
 of GMP equalisation                            (150)                -         - 
Restructuring & relocation costs                 (59)            (194)     (807) 
 
Statutory operating profit                      5,875            2,214     3,116 
                                      ===============  ===============  ======== 
 

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 items as non-underlying as they are non-recurring items that are judged to be significant enough to affect the understanding of the underlying trading performance of the business:

- One-off costs of material restructuring and relocation of separate businesses within the Group in both 2019/20 and 2020/21;

- 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 20 November 2020; and

- One-off profit relating to the sales proceeds recognised in relation to the contingent consideration earned and received in cash following the divestment of the Alumasc Facades business.

5. Segmental analysis

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

 
                                          Segmental 
                                          operating 
                                Revenue      result 
Half Year to 31 December 2020   GBP'000     GBP'000 
 
Water Management                 19,160       3,501 
Building Envelope                21,064       2,519 
Housebuilding Products            5,327       1,184 
                                -------  ---------- 
Trading                          45,551       7,204 
 
Unallocated costs                           (1,001) 
 
Total                            45,551       6,203 
                                =======  ========== 
 
 
                                         GBP'000 
 
Segmental operating result                 6,203 
Brand amortisation                         (119) 
Past service cost in respect of GMP 
 equalisation                              (150) 
Restructuring & relocation costs            (59) 
 
Total operating profit                     5,875 
                                         ======= 
 
 
                                             Segmental 
                                             operating 
                                   Revenue      result 
Half Year to 31 December 2019      GBP'000     GBP'000 
 
Water Management                    17,619       2,436 
Building Envelope                   18,178       (269) 
Housebuilding Products               5,302         919 
                                   -------  ---------- 
Trading                             41,099       3,086 
 
Unallocated costs                                (559) 
 
Total                               41,099       2,527 
                                   =======  ========== 
 
                                               GBP'000 
 
Segmental operating result                       2,527 
Brand amortisation                               (119) 
Restructuring & relocation costs                 (194) 
 
Total operating profit                           2,214 
                                            ========== 
 
 
                                      Segmental 
                                      operating 
                            Revenue      result 
                            GBP'000     GBP'000 
Full Year to 30 June 2020 
 
Water Management             33,715       4,824 
Building Envelope            33,209       (939) 
Housebuilding Products        9,068       1,243 
                            -------  ---------- 
Trading                      75,992       5,128 
 
Unallocated costs                         (967) 
 
Total                        75,992       4,161 
                            =======  ========== 
 
 
                                    GBP'000 
 
Segmental operating result            4,161 
Brand amortisation                    (238) 
Restructuring & relocation costs      (807) 
 
Total operating profit                3,116 
                                    ======= 
 

6. Finance expenses

 
                                                                  Half year     Half year 
                                                                         to            to   Year to 
                                                                31 December   31 December   30 June 
                                                                       2020          2019      2020 
                                                                    GBP'000       GBP'000   GBP'000 
 
 Finance costs - Bank overdrafts                                          8            17        40 
                         - Revolving credit facility                    153           154       303 
                         - Interest on lease liabilities                 90            76       153 
                                                               ------------  ------------  -------- 
                                                                        251           247       496 
                         - IAS 19 net pension scheme finance 
                          costs                                         134           160       261 
                                                                        385           407       757 
                                                               ============  ============  ======== 
 

7. Tax expense

 
                                                           Half year         Half year    Year to 
                                                      to 31 December    to 31 December    30 June 
                                                                2020              2019       2020 
                                                             GBP'000           GBP'000    GBP'000 
 
 Current tax: 
 UK corporation tax                                              652               300         22 
 Overseas tax                                                     29                 -         48 
 Amounts over provided in previous years                           -              (10)       (19) 
 Total current tax                                               681               290         51 
 
 Deferred tax: 
 Origination and reversal of temporary 
  differences                                                    450                99        450 
 Amounts under/(over) provided in previous 
  years                                                            3              (23)      (157) 
 Rate change adjustment                                            -                 -         98 
 Total deferred tax                                              453                76        391 
 
 Total tax expense                                             1,134               366        442 
                                                    ----------------  ----------------  --------- 
 
   Deferred tax recognised in other comprehensive 
   income: 
 Actuarial gains/(losses) on pension 
  schemes                                                      1,026             (262)    (1,838) 
 Cash flow hedges                                               (70)              (34)         41 
 Tax charged/(credited) to other comprehensive 
  income                                                         956             (296)    (1,797) 
 
 Total tax charge/(credit) in the statement 
  of comprehensive income                                      2,090                70    (1,355) 
                                                    ================  ================  ========= 
 

8. Dividends

The Directors have approved an interim dividend per share of 3.25 pence (2019/20: GBPnil) which will be paid on 6 April 2021 to shareholders on the register at the close of business on 26 February 2021. The cash cost of the dividend is expected to be GBP1,162,000. In accordance with accounting requirements, as the dividend was approved after the statement of financial position date, it has not been accrued in the interim consolidated financial statements. A final dividend per share of 2.0 pence in respect of the 2019/20 financial year was paid at a cash cost of GBP715,000 during the six months to 31 December 2020.

9. Share Based Payments

During the period the Group awarded 170,000 options (2019/20: 160,000) under the Executive Share Option Scheme ("ESOS"). These options have an exercise price of 79.0 pence and require certain criteria to be fulfilled before vesting. No existing options (2019/20: none) were exercised during the period and 120,000 existing options lapsed (2019/20: 130,000).

Total awards granted under the Group's Long Term Incentive Plans ("LTIP") amounted to 265,760 (2019/20: 219,078). LTIP awards have no exercise price but are dependent on certain vesting criteria being met. No existing LTIP awards were exercised during the period (2019/20: none) and 257,688 existing LTIP awards lapsed (2019/20: 253,208).

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:

 
                                                Half year         Half year        Year to 
                                           to 31 December    to 31 December        30 June 
                                                     2020              2019           2020 
                                                  GBP'000           GBP'000        GBP'000 
 
 Net profit attributable to equity 
  holders of the parent - continuing 
  operations                                        4,356             1,441          1,917 
 Net profit attributable to equity 
  holders of the parent - discontinued 
  operations                                            -               339            339 
                                         ----------------  ----------------  ------------- 
                                                    4,356             1,780          2,256 
                                         ----------------  ----------------  ------------- 
 
 
                                                    000s              000s           000s 
 
 Basic weighted average number of 
  shares                                          35,764            35,764         35,764 
 Dilutive potential ordinary shares 
  - employee share options                           169                16             55 
 Diluted weighted average number of 
  shares                                          35,933            35,780         35,819 
                                        ================  ================  ============= 
 
                                               Half year         Half year        Year to 
                                          to 31 December    to 31 December        30 June 
                                                    2020              2019           2020 
                                                   Pence             Pence          Pence 
 Basic earnings per share: 
 Continuing operations                              12.2               4.0            5.4 
 Discontinued operations                               -               1.0            0.9 
                                                    12.2               5.0            6.3 
                                        ================  ================  ============= 
 Diluted earnings per share: 
 Continuing operations                              12.1               4.0            5.4 
 Discontinued operations                               -               1.0            0.9 
                                                    12.1               5.0            6.3 
                                        ================  ================  ============= 
 
 Calculation of underlying earnings per share from continuing 
  operations: 
 
                                               Half year         Half year        Year to 
                                          to 31 December    to 31 December        30 June 
                                                    2020              2019           2020 
                                                 GBP'000           GBP'000        GBP'000 
 
 Reported profit before taxation from 
  continuing operations                            5,490             1,807          2,359 
 Brand amortisation                                  119               119            238 
 IAS 19 net pension scheme finance 
  costs                                              134               160            261 
 Pension GMP equalisation                            150                 -              - 
 Restructuring & relocation costs                     59               194            807 
 
 Underlying profit before taxation 
  from continuing operations                       5,952             2,280          3,665 
 Tax at underlying Group tax rate 
  of 19.6% 
  (2019/20 first half year: 19.6%; 
  full year: 20.3%)                              (1,167)             (447)          (744) 
 Underlying earnings from continuing 
  operations                                       4,785             1,833          2,921 
                                        ----------------  ----------------  ------------- 
 
 Weighted average number of shares                35,764            35,764         35,764 
                                        ----------------  ----------------  ------------- 
 Underlying earnings per share from 
  continuing operations                            13.4p              5.1p           8.2p 
                                        ================  ================  ============= 
 

11. Movement in borrowings

 
                                 Cash at   Bank loans       Net bank   Lease liabilities   Total borrowings 
                              bank /bank                 cash/(debt) 
                              overdrafts 
                                 GBP'000      GBP'000        GBP'000             GBP'000            GBP'000 
 
At 1 July 2019                     2,762      (7,857)        (5,095)                   -            (5,095) 
Impact of adoption of IFRS 
 16                                    -            -              -             (5,027)            (5,027) 
Cash flow movements                1,484      (3,000)        (1,516)                 173            (1,343) 
Non-cash movements                     -         (26)           (26)                   -               (26) 
Effect of foreign exchange 
 rates                               (8)            -            (8)                   -                (8) 
 
At 31 December 2019                4,238     (10,883)        (6,645)             (4,854)           (11,499) 
                             ===========  ===========  =============  ==================  ================= 
 
 
                                  Cash at   Bank loans       Net bank          Lease   Total borrowings 
                               bank /bank                 cash/(debt)    liabilities 
                               overdrafts 
                                  GBP'000      GBP'000        GBP'000        GBP'000            GBP'000 
 
At 1 July 2020                     15,576     (19,909)        (4,333)        (5,924)           (10,257) 
Cash flow movements                 4,224            -          4,224            340              4,564 
Non-cash movements                      -         (26)           (26)              -               (26) 
Effect of foreign exchange 
 rates                               (41)            -           (41)              -               (41) 
 
At 31 December 2020                19,759     (19,935)          (176)        (5,584)            (5,760) 
                             ============  ===========  =============  =============  ================= 
 

12. Related party disclosure

The Group has a related party relationship with its Directors and with its UK pension schemes. There has been no material change in the nature of the related party transactions described in the Report and Accounts 2020. Related party information is disclosed in note 29 of that document.

Responsibility Statement

The Directors confirm that, to the best of their knowledge the condensed consolidated interim financial statements have been prepared in accordance with Alternative Investment Market ("AIM") Rule 18.

On behalf of the Board

G P Hooper

Chief Executive

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