TIDMALU

RNS Number : 9086K

Alumasc Group PLC

07 September 2021

7 September 2021

IMMEDIATE RELEASE

THE ALUMASC GROUP PLC

("ALUMASC")

FULL YEAR RESULTS ANNOUNCEMENT

STRONG PERFORMANCE ACROSS ALL DIVISIONS; WELL-POSITIONED TO BENEFIT FROM LONG-TERM GROWTH DRIVERS

Alumasc (ALU.L), the premium sustainable building products, systems and solutions Group, announces results for the year ended 30 June 2021.

Commenting on the results reported today, Paul Hooper, Chief Executive, said:

"After a record first half performance, in which volume growth was supplemented by around GBP2.5m of sales delayed from 2020 by the initial Covid-19 lockdown, the numbers today reflect the determined efforts by Alumasc employees across the Group to ensure the underlying momentum was maintained throughout the second half.

I am delighted to report this excellent set of results to our shareholders and believe Alumasc is well-positioned to benefit from the long-term growth drivers in our market."

Financial Highlights:

-- Double-digit growth in revenues from continuing operations: GBP90.5m (2019/20: GBP76.0m): +19.0%

-- Group underlying operating profit GBP11.0m (2019/20: GBP4.2m): +162% reflecting both strong growth and the benefit of structural cost and efficiency gains

   --      Underlying operating margin: 12.2% (2019/20: 5.5%) 
   --      Reported PBT GBP9.8 million (2019/20: GBP2.7 million) 
   --      Robust balance sheet with net bank debt of GBP0.9m (2020: GBP4.3m).  Headroom c.GBP23m 
   --      Underlying EPS: 23.7p (2019/20: 8.2p): +189% 
   --      Basic EPS: 21.2p (2019/20: 6.3p) 
   --      Final dividend: 6.25p (2019/20: nil) 

o Full year dividend 9.5p (2019/20: 2.0p)

Operational Highlights: Strong performance in all divisions

-- Water Management Division delivered an excellent performance with operating profit of GBP6.1m (2019/20: GBP4.8m), indicative of the potential for the business as market conditions normalise

-- Building Envelope Division saw a significant revenue increase of GBP7.8m (+24%) and a GBP5.2m operating profit improvement, including a GBP1.4m turnaround at Levolux, resulting in the division achieving a double-digit underlying margin of 10.4%

-- Housebuilding Products (Timloc) had an outstanding year growing its revenue by 22% and operating profit by 105% versus a Covid affected prior year

o Operating margin 23% (2019/20: 13.7%)

o Long-term growth drivers remain strong

-- The Alumasc portfolio is aligned to environmental growth drivers, with c.80% of sales derived from environmental solution products

Outlook:

-- Alumasc remains well-positioned to deliver sustainable growth, underpinned by a clear strategy and strong market positions:

o Water Management is benefitting from both its UK and export-focussed strategy

o Building Envelope entered the new year with a strong order book, supported by the benefits of the recent restructuring

o Housebuilding Products (Timloc) continues to innovate and develop new products, against a favourable UK housebuilding backdrop

-- The Group's cost savings programme, liquidity management, strong balance sheet and improved commercial positioning underpin a robust platform that positions Alumasc to benefit from the long-term growth drivers in our markets

-- The Board is cognisant of the potential for short-term disruption to our customers' operations from shortages of building materials, labour and road haulage, and delays in the global container shipping industry

-- Notwithstanding these risks, the Board believes Alumasc's strong platform provides confidence for another year of progress

Enquiries:

 
 The Alumasc Group plc            +44 (0)1536 383844 
 Paul Hooper (Chief Executive) 
 Simon Dray (Group Finance 
  Director) 
 
 Peel Hunt (Broker)               +44 (0)207 418 8831 
 Mike Bell 
 Ed Allsopp 
 
 finnCap (NOMAD)                  +44 (0)207 220 0561 
 Julian Blunt 
 
 Camarco (Financial PR)           alumasc@camarco.co.uk 
 Ginny Pulbrook                   +44 (0)203 757 4992 
 D aniel Sherwen                  +44 (0)203 781 9241 
 

LEI: 2138002MV11VKZFJ4359

Notes to Editors:

Alumasc is a UK-based supplier of premium sustainable 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.

Strategic Report

Chairman's Statement

This has been an extremely successful year for Alumasc.

There have been several reasons for this:

-- Our industry -principally UK construction - was fortunate to be able, indeed encouraged, to continue operating, despite the presence of the Covid pandemic throughout the year. We pursued this opportunity enthusiastically while abiding by, and in many cases exceeding, the stringent rules introduced to manage the attendant risks.

-- Following the temporary closures that did occur, both of our own operations and of those of our customers, during the latter part of the prior financial year, a number of projects resumed during the year under review, creating demand arguably above the underlying level. This demand was not easy to accommodate, particularly within the Covid rulebook and with Brexit looming. However, the combination of prudent stock building and magnificent co-operation from our workforce enabled us to sustain a high level of service in response. We believe that gains in market share were won as a result.

-- During the year prior to that under review, Alumasc had significantly streamlined its business, reducing the number of operating/manufacturing sites from ten to six and taking costs out of the business amounting to some GBP2.4 million per annum in the process. As a result, a higher proportion of the margins earned on healthy sales was converted to profit and profit margins rose as a result.

-- Finally, and perhaps most significantly, our management teams and their colleagues throughout the company responded with calmness and determination to the very uncertain conditions brought about by the pandemic and made this outcome possible. I thank them all on behalf of fellow Shareholders and Directors.

Performance

Revenues of GBP90.5 million were GBP14.5 million (19.0%) ahead of the prior year, which was badly affected by Covid. They were very slightly ahead of the previous "pre-pandemic" year. Roofing Products grew by a remarkable 62% year on year and Housebuilding Products by 22%, both arguably benefitting from the demand that was building during the interruptions suffered in the prior year. Levolux was the only business that saw a reduction in sales, reflecting both the weakness in commercial activity in the period and the intentional focusing of that business to a narrower, more selective market.

Profit, however, was well ahead, not just of the depressed prior year but also of the earlier year, not so affected. Trading Profit of GBP12.9 million, hence trading margins, were double that of the earlier year, reflecting the reduction in costs referred to above and further efficiencies achieved during the intervening period. See note 4.

Similar improvements in the group's profit have benefitted cash and more than recovered the group's capacity to pay dividends.

Alumasc's focus on the prudent management of cash has reduced net bank debt from GBP5.1 million two years ago to GBP4.3 million one year ago at the height of the Pandemic's impact, and further to GBP0.9 million at 30 June 2021. With debt facilities in excess of GBP20 million, this places the group in a strong position for further development.

Dividend

The unpredictable consequences of Covid led your Board to suspend dividend payments in the conservation of cash during the first half of last year; and payments were only resumed, albeit at a low level by historical standards, as the year progressed. It is enormously gratifying to be able to recover this year's dividend payment above pre-pandemic levels and your Board is recommending an increase in the final dividend to 6.25p per share (2020: 2p per share), making a total for the year of 9.5p. This compares with a total of 2p in 2019/20, and 7.35p in the earlier "pre-pandemic" year.

Strategy and Corporate Activity

The principal focus has been operational during the year, always within the strategic framework set out in this and previous reports. Hence, it has been a quiet year in the corporate sphere. There has, however, been progress on the twin fronts of outperforming our sector and evolving our sustainable credentials, illustrated by the ESG Statement in the full Annual report and accounts.

Pensions

There has been significant progress also in reducing the pensions legacy, partly due to the impact of rising gilt yields on our liabilities, and partly to an excellent investment performance.

The Boardroom

Following six years in the post, David Armfield resigned his non-executive directorship during the year in order to concentrate on his other activities. I am grateful to David for his wise support during his time with Alumasc and wish him every success.

In March this year, Simon Dray was appointed to the vacant position of Group Finance Director and is a welcome addition to our team. His broad experience is well matched to our strategic targets and public company responsibilities.

Prospects

It is never easy to follow such success, particularly when an element of that success was due to an abnormal carry over of demand from the prior year. However, demand from our markets remains buoyant, including an anticipated partial recovery from the much depressed commercial sector, which unsurprisingly was most affected by the events of the past year and a half.

The principal area of concern, therefore, relates to the availability of materials and human resources to meet this demand and the cost implications of shortages, which may dampen demand in certain areas, possibly permanently delaying some projects already in the pipeline. At present, the industry understands and is absorbing these rising costs and additional capacity has a way of soon following on the heels of unsatisfied demand.

It is therefore reasonable to anticipate another strong performance from Alumasc in the coming year, as the UK economy recovers from its recent misfortunes.

John McCall

Chairman

Chief Executive's Review

Financial Highlights and Overview

 
                                            2020/21   2019/20     % change 
 Group performance: 
 Revenue (GBPm) *                              90.5      76.0         +19% 
 
 Underlying profit before tax (GBPm) *         10.5       3.7        +187% 
 Statutory profit before tax (GBPm)             9.8       2.7        +263% 
 
 Underlying earnings per share (pence) *       23.7       8.2        +189% 
 Basic earnings per share (pence)              21.2       6.3        +237% 
 
 Dividends per share (pence)                    9.5       2.0        +375% 
 
 

* A reconciliation of underlying to statutory profit before tax is provided in note 5

Covid-19

The response of our employees to the challenges faced this year has been exceptional. Covid-19 has brought many difficult challenges but our number one priority is always the health, safety and wellbeing of our people and visitors to sites. The actions taken to comply, as a minimum, with government advice has resulted in several unannounced HSE visits that have confirmed the actions taken with very positive feedback being received. During the year we had one small Covid-19 outbreak involving less than 20 people. Swift management action contained this with a full return to work within 10 days. Our new norm allowed us to adapt our working practices to have more people working from home while maintaining a good premium customer service. I am immensely proud of our incredible people and all that they have achieved.

Overview of performance

Following an outstanding and record performance in H1, which included around GBP2.5 million of pent-up demand revenue carried forward from the prior year Covid affected lockdown, Alumasc's underlying momentum was maintained throughout H2, despite the effects of Brexit. Growth was achieved in all three divisions against a backdrop of resilient building and construction activity along with market share gains. In addition, raw material and shipping cost increases to date have been successfully recovered through sales price increases.

Close control of costs and the benefit of the restructuring implemented in FY 2020 have also contributed to the improved profitability. Levolux delivered a substantially improved performance during the financial year, returning to consistent profitability on improved tendering and contract management disciplines and a streamlined cost base.

The star performer of the year was undoubtedly the Building Envelope Division which turned a prior year loss of GBP0.9 million into a GBP4.3 million profit. This was a testament to several factors, but both parts of this division, Roofing and Levolux, contributed significantly. As you will see in the section on this division it was really a volume/market share increase that improved Roofing's performance while Levolux had a significant turnaround into profit from a prior year loss assisted by significant cost reductions and efficiency improvements.

The remaining two divisions had record performances, both driven by volume/market share gains and operational efficiencies. New products were also important and, in particular, for the Housebuilding Products Division which launched a record number, supported by its industry leading service, with some considerable success.

Strategy and performance against strategic objectives

Alumasc's strategy is to:

1. Build leading positions in specialist markets to grow revenues faster than the UK construction market

Although the impact of Covid-19 makes any analysis of the most recent year difficult when compared with the consistent outperformance of the previous years we have however gained market share and grown the business.

   2.      Augment UK revenue growth through the development of selected export markets 

Compared to the prior year in which export revenues were 15% of Group revenues, during the year under review export revenues were 14% of Group revenue. However, actual export sales grew by GBP1.1 million (10%). Export sales at AWMS (Gatic and Wade) were marginally behind the prior year, due to a large one-off European order in 2019/20. However sales to the Far East grew strongly, supported by investment in both sales and marketing. The year end export order book for AWMS stood at GBP1.7 million, versus GBP1.2 million at the prior year end.

Meanwhile, Levolux accelerated its export revenue by a strong 32%. At the start of the new financial year a second experienced US Senior VP of sales has been appointed in the USA. We anticipate good further growth in the USA from this development.

   3.      Grow profit at a faster rate than revenue by improving operating margins 

The Group's underlying operating margins grew from a Covid affected prior year 5.5% to 12.2% (and also improved on underlying operating margins in 2019 of 6.5%) representing a pleasing result. This movement into a 'double-digit percentage' return has been achieved earlier than expected. The prior year's structural GBP2.4 million cost savings have been a significant contribution along with increased sales.

Executing our priorities in FY20/21

Management accelerated the pace of strategic development during its 2021 financial year:

   1.   Levolux business improvement plan 

The objective of this plan was to return Levolux to sustainable profit. At the start of the year the Board announced a refocus of the business to those areas where it could clearly differentiate and add most value to customers and therefore shareholders. This included concentration on developing the more profitable areas of the business, simplifying operational delivery and reducing risk. The key elements have been:

-- Integrated sales approach. 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 has increased Levolux's existing market reach and leverages existing strong customer relationships. This is the second year of this new division's formation.

This objective is being achieved and examples where the 'cross-sell' and single expert service has been welcomed by specifiers and clients are growing. There are several examples of this including the new DWP Welsh Valleys offices.

-- Leverage core strengths. Focus on design and supply activities as we do in the rest of the Alumasc Group. In-house installation will only be offered where this service is particularly valuable to customers and Levolux. Over time this will improve margin mix and enhance profit margins.

This objective is being achieved with the order book strengthening for supply only projects.

-- Export opportunities. Invest in local technical sales resources to accelerate growth in the profitable Levolux business in North America. Current revenues in this market are circa GBP4.7 million (+32% v PY). This objective was achieved with a US-based Senior VP appointed.

-- Reduce overhead. We announced a significant restructuring of the existing Levolux operational and overhead cost base, including a relocation of sites, with fixed cost savings achieved of GBP1.8 million in the Group's 2019/20 financial year versus a target GBP1.0 million, and further significant annualised savings of GBP0.7 million. These benefits have assisted the 2020/21 financial year.

Alumasc continues to believe that Levolux, as part of the Building Envelope Division, has a great future potential and continues to be one of the Group's strongest brands.

   2.   Develop further opportunities for specification cross selling 

There remains a significant future opportunity for the Group from offering an integrated "Building Envelope" of exterior building products facilitating the integration of walling, roofing, balconies, solar shading and integrated aluminium detailing. This 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. Closer working between divisions has led to cross-selling opportunities. This will continue to be a focus going forward.

   3.   Implementation of a more cost-efficient operating structure 

Following the move in the prior year of the AWMS Gatic Slotdrain manufacturing from a leased facility in Dover to the freehold AWMS's Wade facility and the restructuring of Levolux described above, some GBP0.6 million per annum has been saved in leased property costs. The objective to move to six facilities from ten has also been achieved.

Total annualised cost savings of GBP2.4 million were achieved in the prior year versus a target of GBP2.0 million and these structural cost savings have assisted the current year.

   4.   Prioritising and focusing investment to drive profitable growth 

Capital expenditure was GBP2.0 million, slightly below depreciation which was GBP2.3 million.

Once again investment has been focused on our businesses with the greatest manufacturing activity: our Water Management business and Timloc. Within this was a continued investment in tooling at strategic suppliers for the Water Management business which has improved manufacturing efficiencies and significantly lowered the carbon footprint of our suppliers along with ensuring continuity of supply. Investment continued at Timloc, including to support new product launches. The benefit of the investments is evident in the relatively strong performances of these businesses.

Investment in new people was directed into expanding the sales reach, notably in the Building Envelope Division where previously weaker areas of the UK now have a stronger senior sales representation. Growing Levolux and Water Management divisional export sales have also been a focus.

5. Proactive management of our portfolio of businesses

The Group continues to seek to grow through bolt-on acquisitions and there are no plans to make divestments.

6. Remaining closely aligned with the sustainability agenda

With the ever-increasing low carbon and sustainable agenda Alumasc is in a perfect position to increase supply solutions to its customers that target these criteria. Not only does it have strong positions in energy management through its presence in solar shading, which can reduce the energy consumption required to cool a building, but it also has innovative Roofing solutions, such as Olivine, which can actually reduce CO(2) in the environment. Within the Water Management Division, the increasing scarcity of water can be managed very successfully. There are examples where both divisions combine to provide a 'Blue Roof'. This, in effect, produces an equivalent to an attenuation tank on a flat roof allowing the controlled egress into the water effluent systems while saving clients the significant alternative cost of an attenuation tank installation. Our Housebuilding Products Division has also significantly contributed to the energy management within housing with its sealed ventilation systems, cavity closer and radiator seals. It is constantly innovating and launching new products that deliver sustainable solutions for our clients.

All divisions are totally committed to, and insist on, the use of recycled material where appropriate. Alumasc is very proud to be able to state that 75% of the Group's products are sourced from recyclable material.

The relentless pursuit of both innovative energy and water management solutions combined with the increasing use of recycled material will continue. Alumasc is already well placed in this regard. Our bespoke approach to product and specification means customers will be able to meet more stringent environmental criteria in the years ahead.

All divisions have plans in place to work towards the Net Zero government led construction targets by 2050.

Overview of performance

Revenue analysis

Revenue grew by GBP14.5 million (19%) compared to a prior year Covid affected performance. This included some carry over of pent-up demand from the Covid-disrupted prior year but also, significantly, benefitted from investing in high quality Roofing salesmen, launching new products and winning market share.

Gross margin

Alumasc's Gross Margin grew by 6.2 percentage points, to 35.9%, a very strong performance and a great testament to the management actions taken in saving costs, increasing efficiencies and growing margins.

Net fixed and operating expenses

Net fixed and operating expenses increased by GBP1.9 million (excluding any furlough benefit in FY20) during the year mainly due to increased sales resource and variable remuneration.

Underlying operating profit

Underlying operating profit was GBP11.0 million compared with GBP4.2 million in the prior year. This was a very strong performance with all 3 divisions performing significantly better than the prior year.

Bank interest

Bank interest of GBP0.3 million was similar to the prior year.

Underlying profit before tax

Underlying profit before tax was GBP10.5 million (2019/20: GBP3.7 million - Covid affected).

Non-underlying, non-recurring items

Non-underlying and non-recurring items amounted to a GBP0.7 million net cost in the period compared with a GBP1.3 million net cost in the prior year. Further details are given in the Financial Review.

Coronavirus Job Retention Scheme

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.

Profit after tax for the year

The Group's resulting overall statutory profit after tax for the year was GBP7.6 million (2019/20: GBP2.3 million).

Divisional review

   (a)    Water Management 

Revenue: GBP38.4 million (2019/20: GBP33.7 million)

Underlying operating profit*: GBP6.1 million (2019/20: GBP4.8 million)

Underlying operating margin*: 15.9% (2019/20: 14.3%)

Operating profit: GBP6.0 million (2019/20: GBP4.6 million)

* Prior to restructuring costs of GBP0.1 million in 2019/20 and brand amortisation charges of GBP0.1 million in both years

Water Management produced a record profit of GBP6.1 million which was GBP1.3 million (27%) higher than the previous year.

The drivers of the improvement were revenue related (which increased by GBP4.7 million (14%)) and by selective price increases, product portfolio management, cost reductions (partly brought about by the move of Gatic Slotdrain manufacturing from Dover to Wade's freehold facility), and general efficiency improvement and tight cost control.

Water Management's operating profit return on sales increased to 15.9% from a prior year of 14.3%. This was a very encouraging performance and is indicative of improved margins.

   (b)    Building Envelope 

Revenue: GBP41.0 million (2019/20: GBP33.2 million)

Underlying operating profit / (loss)*: GBP4.3 million (2019/20: GBP(0.9) million)

Underlying operating margin*: 10.4% (2019/20: (2.8)%)

Operating profit / (loss): GBP4.1 million (2019/20: GBP(1.4) million)

* Prior to restructuring costs of GBP0.3 million in 2019/20 and brand amortisation charges of GBP0.2 million in both years

The Building Envelope division sells principally into the high end UK commercial and residential new build construction market.

Levolux's restructuring has taken significant cost out of the business and when combined with a more selective strategy for work that it will target with a focus on supply only, along with a stronger push into export markets, the benefits showed in the year with an outstanding GBP1.4 million turnaround from a GBP0.9 million loss to an encouraging GBP0.5 million profit. This was the result of following the very effective turnaround plan.

Alumasc Roofing's performance was outstanding and driven strongly within the Refurbishment sector. Five new salespeople were recruited and significantly strengthened some of our historically under-represented markets in the UK whilst technical services staffing was increased across the country. It went from strength to strength and with the pressure of Covid-19 encouraging more external work, particularly for schools and health boards, Roofing benefited and increased its revenue stream whilst also securing additional market share.

   (c)     Housebuilding Products 

Revenue: GBP11.1 million (2019/20: GBP9.1 million)

Underlying operating profit*: GBP2.6 million (2019/20: GBP1.2 million)

Underlying operating margin*: 23.0% (2019/20: 13.7%)

Operating profit: GBP2.5 million (2019/20: GBP1.2 million)

* Prior to restructuring costs of GBP0.1 million in 2020/21

Timloc, our Housebuilding Products Division, had an outstanding year growing its revenue by 22% and PBIT by 105% (versus a Covid affected prior year). In addition, during a challenging year, Timloc continued to launch new products, improve efficiencies and maintain 100% OTIF to customers. Timloc continues to receive very positive feedback from its customers on its excellent service and promotes this through its '#TrustTimloc to deliver' strapline.

New product development is an important factor in Timloc's success and during the year it successfully launched a number of new products including Rad-Seal face-fix, FR60 fire rated cavity closer and FRSTOP cavity stop socks.

With its constant focus on improving efficiencies, new product development and customer service Timloc is well positioned to maximise opportunities presented by the housebuilding sector.

Outlook

Alumasc's cost savings programme, liquidity management, strong balance sheet and improved commercial positioning underpin a robust platform that positions Alumasc to benefit from the long-term growth drivers in our markets. Alumasc's primary aim is to manage the long-term sustainability of the business and to focus on its key strategic objectives, growing revenues faster than the UK construction market and being a supplier of sustainable building products.

The Board believes Alumasc remains well positioned to deliver sustainable earnings progression, underpinned by a clear strategy and strong market positions, together with:

-- Water Management benefiting from both its UK and export-focussed strategy, and a growing online offering;

-- Building Envelope entered the new year with a strong order book, supported by specification cross-selling and restructuring benefits;

-- Housebuilding Products continues to innovate and develop new products, against a favourable backdrop of structural UK housing shortage; and

-- the major restructuring of the Levolux business within the Building Envelope Division.

Further investment opportunities exist in:

-- sales resource and manufacturing capacity

-- bolt-on M&A to expand capabilities, product range and routes to market.

Demand remains strong entering the new financial year, which has started in line with management's expectations. The Board is however cognisant of the potential for short-term disruption to our customers' operations from shortages of building materials, labour and road haulage, and delays in the global container shipping industry.

Notwithstanding these risks, a strong platform is now in place which should provide the Board with confidence for another strong year.

Paul Hooper

Chief Executive

7 September 2021

Financial Review

Reconciliation of underlying to statutory profit before tax

The underlying profit before tax for the 2020/21 financial year of GBP10.5 million reconciles to the statutory profit before tax of GBP9.8 million as follows:

 
                                        2020/21   2019/20 
                                           GBPm      GBPm 
 Underlying profit before tax              10.5       3.7 
 Brand amortisation                       (0.2)     (0.2) 
 Net IAS 19 defined benefit pension 
  scheme costs                            (0.3)     (0.3) 
 IAS 19 past service cost in respect      (0.1)         - 
  of GMP equalisation 
 Restructuring & relocation costs         (0.1)     (0.8) 
 Net gain from business disposals             -       0.3 
 Statutory profit before tax                9.8       2.7 
                                       ========  ======== 
 

The reconciling items were:

-- Amortisation of acquired brands of GBP0.2 million (2019/20: GBP0.2 million). This is a non-cash charge arising from the application of accounting standards, to write off the estimated value of brands associated with acquired businesses over their anticipated useful life.

-- Net IAS 19 defined benefit pension scheme costs of GBP0.3 million (2019/20: GBP0.3 million) are also non-cash charges. These relate to the Group's legacy defined benefit pension scheme, which was closed to future accrual in 2009. The value of the charge is determined by actuarial assessment and represents the notional financing cost of the Group's pension deficit.

-- A one-off IAS 19 past service cost of GBP0.1 million (2019/20: GBPnil), representing an increase in the estimated cost of guaranteed minimum pension equalisation between men and women, following a High Court ruling in November 2020.

-- One-off restructuring and relocation costs of GBP0.1 million (2019/20: GBP0.8 million) following changes in the estimated cost of several material reorganisation projects, which were announced during the 2019/20 financial year.

-- The net gain from business disposals was recognised in the prior year following the receipt of GBP0.3 million of deferred consideration relating to the divestment of the Alumasc Facades business.

Taxation

The Group's underlying effective tax rate was 19.5% (2019/20: 20.3%), 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 2021/22 financial year.

The Group's effective tax rate on statutory profit before tax was 22.6% (2019/20: 16.4%). Reconciliations from the actual to statutory rates of tax are provided in note 7. The reconciling items chiefly relate to the tax treatment of the one-off items in the Group's income statement and the deferred tax impact of the increase in future tax rate from 19% to 25% from 1 April 2023.

Earnings per share

Underlying earnings per share for the year was 23.7 pence (2019/20: 8.2 pence). This increase is consistent with the increased underlying profit before tax for the year.

Basic earnings per share of 21.2 pence (2019/20: 6.3 pence) reflected both the increase in underlying profit before tax for the year and the lower level of non-underlying costs in 2020/21 relative to 2019/20.

Dividends

The Board have recommended to shareholders a final dividend of 6.25 pence per share (2019/20: 2.0 pence), which will absorb an estimated GBP2.2m of shareholders' funds. This has not been accrued in these accounts as it was proposed after the end of the financial year. Subject to shareholder approval at the Annual General Meeting, it will be paid on 29 October 2021 to members on the share register on 24 September 2021.

Together with the interim dividend of 3.25p (2019/20: nil) paid to shareholders on 6 April 2021, this will bring the total distribution for the year to 9.5 pence per share (2019/20: 2.0 pence), which is covered 2.5 times (2019/20: 4.1 times) by underlying earnings per share.

The Board continues to follow a progressive distribution policy, where dividends rise broadly in line with earnings, while maintaining sensible cover.

 
 Summarised Cash Flow Statement 
 
 
                                                            2020/21      2019/20 
                                                              GBPm         GBPm 
 
 EBITDA *                                                         13.8       6.2 
 Change in working capital                                       (0.7)       0.7 
 VAT (paid)/deferred                                             (1.1)       1.8 
 
 Operating cash flow                                              12.0       8.7 
 
 Capital expenditure                                             (2.0)     (1.7) 
 Interest                                                        (0.2)     (0.3) 
 Tax                                                             (0.2)     (0.1) 
 Pension deficit funding                                         (2.6)     (2.3) 
 Finance lease payments                                          (0.9)     (0.5) 
 Dividend payments                                               (1.9)     (1.6) 
 Sub total                                                         4.2       2.2 
 Non-underlying payments                                         (0.8)     (1.4) 
 
 Net cash flow                                                     3.4       0.8 
                                                         =============  ======== 
 
 Net bank debt at the year end                                     0.9       4.3 
                                                         =============  ======== 
 
 * EBITDA: Underlying operating profit from continuing 
  operations before interest, tax, depreciation and amortisation 
 

Cashflows and net debt

At the onset of the Covid-19 pandemic in the UK, in the second half of financial year 2019/20, the Group undertook a series of measures to conserve cash, including agreements to defer GBP1.8 million of VAT and GBP0.6 million of pension payments. The Group's cash management activities in financial year 2020/21 have been focused on repaying these deferred amounts as they fall due, along with managing the working capital demands of a period of strong growth.

The Group's operating cashflow was GBP12.0 million (2019/20: GBP8.7 million), after a cash outflow into working capital of GBP1.8 million, which includes payment of GBP1.1 million of VAT deferred from 2019/20 (2019/20: GBP2.5 million inflow, with GBP1.8 million of VAT payment deferral). The remaining GBP0.7 million VAT deferral will be repaid in the first half of 2021/22. Trade working capital as a percentage of revenue was 13.9% at 30 June 2021 (30 June 2020: 17.7%).

Capital expenditure was GBP2.0 million (2019/20: GBP1.7 million), representing 86% of depreciation (2019/20: 87%). The main investments were on upgrading equipment at our Housebuilding Products facility in Howden, East Yorkshire, and tooling at our Water Management division. The Board see further opportunities for targeted investments to deliver organic growth, and expect capital expenditure to remain above depreciation for the medium term.

Tax payments of GBP0.2 million were made in the year (2019/20: GBP0.1 million). The current year payment is stated net of a GBP0.4 million (2019/20: GBPnil) tax refund relating to financial year 2018/19.

The Group recorded a net cash inflow for the year of GBP3.4 million (2019/20: GBP0.8m), reducing net debt at 30 June 2021 to GBP0.9 million (30 June 2020: GBP4.3 million).

Statement of financial position and return on investment

Group net assets increased by GBP16.3 million in the year to GBP36.1 million at 30 June 2021, a consequence of the profit retained for the year and a reduction in the pension deficit.

The Group defines its capital invested as the sum of shareholders' funds, including historic goodwill but excluding net bank debt, pension deficit (net of tax) and lease liabilities. Post tax return on investment (underlying operating profit divided by capital invested) was 19.8% (2019/20: 7.2%), reflecting the improved operating performance and close management of capital employed during the year.

Pensions

The Group accounts for its defined benefit retirement obligations in accordance with IAS 19 Employee Benefits, based on the market value of scheme assets and a valuation of scheme liabilities using a discount rate based on AA corporate bond yields at year end. The IAS 19 defined benefit pension scheme deficit at 30 June 2021 was GBP4.6 million (30 June 2020: GBP19.3 million). Scheme assets increased by GBP9.2 million, on a strong investment performance and GBP2.6 million of deficit reduction payments made by the Group in the period. Scheme liabilities decreased by GBP5.5 million, with an increase in the discount rate offsetting an increase in inflation. As funding levels rise, the scheme is adopting a lower risk investment strategy, in which interest rate and inflation risks are more closely hedged, which should reduce volatility in the deficit valuation going forward.

The deficit reduction payments are agreed between the Group and the scheme's trustees, based on triennial actuarial valuations. At the last review on 31 March 2019, Alumasc agreed to pay GBP2.3m annually under a seven year recovery plan. As part of its Covid-19 cash conservation measures, the Group agreed with the trustees to defer GBP0.6 million of deficit reduction payments due in financial year 2019/20. GBP0.4 million of this was repaid over financial year 2020/21, and the remaining GBP0.2 million will be repaid in the first half of financial year 2021/22.

Banking facilities and covenants

The Group maintains facilities with its banking partners to ensure the availability of sufficient liquidity to meet the Group's operational and strategic needs, at optimal cost. The Group projects facility utilisation and compliance with the associated covenants during its short-term forecasting, annual budgeting and strategic planning exercises to ensure adequate headroom is maintained.

During the year, the expiry date of the Group's revolving credit facility was extended by one year. Alumasc's current banking facilities comprise:

-- An unsecured committed three-year revolving credit facility of GBP20.0 million, with a revised expiry date of April 2023 and a further one year extension period;

-- Overdraft facilities, repayable on demand, of GBP4.0 million.

The covenants associated with these facilities are set out below, together with the reported figures at 30 June 2021 and 2020:

                                                                         Covenant             30 June 2021             30 June 2020 

Net debt: EBITDA <3.5* 0.1 0.8

Interest cover >2.5* 42.1 17.3

* changes to <2.5 and >4 from 31 December 2021.

Going Concern

In assessing the Group's ability to continue as a going concern, the Board has considered medium-term forecasts based on the Group's approved budget and three year plan. The Board has also considered stress test scenarios modelled on both a resumption of Government lockdowns and a 20% reduction in revenue for the period to September 2022.

Under the stress test scenarios, there remained adequate headroom in banking facilities and no breach of banking covenants over the period covered by the models. The Board also took note of the Group's further ability to reduce its cost base and/or conserve cash resources at short notice if necessary.

A reverse stress test scenario, that would lead to a breach of the Group's banking covenants, was also modelled. The Board considered the risk of such a scenario arising to be remote.

Having taken into account the scenario models above, and in light of the bank facility headroom under various scenarios, the Directors consider that the Group has adequate resources to continue trading for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. See note 1 for the full Going Concern assessment.

Simon Dray

Group Finance Director

7 September 2021

The contents of this announcement have been extracted from the annual report and accounts for the year ended 30 June 2021 which will be dispatched to shareholders on or around 23 September 2021 and will be available at www.alumasc.co.uk.

PRINCIPAL RISKS AND UNCERTAINTIES

 
 Risks and uncertainties                 Mitigating actions taken 
 COVID-19 
                                           *    The company took swift action in 2020 and managed 
  Comment                                       costs and cash flow intensively. Capital expenditure 
                                                and non-essential new hires were delayed. 
  The Coronavirus pandemic 
  is still impacting our 
  customers' businesses                    *    The primary focus was on the health and wellbeing of 
  and the way we work.                          staff and additional communication channels were 
  As the duration of the                        established. In addition, a new wellbeing app has 
  pandemic is uncertain,                        been made available to all staff to help to mitigate 
  concerns remain over                          stress at home and in the workplace. 
  the potential risk of 
  future lockdowns and 
  restrictions returning                   *    Staff, where possible, switched to working from home 
  together with possibly                        without disruption. All manufacturing sites have been 
  new variants of Covid-19.                     operational with additional Covid-19 protocols this 
                                                financial year. 
 
 
                                           *    Supply chain remained resilient. 
 
 
                                           *    Exports and internet sales have been expanding and 
                                                helped to gain new customers/market share. 
 
 
                                           *    Some business opportunities and mitigations used 
                                                during the pandemic (including use of TEAMS) continue 
                                                to provide ways to trade efficiently and improve 
                                                margin/revenue. Best practices and new ways of 
                                                working, that proved to be effective, will be adopted 
                                                going forward. 
 
 
                                           *    All Government guidelines on Health & Safety, 
                                                including social distancing were implemented and 
                                                continue to be followed on all sites. 
 
 
                                           *    With new ways of working the business is very agile 
                                                and can quickly implement Government guidelines to 
                                                protect employees and customers from Covid-19. There 
                                                is now greater use of IT and other flexible ways of 
                                                working have been adopted. 
                                        -------------------------------------------------------------- 
 Health and safety risks 
                                           *    Health and safety is the number one priority of 
  Comment                                       management and the first Board agenda item. 
 
  The Group has a strong 
  overall track record                     *    Risk assessments are carried out and safe systems of 
  of health and safety                          work documented and communicated. 
  management performance, 
  with the number of lost 
  time accidents significantly             *    All safety incidents and significant near misses are 
  reduced.                                      reported at Board level monthly, with 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 are conducted in 
                                                all Group businesses by independent consultants and 
                                                other specialist advisers. 
 
 
                                           *    Specific focus on improving safety of higher risk 
                                                operations, with external consultancy support as 
                                                needed. 
                                        -------------------------------------------------------------- 
 Staff recruitment and 
  retention risks                          *    Increasing focus of Board and Executive Committee on 
                                                staff retention and reward, supported by HR and 
  Comment                                       external advice. 
 
  Including recruitment, 
  retention, succession,                   *    Competitive remuneration/incentive rates paid to 
  people development. Risk                      attract and retain talented employees. 
  of loss of skills, ability 
  to innovate and improve. 
                                           *    Employee numbers and changes monitored in monthly 
                                                subsidiary Board meetings. 
 
 
                                           *    Retention plans for key, high performing, and 
                                                high-potential employees. 
 
 
                                           *    Training and development programmes. 
 
 
                                           *    The Remuneration Committee considers retention and 
                                                motivation when considering the Remuneration 
                                                framework. 
 
 
                                           *    Succession planning. 
                                        -------------------------------------------------------------- 
 Product/service differentiation 
  relative to competition                  *    A devolved operating model with both group and local 
  not developed                                 management responsible for developing a deep 
  or maintained                                 knowledge of our specialist markets and identifying 
                                                opportunities and emerging market trends. 
  Comment 
 
  Innovation, an agile                     *    Innovation best practice planned at Group level and 
  and entrepreneurial spirit                    more regularly in each business. New product ideas 
  is encouraged in all                          are discussed as part of the businesses' strategy. 
  Group companies. Constantly 
  looking for innovation 
  for new products, particularly           *    Annual Group strategy meetings encourage innovation 
  those that contribute                         and "blue sky" thinking. 
  to sustainability within 
  the built environment. 
                                           *    New product introduction/development KPI used to 
                                                monitor progress. 
 
 
                                           *    Monitoring the market for potentially new and/or 
                                                disruptive technologies. 
 
 
                                           *    Customer feedback considered in the design and /or 
                                                supply of additional products and services. 
 
 
                                           *    Agile approach to business and an ability to meet 
                                                increasing demand for products. 
                                        -------------------------------------------------------------- 
 Loss of key customers 
                                           *    Cross selling of products encouraged to grow revenues, 
  Comment                                       and to introduce customers to all our product ranges. 
 
  Generally, the Group 
  has a good track record                  *    Develop and maintain strong customer relationships 
  of customer retention                         through service excellence and dedicated account 
  and has a diversified                         management. 
  customer base. 
 
                                           *    Product, system and service differentiation and 
                                                reliability. 
 
 
                                           *    Project tracking and enquiry/quote conversion rate 
                                                KPI. 
 
 
                                           *    Increasing use of, and investment in, customer 
                                                relationship management (CRM) software. 
 
 
                                           *    Organisational and business agility to adapt to 
                                                changing and emerging customer needs. 
                                        -------------------------------------------------------------- 
 Legacy defined benefit 
  pension obligations                      *    Continue to grow the business so the relative 
                                                affordability of pension deficit contributions is 
  Comment                                       improved over time. Active management of scheme 
                                                liabilities and assets to reduce deficit, with 
  Alumasc's pension obligations                 particular success during the year. 
  are material relative 
  to its market capitalisation 
  and shareholders' funds.                 *    Continue to maintain constructive relationship with 
                                                Pension Trustees. 
 
 
                                           *    Affordable pension funding commitments agreed and 
                                                met. 
 
 
                                           *    Regular review at Group Board level. 
 
 
                                           *    Use of specialist advisors. 
 
 
                                           *    Investment performance and risk/return balance 
                                                overseen by an Investment Committee. 
 
 
                                           *    The Trustees are pursuing a lower risk investment 
                                                strategy to match liability risks and reduce future 
                                                volatility. 
                                        -------------------------------------------------------------- 
 Supply chain risks 
                                           *    Annual strategic reviews, including supplier, quality, 
  Comment                                       reliability and sustainability. 
 
  International supply 
  chain                                    *    Regular key supplier visits, good relationships 
  risks could increase                          maintained including quality control reviews and 
  through local lockdowns                       training. 
  due to the 
  Covid-19 pandemic, increased 
  tariffs/duties, Brexit                   *    Logistics delays due to post Brexit driver shortages 
  risks in Europe and political/global          have been managed and delivery times agreed/managed 
  volatility.                                   with customers. 
 
 
                                           *    Regular supplier quality, value for money and risk 
                                                reviews. 
 
 
                                           *    Avoidance of strategic dependence on single sources 
                                                of supply. 
 
 
                                           *    Contingency plans to manage Brexit and Asian sourcing 
                                                risks. 
 
 
                                           *    Supplier questionnaires and export checks are 
                                                completed to ensure compliance with Group policies 
                                                including anti-bribery and anti-modern slavery. 
 
 
                                           *    Training has been provided on customs duties, 
                                                particularly on managing new arrangements post 
                                                Brexit. 
 
 
                                           *    Brand and product strength generally enable increases 
                                                in raw material prices to be passed on through 
                                                selling prices. 
                                        -------------------------------------------------------------- 
 Cyber security 
  and Business Interruption                *    IT disaster recovery plans are in place for all 
  Comment                                       businesses and tested regularly. 
 
  Cyber security risks 
  and Business Interruption                *    Business continuity plans are in place, or being 
  risks are increasing                          evolved where we are relocating operations, at each 
  globally and have increased                   business. 
  during the Covid-19 pandemic. 
 
                                           *    Awareness training and management briefings held on 
                                                cyber security risks and actions taken as 
                                                preventative measures. 
 
 
                                           *    New security protocols and software are installed and 
                                                continually reviewed to help mitigate Cyber threats. 
 
 
                                           *    Regular reviews of cyber security, including external 
                                                penetration testing and reviews with external IT 
                                                professionals. 
 
 
                                           *    Critical plant and equipment are identified, with 
                                                associated breakdown/recovery plans in place. 
 
 
                                           *    Business interruption insurance to cover residual 
                                                risks. 
 
 
                                           *    Further systems are being implemented to underpin the 
                                                business strategic growth plans and drive efficiency. 
                                                Implementation risks are mitigated via the use of 
                                                third-parties, qualified project managers and 
                                                increased user-testing. 
                                        -------------------------------------------------------------- 
 Economic uncertainty 
  and Brexit risks                         *    Strategic positioning in markets/sectors anticipated 
                                                to grow faster than the UK construction market. 
  Comment 
 
  Due to the ongoing pandemic,             *    Development of export sales opportunities, especially 
  there is still macroeconomic                  for Levolux (particularly in North America) and 
  uncertainty on a global                       Alumasc Water Management (in Asia and the Middle 
  basis. Markets are also                       East). 
  not completely settled 
  post Brexit, and this 
  has had an impact on                     *    Revenues are derived from a variety of end-use 
  logistics, raw material                       construction markets. 
  prices and supplies. 
  This is challenging the 
  housebuilding                            *    Development of added value systems and solutions that 
  /house-sales/construction                     are either required by legislation, building 
  industry. Government                          regulation and/or specified by architects and 
  spending on infrastructure                    engineers. 
  projects needs to be 
  maintained. 
                                           *    Continuous development and introduction of innovative 
                                                green products, systems, solutions, and services that 
                                                are market leading and differentiated against the 
                                                competition. 
 
 
                                           *    The Group has limited exposure to currency risk, 
                                                mainly 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 suppliers. Contingency planning is in place 
                                                for key residual risk areas, including increased 
                                                inventory of materials/products imported from the EU. 
                                        -------------------------------------------------------------- 
 Product warranty 
  /recall risks                            *    Robust internal quality systems, compliance with 
                                                relevant legislation, building regulations and 
  Comment                                       industry standards (e.g. ISO, BBA etc), and product 
                                                testing, as appropriate. 
  The Group does not have 
  a history of significant 
  warranty claims or product               *    Group insurance programme to cover larger potential 
  recall.                                       risks. 
 
 
                                           *    Back-to-back warranties obtained from suppliers where 
                                                possible. 
 
 
                                           *    Specific local risk management procedures in Group 
                                                brands that also install (and supply) building 
                                                products (i.e. Levolux and Blackdown). 
                                        -------------------------------------------------------------- 
 Credit risk 
                                           *    Most credit risks are insured, including all 
  Comment                                       contracting credit risk. 
 
  The Group has good recent 
  record in managing credit                *    Large export contracts are backed by letters of 
  risks and the contribution                    credit, performance bonds, guarantees or similar. 
  from the UK Government 
  Export Credit Scheme 
  for overseas opportunities               *    Due to Covid-19 and related uncertainties credit 
  has supported export                          risks have increased. 
  opportunities. 
 
                                           *    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 2021

 
                                                Year ended 30 June                    Year ended 30 June 
                                                       2021                                   2020 
 
                                                   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        90,465               -    90,465      75,992               -     75,992 
Cost of sales                            (57,950)               -  (57,950)    (53,413)               -   (53,413) 
                                       ----------  --------------  --------  ----------  --------------  --------- 
Gross profit                               32,515               -    32,515      22,579               -     22,579 
 
Net operating expenses 
  Net operating expenses 
   before non-underlying 
   items                                 (21,511)               -  (21,511)    (19,386)               -   (19,386) 
  Other operating income          5             -               -         -         968               -        968 
 
    IAS 19 past service 
    pension cost                   5            -           (150)     (150)           -               -          - 
  Other non-underlying 
   items                          5             -           (296)     (296)           -         (1,045)    (1,045) 
Net operating expenses                   (21,511)           (446)  (21,957)    (18,418)         (1,045)   (19,463) 
 
Operating profit                4, 5       11,004           (446)    10,558       4,161         (1,045)      3,116 
 
Net finance costs                           (489)           (268)     (757)       (496)           (261)      (757) 
                                       ----------  --------------  --------  ----------  --------------  --------- 
Profit before taxation                     10,515           (714)     9,801       3,665         (1,306)      2,359 
 
Tax expense                       7       (2,050)           (165)   (2,215)       (744)             302      (442) 
                                       ----------  --------------  --------  ----------  --------------  --------- 
Profit for the year 
 from continuing operations                 8,465           (879)     7,586       2,921         (1,004)      1,917 
 
Discontinued operations: 
Profit after taxation 
 for the period from 
 discontinued operations                        -               -         -           -             339        339 
 
Profit for the year                         8,465           (879)     7,586       2,921           (665)      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                                              10,393                                (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                                                 (385)                                    176 
  Exchange differences 
   on retranslation of 
   foreign operations                                                  (46)                                     11 
                                                                      (431)                                    187 
                                                                   --------                              --------- 
 
Other comprehensive 
 gain/(loss) for the 
 year, net of tax                                                     9,962                                (6,286) 
                                                                   --------                              --------- 
 
Total comprehensive 
 profit/(loss) for 
 the year, net of tax                                                17,548                                (4,030) 
                                                                   ========                              ========= 
 
Earnings per share                                                    Pence                                  Pence 
 
Basic earnings per 
 share 
- Continuing operations                                                21.2                                    5.4 
- Discontinued operations                                                 -                                    0.9 
                                  9                                    21.2                                    6.3 
                                                                   ========                              ========= 
Diluted earnings per 
 share 
- Continuing operations                                                20.8                                    5.4 
- Discontinued operations                                                 -                                    0.9 
                                  9                                    20.8                                    6.3 
                                                                   ========                              ========= 
 
Alternative Performance 
 Measures: 
 
Underlying earnings 
 per share (pence)                                                     23.7                                    8.2 
                                                                   ========                              ========= 
 
 

Reconciliations of underlying to statutory profit and earnings per share are provided in notes 5 and 9 respectively.

consolidated statement of financial position

At 30 June 2021

 
                                        Notes      2021      2021      2020      2020 
                                                GBP'000   GBP'000   GBP'000   GBP'000 
Assets 
Non-current assets 
Property, plant and equipment 
 - owned assets                                  11,734              11,089 
Property, plant and equipment 
 - right-of-use assets                            5,469               5,856 
Goodwill                                6        18,705              18,705 
Other intangible assets                           3,321               3,352 
Deferred tax assets                     7         1,145               3,661 
                                               --------            -------- 
                                                           40,374              42,663 
Current assets 
Inventories                                      10,871               8,596 
Trade and other receivables                      21,389              16,270 
Corporation tax receivable                            -                 325 
Derivative financial assets                           -                 207 
Cash at bank                                      4,999              16,143 
                                               --------            -------- 
                                                           37,259              41,541 
 
Total assets                                               77,633              84,204 
                                                         ========            ======== 
 
Liabilities 
Non-current liabilities 
Interest bearing loans and borrowings           (5,936)            (19,909) 
Lease liability                                 (4,811)             (5,244) 
Employee benefits payable                       (4,581)            (19,269) 
Provisions                                      (1,267)             (1,182) 
Deferred tax liabilities                7         (966)             (1,007) 
                                               --------            -------- 
                                                         (17,561)            (46,611) 
Current liabilities 
Trade and other payables                       (21,011)            (15,311) 
Lease liability                                   (795)               (680) 
Provisions                                        (834)             (1,194) 
Corporation tax payable                         (1,019)                   - 
Derivative financial liabilities                  (268)                   - 
Bank overdraft                                        -               (567) 
                                               --------            -------- 
                                                         (23,927)            (17,752) 
 
Total liabilities                                        (41,488)            (64,363) 
                                                         ========            ======== 
 
Net assets                                                 36,145              19,841 
                                                         ========            ======== 
 
Equity 
Share capital                                     4,517               4,517 
Share premium                           10          445                 445 
Capital reserve - own shares            10        (406)               (416) 
Hedging reserve                         10        (217)                 168 
Foreign currency reserve                10           55                 101 
Profit and loss account reserve                  31,751              15,026 
                                               --------            -------- 
 
Total equity                                               36,145              19,841 
                                                         ========            ======== 
 

The financial statements were approved by the Board of Directors and authorised for issue on 7 September 2021

   Paul Hooper                        Simon Dray 
   Director                                  Director 

7 September 2021

Company number 1767387

consolidated STATEMENT of cash flows

For the year ended 30 June 2021

 
                                                            Year ended   Year ended 
                                                               30 June      30 June 
                                                                  2021         2020 
                                                    Notes      GBP'000      GBP'000 
 Operating activities 
 Operating profit                                               10,558        3,116 
 Adjustments for: 
 Depreciation                                                    2,146        1,851 
 Amortisation                                                      361          313 
 Impairment of assets                                                -          300 
 (Gain)/loss on disposal of property, plant 
  and equipment                                                   (16)            4 
 IAS 19 past service pension cost                     5            150            - 
 (Increase)/decrease in inventories                            (2,275)        1,892 
 (Increase)/decrease in receivables                            (5,119)        5,114 
 Increase/(decrease) in trade and other payables                 5,287      (4,564) 
 Movement in provisions                                          (275)      (1,229) 
 Cash contributions to retirement benefit 
  schemes                                                      (2,614)      (2,254) 
 Share based payments                                              397            - 
                                                           -----------  ----------- 
 Cash generated by operating activities                          8,600        4,543 
 
 
 Tax paid                                                        (161)         (93) 
 Net cash inflow from operating activities                       8,439        4,450 
                                                           -----------  ----------- 
 
 Investing activities 
 Purchase of property, plant and equipment                     (1,666)      (1,342) 
 Payments to acquire intangible fixed assets                     (330)        (417) 
 Proceeds from sales of property, plant and 
  equipment                                                         46          143 
 Net proceeds from sale of business activity                         -          339 
 Net cash outflow from investing activities                    (1,950)      (1,277) 
                                                           -----------  ----------- 
 
  Financing activities 
 Bank interest paid                                              (207)        (297) 
 Equity dividends paid                                         (1,878)      (1,574) 
 (Repayment)/draw down of amounts borrowed                    (14,000)       12,000 
 Principal paid on lease liabilities                             (692)        (346) 
 Interest paid on lease liabilities                              (178)        (153) 
 Refinancing costs                                                (65)            - 
 Net cash (outflow)/inflow from financing 
  activities                                                  (17,020)        9,630 
                                                           -----------  ----------- 
 
 Net (decrease)/increase in cash at bank 
  and bank overdraft                                          (10,531)       12,803 
 
 Net cash at bank and bank overdraft brought 
  forward                                                       15,576        2,762 
 Net (decrease)/increase in cash at bank 
  and bank overdraft                                          (10,531)       12,803 
 Effect of foreign exchange rate changes                          (46)           11 
 Net cash at bank and bank overdraft carried 
  forward                                                        4,999       15,576 
                                                           ===========  =========== 
 

consolidated STATEMENT of changes in equity

For the year ended 30 June 2021

 
                                                                         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 2019                       4,517       445            (416)        (8)          90     20,817         25,445 
Profit for the 
 period                                  -         -                -          -           -      2,256          2,256 
Exchange differences 
 on retranslation 
 of foreign 
 operations                              -         -                -          -          11          -             11 
Net gain on cash 
 flow hedges                             -         -                -        217           -          -            217 
Tax on derivative 
 financial asset                         -         -                -       (41)           -          -           (41) 
Actuarial loss on 
 defined benefit 
 pensions, net of 
 tax                                     -         -                -          -           -    (6,473)        (6,473) 
Dividends                 8              -         -                -          -           -    (1,574)        (1,574) 
At 1 July 2020                       4,517       445            (416)        168         101     15,026         19,841 
 
Profit for the 
 period                                  -         -                -          -           -      7,586          7,586 
Exchange differences 
 on retranslation 
 of foreign 
 operations                              -         -                -          -        (46)          -      (46) 
Net loss on cash 
 flow hedges                             -         -                -      (475)           -          -          (475) 
Tax on derivative 
 financial liability                     -         -                -         90           -          -             90 
Actuarial gain on 
 defined benefit 
 pensions, net of 
 tax                                     -         -                -          -           -     10,393         10,393 
Tax on share options                     -         -                -          -           -        237            237 
Own shares used to 
 satisfy exercise 
 of share awards                         -         -               10          -           -          -             10 
Share based payments                     -         -                -          -           -        397            397 
Dividends                 8              -         -                -          -           -    (1,878)        (1,878) 
Exercise of share 
 based incentives                        -         -                -          -           -       (10)           (10) 
At 30 June 2021                      4,517       445            (406)      (217)          55     31,751         36,145 
                             -------------  --------  ---------------  ---------  ----------  ---------  ------------- 
 
   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 financial information included within this announcement does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006 (the "Act"). The financial information for the year ended 30 June 2021 has been extracted from the statutory accounts on which an unqualified audit opinion has been issued.

The statutory accounts for the year ended 30 June 2021 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The Group financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), International Financial Reporting Standards Interpretations Committee ("IFRS IC") interpretations and those provisions of the Companies Act 2006 applicable to companies reporting under IFRS. The Group financial statements have been prepared on the going concern basis and adopting the historical cost convention. The Group's accounting policies remain consistent with the previous financial year.

Going concern and COVID-19

Management continued to take actions to allow the business to trade effectively and manage the risks associated with the Covid-19 pandemic.

At 30 June 2021 the Group had cash and cash equivalents of GBP5.0 million and had utilised GBP5.9 million of the committed GBP20m revolving credit facility. This provided total headroom of some GBP19.1m against committed facilities and, together with GBP4m overdraft facilities, there is headroom of some GBP23.1m against total facilities at 30 June 2021. Management extended the expiry date of the committed GBP20 million revolving credit facility during the year to April 2023, and retain the option to extend it by a further year.

In assessing going concern to take account of the continued uncertainties caused by Covid-19, the Group has modelled a Base Case (BC) trading scenario on a "bottom up" basis. Given the continuing uncertainty regarding the impact of Covid-19 (including potential further waves of the pandemic) on the economy, customer behaviour and ultimately on the Group's performance, the Group has also modelled a stress test scenario which assumes a 20% reduction in revenue, with no cost reduction or cash conservation measures, and a Covid-19 model, which assumes a five month disruption of trade consistent with that experienced during the first wave of the pandemic. Under the lowest point in these stress tested scenarios, the Group retains adequate headroom against its total banking facilities for the next 13 months to September 2022, with no breach of banking covenants across this period.

The Group has modelled an additional scenario (a reverse stress test) that would lead to a breach of its banking covenants. It is considered that the risk of such a scenario arising is remote. Management have also identified a number of mitigating actions that the Group would take to stay within its banking facilities and comply with the associated covenants throughout the period.

Having taken into account all of the aforementioned comments, actions and factors in relation to going concern and the potential impact of Covid-19, and in light of the bank facility headroom under various scenarios, the Directors consider that the Group has adequate resources to continue trading for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

   2             judgments and estimates 

The main sources of estimation uncertainty that could have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities at 30 June 2021 within the next financial year are the valuation of defined benefit pension obligations, the valuation of the Group's acquired goodwill, the recognition of revenues and profit on contracts with customers where revenue is recognised over time.

Valuation 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 6 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 IFRS15 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 

The accounting policies adopted are consistent with those of the previous financial year. The following new standards, amendments and interpretations are effective for the period beginning on or after 1 July 2020 and have been adopted for the Group financial statements where appropriate with no material impact on the disclosures made by the Group:

-- Definition of a Business (Amendments to IFRS 3);

-- Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 9, IAS 39 and IFRS 7); and

-- Covid-19-Related Rent Concessions (Amendments to IFRS 16).

   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.

 
                                             Segmental 
                                             operating 
                                   Revenue      result 
                                   GBP'000     GBP'000 
Full Year to 30 June 2021 
 
Water Management                    38,370       6,115 
Building Envelope                   41,022       4,255 
Housebuilding Products              11,073       2,552 
                                   -------  ---------- 
Trading                             90,465      12,922 
 
Unallocated costs                              (1,918) 
 
Total from continuing operations    90,465      11,004 
                                   =======  ========== 
 
 
                                                     GBP'000 
 
Segmental operating result                            11,004 
Brand amortisation                                     (238) 
Past service cost in respect of GMP equalisation 
 (see note 5)                                          (150) 
Restructuring & relocation costs (see note 5)           (58) 
 
Total operating profit from continuing operations     10,558 
                                                     ======= 
 
 
                                                       Capital expenditure 
                                                 ------------------------- 
                                        Segment    Property,         Other   Deprecia-tion   Amortisa-tion 
                         Segment    Liabilities      Plant &    Intangible 
                          Assets                   Equipment        Assets 
                         GBP'000        GBP'000      GBP'000       GBP'000         GBP'000         GBP'000 
 
Water Management          29,866        (9,635)        1,455           271           1,081             137 
Building Envelope         25,500       (10,208)          215            36             175             180 
Housebuilding Products    14,747        (7,114)          769            23             798              44 
 
Trading                   70,113       (26,957)        2,439           330           2,054             361 
 
Unallocated                7,520       (14,531)            -             -              92               - 
 
Total                     77,633       (41,488)        2,439           330           2,146             361 
                         =======  =============  ===========  ============  ==============  ============== 
 
 
                                             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 from continuing operations    75,992       4,161 
                                   =======  ========== 
 
 
                                                      GBP'000 
Segmental operating result 
Brand amortisation                                      4,161 
Restructuring & relocation costs (see note 5)           (238) 
                                                        (807) 
Total operating profit from continuing operations       3,116 
                                                     ======== 
 
 
                                                         Capital expenditure 
                                                   ------------------------- 
                                          Segment    Property,         Other   Deprecia-tion   Amortisa-tion 
                           Segment    Liabilities      Plant &    Intangible 
                            Assets                   Equipment        Assets 
                           GBP'000        GBP'000      GBP'000       GBP'000         GBP'000         GBP'000 
 
Water Management            26,645        (7,244)        1,813           264             785             100 
Building Envelope           22,267        (8,346)          162            17             175             173 
Housebuilding Products      13,051        (5,687)          361            29             798              39 
 
Trading                     61,963       (21,277)        2,336           310           1,758             312 
 
Unallocated/discontinued    22,241       (43,086)           19           131              93               1 
 
Total                       84,204       (64,363)        2,355           441           1,851             313 
                           =======  =============  ===========  ============  ==============  ============== 
 

Analysis by geographical segment 2020/21

 
                       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             78,194    4,133     3,599    1,286    2,663       590   90,465 
 
Segment non-current 
 assets                39,225        -         -        -        4         -   39,229 
 

Analysis by geographical segment 2019/20

 
 
                        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              64,816    4,147     3,184     1,485    1,587        773   75,992 
 
Segment non-current 
 assets                 38,996        -         -         -        -          -   39,002 
 

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 
 
                                                      2020/21             2019/20 
                                           ------------------  ------------------ 
                                           Operating   Profit  Operating   Profit 
                                              profit   before     profit   before 
                                                          tax                 tax 
                                             GBP'000  GBP'000    GBP'000  GBP'000 
 
Underlying operating profit/profit 
 before tax                                   11,004   10,515      4,161    3,665 
Brand amortisation                             (238)    (238)      (238)    (238) 
IAS 19 net pension scheme finance 
 costs                                             -    (268)          -    (261) 
IAS 19 past service cost in respect 
 of GMP equalisation                           (150)    (150)          -        - 
Restructuring & relocation costs                (58)     (58)      (807)    (807) 
Profit/profit before tax from continuing 
 operations                                   10,558    9,801      3,116    2,359 
 
Profits/gains relating to discontinued 
 operations                                        -        -          -      339 
Statutory operating profit/profit 
 before tax                                   10,558    9,801      3,116    2,698 
                                           =========  =======  =========  ======= 
 

In the presentation of underlying profits, management disclose 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 would typically be excluded in assessing the value of the business.

In addition, management has presented the following specific items that arose in 2020/21 and 2019/20 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:

- One-off costs of material restructuring and relocation of separate businesses within the Group in both 2020/21 and 2019/20, including costs associated with the departure and recruitment of a Group Finance Director during the prior financial year;

- 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 20 November 2020; and

- The one-off deferred tax rate change adjustment charge of GBP319k relating to the increase in main rate of UK corporation tax from 19% to 25%.

   6             GOODWILL 
 
                            2021     2020 
                         GBP'000  GBP'000 
Cost: 
At 1 July and 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:

 
                      2021     2020 
                   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% (2020: 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, including Covid-19, 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% (2020: 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 2021 was similar to the rate used in 2020.

The surplus headroom above the carrying value of goodwill at 30 June 2021 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 2021 for Levolux was more sensitive and the following change to each of the key assumptions would lead to an impairment:

   -       a 3% increase in the discount rate; 
   -       a growth rate of -1% used to extrapolate the cash flows; 
   -       a 35% reduction in the cash flow generated in the terminal year. 
   7             tax expense 

(a.) Tax on profit on ordinary activities

Tax charged in the statement of comprehensive income

 
                                                    2020/21  2019/20 
                                                    GBP'000  GBP'000 
Current tax: 
UK corporation tax                                    1,443       22 
Overseas tax                                             46       48 
Amounts under/(over) provided in previous years          23     (19) 
Total current tax                                     1,512       51 
                                                    =======  ======= 
 
Deferred tax: 
Origination and reversal of temporary differences       405      450 
Amounts over provided in previous years                (21)    (157) 
Rate change adjustment                                  319       98 
                                                    -------  ------- 
Total deferred tax                                      703      391 
Total tax expense                                     2,215      442 
                                                    =======  ======= 
 
 
Tax recognised in other comprehensive income 
Deferred tax: 
Actuarial gains/(losses) on pension schemes                    2,099  (1,838) 
Cash flow hedge                                                 (90)       41 
Tax charged/(credited) to other comprehensive income           2,009  (1,797) 
                                                               =====  ======= 
 Total tax charge/(credit) in the statement of comprehensive 
  income                                                       4,224  (1,355) 
                                                               =====  ======= 
 

(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 22.6% is higher than (2019/20: 16.4% was lower than) the standard rate of corporation tax in the UK of 19% (2019/20: 19.0%).

The differences are reconciled below:

 
                                                         2020/21  2019/20 
                                                         GBP'000  GBP'000 
 
Profit before tax from continuing operations               9,801    2,359 
Profit before tax from discontinued operations                 -      339 
Accounting profit before tax                               9,801    2,698 
 
Current tax at the UK standard rate of 19.0% (2019/20: 
 19.0%)                                                    1,862      513 
Expenses not deductible for tax purposes                      32       71 
Use of capital losses                                          -     (64) 
Rate change adjustment                                       319       98 
Tax under/(over) provided in previous years - current 
 tax                                                          23     (19) 
Tax over provided in previous years - deferred 
 tax                                                        (21)    (157) 
 
                                                           2,215      442 
                                                         =======  ======= 
 

(c.) Unrecognised tax losses

The Group has agreed tax capital losses in the UK amounting to GBP16.3 million (2020: GBP16.3 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 (2020: GBP1 million). These have been offset in the prior year against the capital losses detailed above. A deferred tax asset has not been recognised in respect of the net capital losses carried forward of GBP15.3 million (2020: GBP15.3 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                         Share          deferred         tax 
                             allowances    differences   Brands   Hedging    options     tax liability       asset 
                                GBP'000        GBP'000  GBP'000   GBP'000    GBP'000           GBP'000     GBP'000 
 
At 1 July 2019                      540           (66)      482       (2)          -               954     (2,202) 
Charged/(credited) 
 to the statement 
 of comprehensive 
 income - current 
 year                               170           (12)       11         -          -               169         379 
Credited to the 
 statement of 
 comprehensive 
 income - prior year              (160)              3        -         -          -             (157)           - 
Charged/(credited) 
 to equity                            -              -        -        41          -                41     (1,838) 
At 30 June 2020                     550           (75)      493        39          -             1,007     (3,661) 
                           ============  =============  =======  ========  =========  ================  ========== 
 
Charged/(credited) 
 to the statement 
 of comprehensive 
 income - current 
 year                           359               (65)       96         -       (83)               307         417 
Credited to the 
 statement of 
 comprehensive 
 income - prior year                (5)           (16)        -         -          -              (21)           - 
Charged/(credited) 
 to equity                            -              -        -      (90)      (237)             (327)       2,099 
At 30 June 2021                     904          (156)      589      (51)      (320)               966     (1,145) 
                           ============  =============  =======  ========  =========  ================  ========== 
 

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 GBP3.7 million (2020: GBP2.9 million) in respect of net capital losses of GBP15.3 million (2020: GBP15.3 million) have not been recognised, see note 10 (c).

(e.) Factors affecting the tax charge in future periods

In the Budget on 3 March 2021, the Government announced its intention to increase the main rate of UK corporation tax from 19% to 25% with effect from 1 April 2023. Existing temporary differences on which deferred tax has been provided may therefore unwind in future periods at this increased rate. Since the 25% tax rate change was substantively enacted at the 30 June 2021 balance sheet date, deferred tax assets and liabilities have been calculated to reflect the expected timing of reversal of the related temporary difference with an impact of GBP319k on the 2020/21 tax charge.

   8             dividends 
 
                                                     2020/21  2019/20 
                                                     GBP'000  GBP'000 
 
Interim dividend for 2021 of 3.25p paid on 6 
 April 2021                                            1,163        - 
Final dividend for 2020 of 2.0p paid on 30 October 
 2020                                                    715        - 
Final dividend for 2019 of 4.4p paid on 31 October 
 2019                                                      -    1,574 
                                                       1,878    1,574 
                                                     =======  ======= 
 
 

A final dividend of 6.25 pence per equity share, at a cash cost of GBP2,236,000, has been proposed for the year ended 30 June 2021, payable on 29 October 2021. In accordance with IFRS accounting requirements this dividend has not been accrued in these consolidated financial statements. The 2020 interim dividend, which was due to be paid on 7 April 2020 at a cash cost of GBP1,055,000, was cancelled as part of the Group's Covid-19 cash conservation programme.

   9             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:

 
                                                2020/21  2019/20 
                                                GBP'000  GBP'000 
 
Net profit attributable to equity holders of 
 the parent - continuing operations               7,586    1,917 
Net profit attributable to equity holders of 
 the parent - discontinued operations                 -      339 
                                                  7,586    2,256 
                                                =======  ======= 
 
                                                   000s     000s 
 
Weighted average number of shares                35,766   35,764 
Dilutive potential ordinary shares - employee 
 share options                                      637       55 
                                                 36,403   35,819 
                                                =======  ======= 
 
 
Basic earnings per share:   Pence  Pence 
 
Continuing operations        21.2    5.4 
Discontinued operations         -    0.9 
                             21.2    6.3 
                            =====  ===== 
 
 
Diluted earnings per share:   2020/21  2019/20 
                                Pence    Pence 
 
Continuing operations            20.8      5.4 
Discontinued operations             -      0.9 
                                 20.8      6.3 
                              =======  ======= 
 

Calculation of underlying earnings per share:

 
                                                      2020/21  2019/20 
                                                      GBP'000  GBP'000 
 
Reported profit before taxation from continuing 
 operations                                             9,801    2,359 
Brand amortisation                                        238      238 
IAS 19 net pension scheme finance costs                   268      261 
Pension GMP equalisation                                  150        - 
Restructuring & relocation costs                           58      807 
Underlying profit before taxation from continuing 
 operations                                            10,515    3,665 
 
Tax at underlying Group tax rate of 19.5% (2019/20: 
 20.3%)                                               (2,050)    (744) 
                                                      -------  ------- 
Underlying earnings from continuing operations          8,465    2,921 
                                                      -------  ------- 
 
Weighted average number of shares                      35,766   35,764 
 
Underlying earnings per share from continuing 
 operations                                             23.7p     8.2p 
                                                      =======  ======= 
 
   10           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 360,017 (2020: 369,245) ordinary own shares held by the Company. The market value of shares at 30 June 2021 was GBP954,045 (2020: GBP265,856). These are held to help satisfy the exercise of awards under the Company's Long Term Incentive Plans. During the year 9,228 shares with an original cost of GBP10,000 were used to satisfy the exercise of awards. No shares were exercised in the prior financial period. 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.

   11           related party disclosure 

The Group's principal actively trading subsidiaries at 30 June 2021 are listed below:

 
                                                      Country of    % of equity interest 
Principal subsidiaries       Principal activity    incorporation          and votes held 
                                                                        2020        2019 
 
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.

 
 Financial Summary                 2014/15     2015/16     2016/17      2017/18      2018/19      2019/20      2020/21 
                                   GBP'000     GBP'000     GBP'000      GBP'000      GBP'000      GBP'000      GBP'000 
                                                                                              -----------  ----------- 
 Income Statement Summary 
 
 Continuing operations: 
  Revenue                           69,950      73,005      88,368       87,048       90,104       75,992       90,465 
 
  Underlying operating 
   profit                            6,341       7,010       8,703        6,224        5,865        4,161       11,004 
  Underlying operating 
   margin                             9.1%        9.6%        9.8%         7.2%         6.5%         5.5%        12.2% 
 
  Net interest cost on 
   borrowings                        (592)       (215)       (132)        (212)        (281)        (343)        (311) 
  Interest on lease 
   liabilities                           -           -           -            -            -        (153)        (178) 
 
  Underlying profit before 
   tax                               5,749       6,795       8,571        6,012        5,584        3,665       10,515 
 
  Non-underlying items*            (1,434)     (1,502)       (888)      (1,082)      (4,599)      (1,306)        (714) 
  Profit before taxation             4,315       5,293       7,683        4,930          985        2,359        9,801 
 
  Taxation                         (1,120)     (1,319)     (1,492)        (967)        (256)        (442)      (2,215) 
  Profit for the year from 
   continuing 
   operations                        3,195       3,974       6,191        3,963          729        1,917        7,586 
 
 Discontinued operations - 
  (Loss)/profit 
  after tax                          1,181       2,510         349          354        2,912          339            - 
----------------------------  ------------  ----------  ----------  -----------  -----------  ----------- 
 Profit for the year                 4,376       6,484       6,540        4,317        3,641        2,256        7,586 
----------------------------  ------------  ----------  ----------  -----------  -----------  -----------  ----------- 
 
 
 Underlying earnings per 
  share from 
  continuing operations 
  (pence)                             12.6        15.1        19.1         13.4         12.4          8.2         23.7 
 
 Basic earnings per share 
  (pence)                             12.3        18.2        18.3         12.0         10.1          6.3         21.2 
 
 Dividends per share (pence)           6.0         6.5        7.15         7.35         7.35          2.0          9.5 
 
 
 Balance Sheet Summary at 30 
 June 
 Shareholders' funds                15,929      16,580      20,437       24,421       25,445       19,841       36,145 
 Net debt/(cash)                     (914)     (8,632)     (6,076)        4,812        5,095        4,333          937 
 Lease liabilities                       -           -           -            -            -        5,924        5,606 
 Pension deficit (net of 
  tax)                              16,748      18,588      17,095       12,566       10,749       15,608        3,436 
 Discontinued operations           (3,708)       (479)       (334)        (714)          359            -            - 
 
 Capital Invested - 
  continuing operations             28,055      26,057      31,122       41,085       41,648       45,706       46,124 
----------------------------  ------------  ----------  ----------  -----------  -----------  -----------  ----------- 
 
 Underlying return on 
  capital invested 
  (post-tax)**                       17.9%       20.5%       24.2%        13.8%        10.2%         7.2%        19.8% 
 
 Underlying tax rate                 22.0%       20.8%       20.6%        20.2%        20.4%        20.3%        19.5% 
 
 Notes 
 
 * Non-underlying items comprise brand amortisation and IAS 19 pension 
  costs in all years. Further details of the 2019/20 and 2020/21 non underlying 
  items can be found in note 5 of the Report and Accounts 2021. 
 
 
 ** Underlying operating profit after tax from continuing operations 
  calculated using the underlying tax rate, as a percentage of average 
  capital invested from continuing operations. 
 

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END

FR UPUMUBUPGPUQ

(END) Dow Jones Newswires

September 07, 2021 02:00 ET (06:00 GMT)

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