TIDMALU

RNS Number : 9481A

Alumasc Group PLC

08 February 2022

Tuesday 8 February 2022

The Alumasc Group plc

Interim results

On track to deliver Full Year expectations

Alumasc (ALU.L) the sustainable building products, systems and solutions Group today announces results for the six months ended 31 December 2021.

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

" The Alumasc Group reported a solid performance during the first half and is on track to deliver its expectations for the full year. Although there were some headwinds experienced due to Covid-19 driven contract delays and cost inflation across the industry during the period, the business performed well and has good momentum going into the second half.

Alumasc is at the forefront of providing high-quality, low carbon, sustainable products, systems and solutions, the majority of which manage the scarce resources of water and energy and improve quality of life for the owner/occupier in the built environment. Our commitment to sustainable business is evidenced by Timloc, our housebuilding products business, becoming the first building products manufacturer in the UK to be carbon neutral across its operations.

I am therefore delighted that Alumasc's green credentials have been recognised by the award of the London Stock Exchange Green Economy Mark in November 2021 and that we are well on the way to becoming a market leader in the provision of sustainable building products."

Financial Overview: Solid underlying performance

 
Half year to 31 December                2021  2020 
--------------------------------------  ----  ---- 
 
Revenue (GBPm)                          46.3  45.6 
Underlying profit before tax (GBPm)      5.3   6.0 
Underlying operating margin (%) (1)     11.9  13.6 
 
Underlying earnings per share (pence)   11.8  13.4 
EBITDA (GBPm) (2)                        6.8   7.4 
 
Statutory profit before tax (GBPm)       5.1   5.5 
Basic earnings per share (pence)        11.2  12.2 
Dividends per share (pence)             3.35  3.25 
 
Net bank debt at 31 December (GBPm)      4.1   0.2 
 
 

A reconciliation of underlying to statutory profit is provided in note 4 to the interim financial statements.

(1) Underlying operating margin: Underlying operating profit as a percentage of revenue.

(2) EBITDA: Underlying operating profit before interest, tax, depreciation and amortisation.

-- Group revenues of GBP46.3m, were 1.6% (GBP0.7m) ahead of H1 FY21 (GBP45.6m, which benefited from some GBP2.5m of business delayed from FY20 by Covid-19). Excluding this, sales growth was 7.5%.

-- Export sales grew by 41% to GBP8.7 million and represented 19% of total Group revenue (H1 FY21: 13%).

-- The strength of our brand positioning and customer relationships allowed the successful pass-through of input cost inflation. As a result, gross margin was only slightly diluted at 34.6% (H1 FY21: 36.7%).

-- Underlying operating margin remained strong at 11.9% (H1 FY21: 13.6%), with statutory operating margin of 11.7% (H1 FY21: 12.9%), after absorbing the lower gross margin as well as the resumption of business development costs which had been curtailed by the Covid-19 restrictions. Structural cost savings of GBP3.1m p.a., achieved over the previous two years, remain.

   --    The Group is selectively investing in opportunities to accelerate growth. 

-- Underlying profit before tax was GBP5.3m (H1 FY21: GBP6.0m); with statutory profit before tax of GBP5.1m (H1 FY21: GBP5.5m).

-- Net bank debt at 31 December was GBP4.1m (31 December 2020: GBP0.2m net bank debt). During the period the Group repaid GBP0.8m of VAT and pension liabilities deferred from FY20 under the Group's Covid-19 cash conservation measures. In addition, the Group actively increased its stock holdings to maintain customer service and mitigate price increases, in response to the global supply chain challenges and raw material cost inflation.

-- The defined benefit pension scheme deficit was further reduced during the first half to GBP2.5m (30 June 2021: GBP4.6m), mainly as a result of deficit reduction payments and asset performance.

-- The Board plans to pay an interim dividend of 3.35p per share in April 2022. This represents an increase of 3.1% on the previous interim dividend, and reflects the encouraging first half performance and Board's confidence in the strength of the Group's strategy and its future prospects.

Divisional Overview

-- Water Management Division made a record profit of GBP4.1m, 17.6% ahead of H1 FY21. Revenues were 18.9% ahead, with strong export and online sales growth. Operating margins remained in line with the prior period at 18%, driven by volume growth and cost savings.

-- The Building Envelope Division reported a reduced revenue and delivered a profit of GBP0.9m (5% operating margin), GBP1.6m below H1 FY21. Alumasc Roofing performed well against a prior half year which included significant business delayed from FY20. Levolux's performance was affected by Covid-19 in its core UK and USA markets, resulting in delays in orders, and it reported a loss for H1 FY22 of GBP1.0m (H1 FY21: GBP0.2m profit). With its restructured cost base and improved capability, Levolux is well placed to recover as commercial market activity resumes.

-- Housebuilding Products Division grew its revenue by 6.4%, representing a very commendable performance given a challenging environment of inflationary pressures and supply-side constraints holding back site activity. Housebuilding Products continued to deliver the highest return on sales in the Group, with a 19% operating margin (H1 FY21: 22%).

Outlook

-- Good momentum across the majority of the Group's businesses, and a growing pipeline of opportunities at Levolux.

   --    A strong balance sheet and cash position allows investment to accelerate future growth. 

-- The business is on track to deliver against its full year expectations and looks forward to the future with confidence.

Enquiries:

 
 The Alumasc Group plc                 +44 (0) 1536 383844 
 Paul Hooper, CEO 
 Simon Dray, Group Finance Director 
 
 Peel Hunt (Broker) 
 Mike Bell                             +44 (0) 20 7418 8831 
 
 finnCap (NOMAD) 
 Julian Blunt                          + 44 (0)207 220 0561 
 
 Camarco                               alumasc@camarco.co.uk 
 Ginny Pulbrook                        + 44 (0)203 757 4992 
 Rosie Driscoll                        + 44 (0)203 757 4981 
 
 

REVIEW OF INTERIM RESULTS

Chief Executive's Statement

The first half of the 2021/22 financial year saw strong sales momentum across most markets and the effective management of ongoing, industry-wide, supply chain and inflationary pressures.

In our Annual Report and Accounts 2021 we indicated that we estimated that circa GBP2.5m sales had been carried forward from the lockdown affected prior year, most of this helping to boost the prior year first half performance. Excluding this from the comparator, underlying sales growth in H1 FY22 was GBP3.2m (7.5%). Price rises and surcharges, necessary to pass through the sustained increase in cost prices, were responsible for GBP1.9m (4.4%) of this. The remaining 3.1% increase in revenue includes reduced volumes at Levolux; revenue growth in the other businesses was closer to 10%.

In particular, our Water Management Division had an excellent first half year, increasing its revenue by 19% (GBP3.6m) to GBP22.8m, a great effort and assisted by increased export sales and, in particular, the start of the shipments to Hong Kong's Chek Lap Kok Airport, illustrating the global reputation of our water management products. Our Roofing business did very well to almost fully offset the delayed revenues from lockdown and a significant contract which both benefited H1 FY21. In addition, our Housebuilding Products Division's revenue grew by 6% and was assisted once again by new product launches.

Group export sales grew by 41% to GBP8.7 million and represented 19% of total revenue (H1 FY21: 13%).

Levolux's performance was affected by Covid-19 (in the UK and USA) resulting in delays in orders. It reported a loss for H1 FY22 of GBP1.0m (H1 FY21: GBP0.2m profit). However Levolux, with its restructured cost base and improved capability, is well placed to recover as commercial market activity resumes. Enquiry levels are increasing and we anticipate an improved order intake in the second half.

Operational Review

Water Management

 
                          H1 FY22    H1 FY21 
 Revenue                 GBP22.8m   GBP19.2m 
                        ---------  --------- 
 Underlying operating     GBP4.1m    GBP3.5m 
  profit 
                        ---------  --------- 
 Underlying operating 
  margin                    18.1%      18.3% 
                        ---------  --------- 
 Operating profit         GBP4.1m    GBP3.5m 
                        ---------  --------- 
 

Alumasc Water Management Division delivered another strong and record performance in the first half year, significantly increasing underlying operating profit. The drivers of the 18% improvement in operating profit to GBP4.1 million (18.1% operating margin) were the continued control of operating costs while accompanied by a significant revenue increase of GBP3.6m (19%) which saw market share growth, particularly within the civil drainage and roofline markets.

Within this the E-Commerce business, Rainclear, returned another significant revenue increase, this time of 18%, following new product launches. Gatic Slotdrain performed very strongly in H1 FY22, and was successful in winning several new larger car parks work and new Amazon facilities, including one in Valencia, Spain. A Slotdrain project was completed for a highway in Costa Rica. Although activity was quiet at airports in the UK, the first shipments to Chek Lap Kok's Airport Runway 3 were made in the second quarter.

Alumasc Water Management Solutions performed very well, with successful market and sales initiatives benefiting in particular sales of its Alumasc Rainwater and Skyline brands.

Building Envelope

 
                          H1 FY22    H1 FY21 
 Revenue                 GBP17.8m   GBP21.1m 
                        ---------  --------- 
 Underlying operating     GBP0.9m    GBP2.5m 
  profit 
                        ---------  --------- 
 Underlying operating 
  margin                     4.9%      12.0% 
                        ---------  --------- 
 Operating profit         GBP0.8m    GBP2.4m 
                        ---------  --------- 
 

The Building Envelope Division had a reduced revenue in both parts of its division and produced a profit of GBP0.9m (5% operating margin), GBP1.6m below H1 FY21, largely reflecting the result at Levolux, discussed below.

The Roofing business performed ahead of internal expectations in both its newbuild and refurbishment markets, against a comparative that included a large one-off contract as well as significant sales delayed from the prior year. It has benefited significantly from the recruitment of high quality sales people who have improved sales in regions that had been weaker in the past. The Covid-19 impact also meant that there was more external work carried out on roofing than on internal refurbishment for Academies. The Roofing business continues to focus on high end specification offers supported by the highest standards, with a customer focused service level which delivers low carbon systems combined with safety in installation; all supported by long-term warranties. This has allowed the business to increase market share in its core sectors.

Covid-19 also played a part in slowing down newbuild commercial market projects, which particularly affected Levolux. This depressed the order intake in the first half to a position significantly lower than was anticipated, and led to a GBP1.0m loss at the half year, compared to a GBP0.2m profit in H1 FY21. However, levels of customer enquiries are increasing and the business is actively pursuing several significant opportunities. With its streamlined operating structure and improved capability, Levolux is well positioned to benefit as market activity resumes.

Specification sales opportunities are growing from the new integrated Building Envelope sales approach with an increasing number of combined project wins taking place.

Housebuilding Products

 
                         H1 FY22   H1 FY21 
 Revenue                 GBP5.7m   GBP5.3m 
                        --------  -------- 
 Underlying operating    GBP1.1m   GBP1.2m 
  profit 
                        --------  -------- 
 Underlying operating 
  margin                   19.3%     22.2% 
                        --------  -------- 
 Operating profit        GBP1.1m   GBP1.1m 
                        --------  -------- 
 

Timloc, our Housebuilding Products business, continued to perform well. Its industry leading next day delivery service and continued introduction of new products underpins this performance.

This Division, representing 12% of Group's revenues, grew its revenue by GBP0.4m (6.4%). This was a very commendable performance in a challenging environment in which housebuilding activity on sites was frequently interrupted by commodity product and labour shortages and inflationary pressures. Despite these, Housebuilding Products maintained its strong returns with a 19% (H1 FY21: 22%) operating margin. New product introductions, outstanding service and rigorous cost controls contributed significantly to this performance. The achievement of 100% On Time In Full ('OTIF') delivery performance was, once again, appreciated by its customers.

New products such as meter boxes, fire rated stop socks, non-combustible InvisiWeep, and the relaunch of the Cavity Closer range all had a positive impact on the business. Ongoing investment in new equipment with much improved energy efficiency, delivering excellent pay-backs, has made a significant contribution in the reduction of the Group's carbon footprint. Timloc became the first building products manufacturer in the UK to source all its energy from renewable sources. In addition, it has become the first building products manufacturer in the UK to become carbon neutral across its operations.

Strategic Overview

The significant improvement in the Group's performance across the last two years emanate from the execution of the Group's strategy which includes the stated objectives of:

Short-term:

   --    Continuing to simplify, streamline and reduce fixed costs across the Group. 
   --    Recovery of Levolux's financial performance. 

Long-term:

   --    Drive organic growth across the Group. 
   --    Continual efficiency improvements. 
   --    Geographical expansion within selected territories. 
   --    New product development focused on environmental and sustainable solutions. 
   --    Bolt-on M&A to expand products and markets. 
   --    Use of sustainable materials with recycled and fully recyclable materials. 

We have managed to streamline the business and have removed GBP3.1m p.a. of structural costs in the last two years, with no reduction in capacity or capability. Of this, GBP2.5m of costs were removed from Levolux, to ensure the business' cost base is efficient and provides a good platform for profitable growth as the order book pipeline and future opportunities are executed.

The Group has continued to progress its long-term strategy to deliver profitable growth through leveraging its strong strategic positions in sustainable building products, and to outperform the UK construction market while continuing development of export markets. The Group's 2% revenue increase, including the 41% growth in export revenue, is testament to that.

Alumasc is also in a very strong position to benefit from the move towards sustainable construction and green buildings, both in terms of its own actions and through the development of its portfolio of products to manage energy consumption in buildings, to produce a greener built environment, and to manage the scarce resource of water. Many internal initiatives have also been taken to act in an environmentally sustainable manner, including the sourcing of electricity from renewable sources for 100% of the Group's supply. The Group's Net Zero planning is underway.

In recognition of its portfolio of environmental solutions and contribution to the global green economy, Alumasc was very pleased to be a recipient of the coveted London Stock Exchange Green Economy Mark in November 2021.

Financial Review

The Group's underlying tax rate was 19.4%, marginally below H1 FY21 (19.6%). Underlying earnings per share for the period were 11.8p, 11.9% lower than H1 FY21 (13.4p), reflecting the lower underlying profit before tax. Basic earnings per share were 11.2p (H1 FY21: 12.2p).

Cash flows and net debt

 
                                    H1 FY22     H1 FY21 
                                       GBPm        GBPm 
 EBITDA *                               6.8         7.4 
 Change in working capital            (1.8)         0.9 
 Deferred VAT paid                    (0.6)       (0.6) 
 Operating cash flow                    4.4         7.7 
 
 Capital expenditure                  (1.4)       (1.0) 
 Interest                             (0.2)       (0.1) 
 Tax                                  (1.3)         0.4 
 Pension deficit funding              (1.3)       (1.3) 
 Lease payments                       (0.4)       (0.4) 
 Dividend payments                    (2.2)       (0.7) 
 Purchase of own shares               (0.4)           - 
 Sub total                            (2.8)         4.6 
 Non-underlying payments              (0.3)       (0.4) 
 Net cash flow                        (3.1)         4.2 
                                   ========  ========== 
 
 Net bank debt at 31 December           4.1       0.2 
                                   ========  ======== 
 
 

* EBITDA: Underlying operating profit before interest, tax, depreciation and amortisation

The Group's operating cash inflow was GBP4.4m (H1 FY21: GBP7.7m), which included a GBP0.6m (H1 FY21: GBP0.6m) repayment to HMRC for VAT deferred during the initial Covid-19 lockdown. The cash outflow into working capital was GBP1.8m (H1 FY21: GBP0.9m inflow), including a GBP2.6m outflow into inventory, resulting from higher cost prices and increased stock holdings to maintain continuity of supply and secure pricing on committed orders; and a net inflow of GBP0.8m from other working capital lines. Average trade working capital as a percentage of sales for the half year was 15.5% (H1 FY21: 14.9%).

Capital expenditure was GBP1.4m (H1 FY21: GBP1.0m), representing 111% of depreciation (H1 FY21: 87%). Principal investments were made on capacity/capability upgrades (GBP0.4m), tooling for new products (GBP0.4m) and system upgrades (GBP0.2m).

Tax paid of GBP1.3m reflected higher payments on account in respect of FY21 and FY22. The prior half year included GBP0.4m of tax refunded from FY19.

The GBP1.3m (H1 FY21: GBP1.3m) of pension fund payments included the final GBP0.2m (H1 FY21: GBP0.2m) of payments deferred under the Group's Covid-19 cash conservation measures.

After the GBP2.2m (H1 FY21: GBP0.7m) payment of the prior year final dividend, GBP0.4m (H1 FY21: GBPnil) of own share purchases to fulfil the vesting of employee share awards, and GBP0.6m (H1 FY21: GBP0.5m) of lease and interest payments, net bank debt at December 2021 was GBP4.1m (December 2020: GBP0.2m).

Pensions and net assets

The Group's pension deficit reduced further to GBP2.5m at December 2021 (June 2021: GBP4.6m, December 2020: GBP12.8m), as a result of the GBP1.3m of deficit repair payments, investment gains and the effect of higher bond yields, which offset an increase in the inflation rate assumption. The scheme's next triennial actuarial valuation is scheduled for 31 March 2022, and the Group expects to conclude ongoing funding discussions with the scheme trustees prior to publication of its full year results later this year.

Group net assets increased in the period by GBP2.2m to GBP38.3m, as a result of the profit retained after dividend payments and the further reduction in the pension deficit. Post tax return on investment (rolling twelve month underlying operating profit divided by capital invested) was 17.8% (December 2021: 13.9%, June 2021: 19.8%).

Interim Dividend

The Board has decided to declare an increased interim dividend of 3.35p per ordinary share, payable on 6 April 2022 to shareholders on the register on 25 February 2022.

The Board

A new Non-Executive Director, Karen McInerney, joined us at the start of the second half year. Karen, a Chartered Accountant, is currently the Group Financial Controller at Computacenter plc, a FTSE 250 company. Karen took on the chairmanship of the Audit Committee, which was relinquished by Vijay Thakrar on his appointment as Chairman of The Alumasc Group.

Vijay became Chairman following the retirement of John McCall in December 2021. John served as Chairman and Chief Executive on the buy-out of Alumasc from Consolidated Goldfields in 1984, remaining as Chief Executive until 2003 and continued as Chairman until his retirement. The Group is indebted to John for his wise counsel across the many years. We also said goodbye to Jon Pither who retired having served for 29 years as a non-executive director. Once again, the Group is indebted to Jon's wise and sometimes iconoclastic counsel.

Outlook

The Group has entered the second half of the year with good momentum, and a growing pipeline of opportunities within Levolux that should come to fruition once activity resumes within the commercial market. Challenges are likely to remain around Covid-19 precautions, supply chain delays and input cost inflation, but we are confident in the resilience of our businesses. We believe our strong positions in sustainable building products will remain a key driver of future growth, and our strong balance sheet will allow us to continue to invest in opportunities to accelerate this.

Accordingly the Board confirms it remains on track to deliver full year results in line with its expectations.

Paul Hooper, Chief Executive

8 February 2022

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

for the half year to 31 December 2021

 
                                                                                                               Year to 
                                  Half year to 31 December                  Half year to 31 December            30 June 
                                            2021                                      2020                       2021 
 
                                       Non-underlying                            Non-underlying 
                           Underlying                        Total   Underlying                        Total       Total 
                          (Unaudited)     (Unaudited)  (Unaudited)  (Unaudited)     (Unaudited)  (Unaudited)   (Audited) 
                   Notes      GBP'000         GBP'000      GBP'000      GBP'000         GBP'000      GBP'000     GBP'000 
 
Revenue                5       46,269               -       46,269       45,551               -       45,551      90,465 
Cost of sales                (30,257)               -     (30,257)     (28,851)               -     (28,851)    (57,950) 
                          -----------  --------------  -----------  -----------  --------------  -----------  ---------- 
Gross profit                   16,012               -       16,012       16,700               -       16,700      32,515 
 
Net operating 
expenses 
  Net operating 
   expenses 
   before 
   non-underlying 
   items                     (10,489)               -     (10,489)     (10,497)               -     (10,497)    (21,511) 
  IAS 19 past 
   service 
   pension cost        4            -               -            -            -           (150)        (150)       (150) 
  Other 
   non-underlying 
   items               4            -           (119)        (119)            -           (178)        (178)       (296) 
Net operating 
 expenses                    (10,489)           (119)     (10,608)     (10,497)           (328)     (10,825)    (21,957) 
 
                      4, 
Operating profit       5        5,523           (119)        5,404        6,203           (328)        5,875      10,558 
 
Finance expenses       6        (265)            (67)        (332)        (251)           (134)        (385)       (757) 
                          -----------  --------------  -----------  -----------  --------------  -----------  ---------- 
Profit before 
 taxation                       5,258           (186)        5,072        5,952           (462)        5,490       9,801 
 
Tax expense            7      (1,020)            (34)      (1,054)      (1,167)              33      (1,134)     (2,215) 
 
Profit for the 
 period                         4,238           (220)        4,018        4,785           (429)        4,356       7,586 
                          ===========  ==============  ===========  ===========  ==============  ===========  ========== 
 
 Other 
 comprehensive 
 income: 
 
Items that will 
not 
be recycled to 
profit 
or loss: 
  Actuarial gain 
   on 
   defined 
   benefit 
   pensions, 
   net of tax                                                  821                                     4,373      10,393 
                                                       -----------                               -----------  ---------- 
 
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                                                          83                                     (300)       (385) 
  Exchange 
   differences 
   on 
   retranslation 
   of 
   foreign 
   operations                                                   10                                      (41)        (46) 
                                                                93                                     (341)    (431) 
                                                       -----------                               -----------  ---------- 
 
Other 
 comprehensive 
 gain for the 
 period, 
 net of tax                                                    914                                     4,032    9,962 
                                                       -----------                               -----------  ---------- 
 
Total 
 comprehensive 
 profit for the 
 period, 
 net of tax                                                  4,932                                     8,388      17,548 
                                                       ===========                               ===========  ========== 
 
Earnings per                                                 Pence                                     Pence       Pence 
share: 
 
 
Basic earnings 
 per 
 share                10                                      11.2                                      12.2        21.2 
                                                       ===========                               ===========  ========== 
 
Diluted earnings 
 per 
 share                10                                      11.0                                      12.1        20.8 
                                                       ===========                               ===========  ========== 
 
Alternative 
Performance 
Measures: 
 
Underlying 
 earnings 
 per share 
 (pence)              10                                      11.8                                      13.4        23.7 
                                                       ===========                               ===========  ========== 
 
 

Full reco0nciliations of underlying to statutory profits and earnings per share are provided in notes 4 and 10 respectively.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

at 31 December 2021

 
                                              31 December    31 December      30 June 
                                                     2021           2020         2021 
                                              (Unaudited)    (Unaudited)    (Audited) 
                                     Notes        GBP'000        GBP'000      GBP'000 
 Assets 
 Non-current assets 
 Property, plant and equipment 
  - owned assets                                   12,368         11,210       11,734 
 Property, plant and equipment 
  - right of use assets                             5,081          5,474        5,469 
 Goodwill                                          18,705         18,705       18,705 
 Other intangible assets                            3,152          3,389        3,321 
 Deferred tax assets                                  630          2,441        1,145 
                                            -------------  -------------  ----------- 
                                                   39,936         41,219       40,374 
 Current assets 
 Inventories                                       13,488          9,779       10,871 
 Trade and other receivables                       14,369         14,987       18,617 
 Contract assets                                    2,526          2,416        2,772 
 Cash at bank                           11          2,878         19,759        4,999 
                                                   33,261         46,941       37,259 
 
 Total assets                                      73,197         88,160       77,633 
                                            -------------  -------------  ----------- 
 
 Liabilities 
 Non-current liabilities 
 Interest bearing loans and 
  borrowings                            11        (6,963)       (19,935)      (5,936) 
 Lease liability                                  (4,475)        (4,914)      (4,811) 
 Employee benefits payable                        (2,520)       (12,847)      (4,581) 
 Provisions                                       (1,251)        (1,028)      (1,267) 
 Deferred tax liabilities                         (1,010)        (1,203)        (966) 
                                            -------------  -------------  ----------- 
                                                 (16,219)       (39,927)     (17,561) 
 Current liabilities 
 Trade and other payables                        (16,289)       (17,194)     (20,266) 
 Contract liabilities                               (160)          (662)        (745) 
 Lease liability                                  (1,145)          (670)        (795) 
 Provisions                                         (471)        (1,172)        (834) 
 Corporation tax payable                            (419)          (758)      (1,019) 
 Derivative financial liabilities                   (165)          (163)        (268) 
                                                 (18,649)       (20,619)     (23,927) 
 
 Total liabilities                               (34,868)       (60,546)     (41,488) 
                                            -------------  -------------  ----------- 
 
 Net assets                                        38,329         27,614       36,145 
                                            =============  =============  =========== 
 
 Equity 
 Called up share capital                            4,517          4,517        4,517 
 Share premium                                        445            445          445 
 Capital reserve - own shares                       (435)          (416)        (406) 
 Hedging reserve                                    (134)          (132)        (217) 
 Foreign currency reserve                              65             60           55 
 Profit and loss account reserve                   33,871         23,140       31,751 
 Total equity                                      38,329         27,614       36,145 
                                            =============  =============  =========== 
 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

for the half year to 31 December 2021

 
                                                          Half year      Half year 
                                                                 to             to      Year to 
                                                        31 December    31 December      30 June 
                                                               2021           2020         2021 
                                                        (Unaudited)    (Unaudited)    (Audited) 
                                              Notes         GBP'000        GBP'000      GBP'000 
 Operating activities 
 Operating profit                                             5,404          5,875       10,558 
 Adjustments for: 
 Depreciation                                                 1,166          1,056        2,146 
 Amortisation                                                   174            157          361 
 Loss/(gain) on disposal of property, 
  plant and equipment                                            17              3         (16) 
 IAS 19 past service pension cost                                 -            150          150 
 (Increase)/decrease in inventories                         (2,617)        (1,183)      (2,275) 
 Decrease/(increase) in receivables                           4,494        (1,133)      (5,119) 
 (Decease)/increase in trade and 
  other payables                                            (4,278)          2,516        5,287 
 Movement in provisions                                       (379)          (176)        (275) 
 Cash contributions to retirement 
  benefit schemes                                           (1,307)        (1,307)      (2,614) 
 Share based payments                                            50            100          397 
                                                      -------------  -------------  ----------- 
 Cash generated by operating activities                       2,724          6,058        8,600 
 
 
 Tax (paid)/received                                        (1,320)            409        (161) 
 Net cash inflow from operating activities                    1,404          6,467        8,439 
                                                      -------------  -------------  ----------- 
 
 Investing activities 
 Purchase of property, plant and 
  equipment                                                 (1,361)          (804)      (1,666) 
 Payments to acquire intangible fixed 
  assets                                                        (5)          (194)        (330) 
 Proceeds from sales of property, 
  plant and equipment                                             -             41           46 
 Net cash outflow from investing 
  activities                                                (1,366)          (957)      (1,950) 
                                                      -------------  -------------  ----------- 
 
 Financing activities 
 Bank interest paid                                           (141)          (141)        (207) 
 Equity dividends paid                                      (2,233)          (715)      (1,878) 
 Draw down/(repayment) of amounts 
  borrowed                                                    1,000              -     (14,000) 
 Principal paid on lease liabilities                          (352)          (340)        (692) 
 Interest paid on lease liabilities                            (83)           (90)        (178) 
 Purchase of own shares                                       (430)              -            - 
 Exercise of share based payments                                70              -            - 
 Refinancing costs                                                -              -         (65) 
 Net cash outflow from financing 
  activities                                                (2,169)        (1,286)     (17,020) 
                                                      -------------  -------------  ----------- 
 
 Net (decrease)/increase in cash 
  at bank and bank overdrafts                               (2,131)          4,224     (10,531) 
 
 Net cash at bank and bank overdraft 
  brought forward                                             4,999         15,576       15,576 
 Net (decrease)/increase in cash 
  at bank and bank overdraft                                (2,131)          4,224     (10,531) 
 Effect of foreign exchange rate 
  changes                                                        10           (41)         (46) 
 Net cash at bank and bank overdraft 
  carried forward                                 11          2,878         19,759        4,999 
                                                      =============  =============  =========== 
 
 
                                CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
                                    for the half year to 31 December 2021 
 
                                                                                                      Profit 
                                                          Capital reserve                Foreign    and loss 
                                          Share    Share                -    Hedging    currency     account 
                                        capital  premium       own shares    reserve     reserve     reserve    Total 
                                        GBP'000  GBP'000          GBP'000    GBP'000     GBP'000     GBP'000  GBP'000 
 
At 1 July 2021                            4,517      445            (406)      (217)          55      31,751   36,145 
Profit for the period                         -        -                -          -           -       4,018    4,018 
Exchange differences on retranslation 
 of foreign operations                        -        -                -          -          10           -       10 
Net gain on cash flow hedges                  -        -                -        103           -           -      103 
Tax on derivative financial liability         -        -                -       (20)           -           -     (20) 
Share based payments                          -        -                -          -           -          50       50 
Actuarial gain on defined benefit 
 pension schemes, net of tax                  -        -                -          -           -         616      616 
Own shares used to satisfy exercise 
 of share awards                              -        -              402          -           -           -      402 
Acquisition of own shares                     -        -            (431)          -           -           -    (431) 
Exercise of share based incentives            -        -                -          -           -       (331)    (331) 
Dividends                                     -        -                -          -           -     (2,233)  (2,233) 
At 31 December 2021                       4,517      445            (435)      (134)      65          33,871   38,329 
                                        =======  =======  ===============  =========  ==========  ==========  ======= 
 
                                                                                                      Profit 
                                                          Capital reserve                Foreign    and loss 
                                          Share    Share                -    Hedging    currency     account 
                                        capital  premium       own shares    reserve     reserve     reserve    Total 
                                        GBP'000  GBP'000          GBP'000    GBP'000     GBP'000     GBP'000  GBP'000 
 
At 1 July 2020                            4,517      445            (416)        168         101      15,026   19,841 
Profit for the period                         -        -                -          -           -       4,356    4,356 
Exchange differences on retranslation 
 of foreign operations                        -        -                -          -        (41)           -     (41) 
Net loss on cash flow hedges                  -        -                -      (370)           -           -    (370) 
Tax on derivative financial liability         -        -                -         70           -           -       70 
Share based payments                          -        -                -          -           -         100      100 
Actuarial gain on defined benefit 
 pension schemes, net of tax                  -        -                -          -           -       4,373    4,373 
Dividends                                     -        -                -          -           -       (715)    (715) 
At 31 December 2020                       4,517      445            (416)      (132)          60      23,140   27,614 
                                        =======  =======  ===============  =========  ==========  ==========  ======= 
 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the half year to 31 December 2020

1. Basis of preparation

The condensed consolidated interim financial statements of The Alumasc Group plc and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS) in conformity with the requirements of the Companies Act 2006 that are effective at 31 December 2021.

The condensed consolidated interim financial statements have been prepared using the accounting policies set out in the statutory accounts for the financial year to 30 June 2021 and in accordance with AIM Rule 18, and the same accounting policies will be adopted in the 2022 annual financial statements.

The consolidated financial statements of the Group as at and for the year ended 30 June 2021 are available on request from the Company's registered office at Burton Latimer, Kettering, Northants, NN15 5JP or on the website www.alumasc.co.uk .

The comparative figures for the financial year ended 30 June 2021 are not the Company's statutory accounts for that financial year but have been extracted from those accounts. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The condensed consolidated interim financial statements for the half year ended 31 December 2021 are not statutory accounts and have been neither audited nor reviewed by the Group's auditors. They do not contain all of the information required for full financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 June 2021.

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

8 February 2022.

The Group performed ahead of the Base Case trading scenario modelled as part of the 30 June 2021 year end Going Concern review, and also compared to the stress testing performed in relation to additional National lockdowns. On the basis of the Group's financing facilities and current financial plans and sensitivity analyses, the Board is satisfied that the Group has adequate resources to continue in operational existence for twelve months from the date of signing this report and accordingly continues to adopt the going concern basis in preparing these condensed consolidated interim financial statements.

2. Estimates

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

Except as described below, in preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 June 2021, namely the valuation of defined benefit pension obligations, the valuation of the Group's acquired goodwill and the recognition of revenue and profit on contracts with customers where revenue is recognised over time.

During the six months ended 31 December 2021, management reassessed and updated its estimates in respect of retirement benefit obligations based on market data available at 31 December 2021. The resulting impact was a GBP0.8 million pre-tax actuarial gain, calculated using IAS 19 conventions, recognised in the six month period to 31 December 2021.

3. Risks and uncertainties

A summary of the Group's principal risks and uncertainties was provided on pages 46 to 49 of Alumasc's Report and Accounts for the year ended 30 June 2021. The Board considers these risks and uncertainties remain relevant to the current financial year.

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

   -       Continued global economic uncertainty surrounding the Covid-19 pandemic; 

- The impact of disruption to our customers' operations from shortages of building materials, labour and road haulage, and delays in the global container shipping industry;

   -       Prolonged period of bad weather impacting the Group's construction markets; and 
   -       Potential impact of the current geopolitical uncertainty globally. 

4. Underlying to statutory profit reconciliation

 
                                                Half year        Half year   Year to 
                                           to 31 December   to 31 December   30 June 
Profit before tax                                    2021             2020      2021 
                                                  GBP'000          GBP'000   GBP'000 
 
 
Underlying profit before tax                        5,258            5,952    10,515 
 
Brand amortisation                                  (119)            (119)     (238) 
IAS 19 net pension scheme finance costs              (67)            (134)     (268) 
IAS 19 past service cost in respect 
 of GMP equalisation                                    -            (150)     (150) 
Restructuring & relocation costs                        -             (59)      (58) 
 
Statutory profit before tax                         5,072            5,490     9,801 
                                          ===============  ===============  ======== 
 
 
                                            Half year        Half year   Year to 
                                       to 31 December   to 31 December   30 June 
Operating profit                                 2021             2020      2021 
                                              GBP'000          GBP'000   GBP'000 
 
Underlying operating profit                     5,523            6,203    11,004 
 
Brand amortisation                              (119)            (119)     (238) 
IAS 19 past service cost in respect 
 of GMP equalisation                                -            (150)     (150) 
Restructuring & relocation costs                    -             (59)      (58) 
 
Statutory operating profit                      5,404            5,875    10,558 
                                      ===============  ===============  ======== 
 

In the presentation of underlying profits, management treats the amortisation of acquired brands and IAS 19 pension costs consistently as non-underlying items because they are material non-cash and non-trading items that typically would be excluded in assessing the value of the business.

In addition, management presented the following items as non-underlying in the prior period, as they are non-recurring items that are judged to be significant enough to affect the understanding of the underlying trading performance of the business:

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

- One-off IAS 19 past service pension cost relating to Guaranteed Minimum Pension ("GMP") equalisation between men and women, following a High Court decision on 20 November 2020; and

- One-off deferred tax rate change adjustment charge of GBP319k relating to the increase in main rate of UK corporation tax from 19% to 25% with effect from 1 April 2023.

5. Segmental analysis

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

 
                               Half year        Half year   Year to 
                          to 31 December   to 31 December   30 June 
Revenue                             2021             2020      2021 
                                 GBP'000          GBP'000   GBP'000 
 
 
Water Management                  22,783           19,160    38,370 
Building Envelope                 17,817           21,064    41,022 
Housebuilding Products             5,669            5,327    11,073 
 
Group Revenue                     46,269           45,551    90,465 
                         ===============  ===============  ======== 
 
 
                                    Half year        Half year   Year to 
                               to 31 December   to 31 December   30 June 
Operating profit                         2021             2020      2021 
                                      GBP'000          GBP'000   GBP'000 
 
 
Water Management                        4,118            3,501     6,115 
Building Envelope                         881            2,519     4,255 
Housebuilding Products                  1,096            1,184     2,552 
Unallocated central costs               (572)          (1,001)   (1,918) 
 
Underlying operating profit             5,523            6,203    11,004 
 
Non-underlying items                    (119)            (328)     (446) 
 
Statutory operating profit              5,404            5,875    10,558 
                              ===============  ===============  ======== 
 

6. Finance expenses

 
                                                                  Half year     Half year 
                                                                         to            to   Year to 
                                                                31 December   31 December   30 June 
                                                                       2021          2020      2021 
                                                                    GBP'000       GBP'000   GBP'000 
 
 Finance costs - Bank overdrafts                                         19             8        24 
                         - Revolving credit facility                    163           153       287 
                         - Interest on lease liabilities                 83            90       178 
                                                               ------------  ------------  -------- 
                                                                        265           251       489 
                         - IAS 19 net pension scheme finance 
                          costs                                          67           134       268 
                                                                        332           385       757 
                                                               ============  ============  ======== 
 

7. Tax expense

 
                                                           Half year         Half year    Year to 
                                                      to 31 December    to 31 December    30 June 
                                                                2021              2020       2021 
                                                             GBP'000           GBP'000    GBP'000 
 
 Current tax: 
 UK corporation tax                                              671               652      1,443 
 Overseas tax                                                     54                29         46 
 Amounts under provided in previous 
  years                                                            -                 -         23 
 Total current tax                                               725               681      1,512 
 
 Deferred tax: 
 Origination and reversal of temporary 
  differences                                                    329               450        405 
 Amounts under/(over) provided in previous 
  years                                                            -                 3       (21) 
 Rate change adjustment                                            -                 -        319 
 Total deferred tax                                              329               453        703 
 
 Total tax expense                                             1,054             1,134      2,215 
                                                    ----------------  ----------------  --------- 
 
   Deferred tax recognised in other comprehensive 
   income: 
 Actuarial gains on pension schemes                              205             1,026      2,099 
 Cash flow hedges                                                 20              (70)       (90) 
 Tax charged to other comprehensive 
  income                                                         225               956      2,009 
 
 Total tax charge in the statement of 
  comprehensive income                                         1,279             2,090      4,224 
                                                    ================  ================  ========= 
 

8. Dividends

The Directors have approved an interim dividend per share of 3.35 pence (2020/21: 3.25 pence) which will be paid on 6 April 2022 to shareholders on the register at the close of business on 25 February 2022. The cash cost of the dividend is expected to be GBP1,202,000. In accordance with accounting requirements, as the dividend was approved after the statement of financial position date, it has not been accrued in the interim consolidated financial statements. A final dividend per share of 6.25 pence in respect of the 2020/21 financial year was paid at a cash cost of GBP2,233,000 during the six months to 31 December 2021.

9. Share Based Payments

During the period the Group awarded 160,000 options (2020/21: 170,000) under the Executive Share Option Scheme ("ESOS"). These options have an exercise price of 226 pence and require certain criteria to be fulfilled before vesting. 78,810 existing options were exercised during the period (2020/21: none) and 41,190 existing options lapsed (2020/21: 120,000).

Total awards granted under the Group's Long Term Incentive Plans ("LTIP") amounted to 214,020 (2020/21: 265,760). LTIP awards have no exercise price but are dependent on certain vesting criteria being met. 228,511 existing LTIP awards were exercised during the period (2020/21: none) and 109,713 existing LTIP awards lapsed (2020/21: 257,688).

10. Earnings per share

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

 
                                            Half year         Half year        Year to 
                                       to 31 December    to 31 December        30 June 
                                                 2021              2020           2021 
                                              GBP'000           GBP'000        GBP'000 
 
 Net profit attributable to equity 
  holders of the parent                         4,018             4,356          7,586 
                                     ================  ================  ============= 
 
 
                                                  000s              000s             000s 
 
 Basic weighted average number of 
  shares                                        35,821            35,764           35,766 
 Dilutive potential ordinary shares 
  - employee share options                         549               169              637 
 Diluted weighted average number of 
  shares                                        36,370            35,933           36,403 
                                      ================  ================  =============== 
 
                                             Half year         Half year          Year to 
                                        to 31 December    to 31 December          30 June 
                                                  2021              2020             2021 
                                                 Pence             Pence            Pence 
 
 Basic earnings per share                         11.2              12.2             21.2 
                                      ================  ================  =============== 
 
 Diluted earnings per share                       11.0              12.1             20.8 
                                      ================  ================  =============== 
 
   Calculation of underlying earnings per share: 
 
                                             Half year         Half year        Year to 
                                        to 31 December    to 31 December        30 June 
                                                  2021              2020           2021 
                                               GBP'000           GBP'000        GBP'000 
 
 Reported profit before taxation                 5,072             5,490          9,801 
 Brand amortisation                                119               119            238 
 IAS 19 net pension scheme finance 
  costs                                             67               134            268 
 Pension GMP equalisation                            -               150            150 
 Restructuring & relocation costs                    -                59             58 
 
 Underlying profit before taxation               5,258             5,952         10,515 
 Tax at underlying Group tax rate 
  of 19.4% 
  (2020/21 first half year: 19.6%; 
  full year: 19.5%)                            (1,020)           (1,167)        (2,050) 
 Underlying earnings                             4,238             4,785          8,465 
                                      ----------------  ----------------  ------------- 
 
 Weighted average number of shares              35,821            35,764         35,766 
                                      ----------------  ----------------  ------------- 
 Underlying earnings per share                   11.8p             13.4p          23.7p 
                                      ================  ================  ============= 
 
 

11. Movement in borrowings

 
 
                                  Cash at 
                               bank /bank    Bank loans       Net bank          Lease    Total borrowings 
                               overdrafts                  cash/(debt)    liabilities 
                                  GBP'000       GBP'000        GBP'000        GBP'000             GBP'000 
 
At 1 July 2021                      4,999       (5,936)          (937)        (5,606)             (6,543) 
        Cash flow movements       (2,131)       (1,000)        (3,131)            352             (2,779) 
         Non-cash movements             -          (27)           (27)          (366)               (393) 
 Effect of foreign exchange 
                      rates            10             -             10              -                  10 
 
At 31 December 2021                 2,878       (6,963)        (4,085)        (5,620)             (9,705) 
                             ============  ============  =============  =============  ================== 
 
 
                                 Cash at 
                              bank /bank    Bank loans       Net bank    Lease liabilities    Total borrowings 
                              overdrafts                  cash/(debt) 
                                 GBP'000       GBP'000        GBP'000              GBP'000             GBP'000 
 
At 1 July 2020                    15,576      (19,909)        (4,333)              (5,924)            (10,257) 
        Cash flow movements        4,224             -          4,224                  340               4,564 
         Non-cash movements            -          (26)           (26)                    -                (26) 
 Effect of foreign exchange 
                      rates         (41)             -           (41)                    -                (41) 
 
At 31 December 2020               19,759      (19,935)          (176)              (5,584)             (5,760) 
                             ===========  ============  =============  ===================  ================== 
 

12. Related party disclosure

The Group has a related party relationship with its Directors and with its UK pension schemes. There has been no material change in the nature of the related party transactions described in note 29 of Alumasc's Report and Accounts for the year ended 30 June 2021.

Responsibility Statement

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

On behalf of the Board

   Paul Hooper                                        Simon Dray 
   Chief Executive                                   Group Finance Director 

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END

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February 08, 2022 01:59 ET (06:59 GMT)

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