Tuesday 6 February 2024
The Alumasc Group
plc
Interim
results
Encouraging first half,
confident of delivering expectations
Alumasc (ALU.L) the sustainable
building products, systems and solutions Group today announces
results for the six months ended 31 December 2023.
Commenting on the interim results,
Paul Hooper, Chief Executive of Alumasc said:
"We are very pleased to report an encouraging first half in
which we continued to outperform our underlying construction
markets. As expected, UK sales were resilient in a challenging
environment; and coupled with strong overseas sales, Group revenue
and underlying profit before tax grew by 6% and 12% respectively.
We have again demonstrated the resilience of our business model
with its multi-markets exposure.
"We were delighted to complete the strategic acquisition of
ARP Group during the period and welcome our new colleagues to the
Group. There are exciting synergies and opportunities for
cross-selling ahead, which will support the delivery of the Group's
growth ambitions.
"The Board remains confident in achieving full year
expectations, despite the expected continuation of UK demand
headwinds and the further delay of a significant export contract in
Hong Kong."
Organic growth demonstrates resilience of business model and
progress against strategic initiatives
·
Group revenues up by 6.4% to £47.8m (H1 FY23:
£45.0m):
o Strong performance in Water Management, with revenues up 12%
to £22.0m.
o Building Envelope resilient, with revenues of £18.7m (H1 FY23:
£18.3m).
o Housebuilding Products also had a resilient first half, with
revenues up slightly to £7.1m.
o Strong recovery in overseas sales to £5.7m, over twice the
level of the prior period.
·
Underlying Group operating margin of 14.1% (H1
FY23: 13.4%):
o Water Management 16.0% (H1 FY23: 12.8%).
o Building Envelope 12.8% (H1 FY23: 14.1%).
o Record underlying operating margin in Housebuilding Products
of 24.5% (H1 FY23: 23.0%).
·
Underlying profit before tax grew 12.4% to £6.3m
(H1 FY23: £5.6m) as a result of increased volumes, complemented by
the management team's focus on price and cost control.
·
Reported profit before tax was £5.6m (H1 FY23:
£5.3m).
·
Underlying earnings per share of 13.0p (H1 FY23:
12.3p).
·
Statutory earnings per share (continuing
operations) of 11.4p (H1 FY23: 12.5p).
·
Net bank debt at December 2023 was £7.4m (H1
FY2023: £6.8m), after net cash outflow on ARP acquisition of
£6.5m:
o Represents gearing of 0.5x (H1 FY2023: 0.5x).
o Comfortably within bank covenant of less than 2.5x.
·
Interim dividend per share increased to 3.45p (H1
FY23: 3.40p).
Accelerating growth with the acquisition of ARP
Group
·
Acquisition of ARP Group ('ARP') for a maximum
cash consideration of £10.0m on a cash and debt free basis
completed in December 2023.
·
ARP is a manufacturer and distributor of
specialist metal rainwater and architectural aluminium products and
will sit within Water Management division.
·
The acquisition strengthens Alumasc's rainwater
product offering, brings exciting consolidation synergies and will
support delivery of the Group's strategic growth plans.
Outlook
·
The Group's focus on sustainable building
products, coupled with innovation, cost base management and
outstanding customer service, will help mitigate the external
geopolitical and economic environment, which is expected continue
to create uncertainty for our sector for the remainder of the
year.
·
With significant funding capacity and a clear,
investment-led strategy supporting both organic and acquisitive
growth, the Group is focused on delivering outperformance during
this period of market volatility.
·
Structural drivers of energy and water management
mean the Group remains well positioned to deliver significant long
term growth when markets recover.
Enquiries:
|
The
Alumasc Group plc
|
+44 (0) 1536 383844
|
|
Paul Hooper, Chief
Executive
|
|
|
Simon Dray, Group Finance
Director
|
|
|
|
|
|
Peel
Hunt (Broker)
|
|
|
Mike Bell, Ed Allsop
|
+44 (0) 20 7418 8831
|
|
|
|
|
Cavendish Capital Markets Ltd (Nominated
Adviser)
|
|
Julian Blunt, Edward
Whiley
|
+ 44 (0) 207 220 0500
|
|
|
|
|
Camarco (Financial PR)
|
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: resilient performance enhanced by
increased overseas sales
We are pleased to report an
encouraging Group result for the six months ended 31 December 2023.
Revenue from continuing operations was £47.8m (H1 FY23: £45.0m),
6.4% ahead of the prior period. UK sales, 2% below the prior
period, were resilient in a challenging market, which was estimated
to have declined by over 6%. This was offset, as expected, by a
strong first half contribution from overseas sales, which at £5.3m
were more than twice the level of the prior period. This was
achieved despite further delays in call-offs on a significant
project at Chek Lap Kok airport in Hong Kong, announced in November
2022, which is now expected to ship after our June 2024 year
end.
Underlying profit before tax grew by
12.4% to £6.3m (H1 FY23: £5.6m) as a result of increased sales
volumes, complemented by the management team's focus on control of
costs and pricing. Reported profit before tax grew by 6% to £5.6m
(H1 FY23: £5.3m).
After investment in the ARP
acquisition of £6.5m, net bank debt at December 2023 was £7.4m (H1
FY23: £6.8m), representing gearing of 0.5x (H1 FY23: 0.5x),
comfortably within our bank covenant of less than 2.5x. The Group's
underlying operating cash flow was £10.0m, 80% higher than H1 FY23,
after a £1.7m inflow from working capital (H1 FY23: £1.9m
outflow).
The financial and operational
performance during the period has provided a good platform, with
the Group entering the second half of the year with good momentum
and a strong order book. Notwithstanding the current geopolitical
and economic uncertainties, the Board remains confident in the
Group achieving its full year expectations and has approved an
interim dividend per share of 3.45 pence (FY23 interim dividend:
3.40 pence).
This performance further
demonstrates the resilience of our business model, and was
underpinned by progress against our strategic initiatives,
positioning the Group well for when markets recover.
Acquisition of ARP Group: accelerating organic growth with
targeted acquisitions
On 25th July 2023, Alumasc announced
the proposed acquisition of the entire share capital of ARP Group
("ARP"), a manufacturer and distributor of specialist metal
rainwater and architectural aluminium goods, for a maximum cash
consideration of £10.0m on a cash and debt free basis. The
acquisition completed in December 2023 following its unconditional
clearance by the UK Competition and Markets Authority.
ARP marks the first acquisition by
Alumasc since 2018 and demonstrates the Group's strategy to
supplement organic growth through earnings-accretive acquisitions.
ARP shares many qualities with Alumasc, including outstanding
customer service, and strong relationships with contractors which
will complement Alumasc's business model. ARP also broadens the
Group's existing product offerings, augments the routes to market
and improves the online presence for both businesses.
The acquisition aligns with our
strategy of accelerating our organic growth with bolt-on
acquisitions which complement our existing businesses and broaden
our sales offering. Our initial work on ARP's integration has
reaffirmed our belief that the acquisition will bring significant
synergistic benefits.
Strategic Overview
The Group's performance during the
period reflects further progress on delivering the Group's growth
strategy:
·
Accelerating sales growth
·
Driving margin improvement
·
Championing sustainable building
products
·
Value-enhancing investment
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
outperformance versus the UK construction market and its more than
doubling of its export revenue in H1 reflects continued strong
progress.
The Group's strong margins are as a
result of high value-add products, tight cost management, and a
relentless focus on efficiency. The restructuring of the sales and
commercial teams in our Water Management division right-sizes the
team for current UK market activity, while simplifying the
organisational structure and improving capability and customer
service. We continue to identify opportunities to improve our
efficiency and will act quickly should conditions require
it.
Alumasc is also in a very strong
position to benefit from the growth in sustainable construction and
green buildings, both in terms of its own decarbonisation 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 near-term Net Zero targets have been set, and will be
verified with the Science Based Target Initiative later in the
year.
The Group has continued to invest in
value-enhancing growth initiatives, including improving
geographical sales coverage in Building Envelope, expanding the
overseas sales team in Water Management, and improving new product
development capability in Housebuilding Products. The acquisition
of ARP Group, which will sit within our Water Management division,
strengthens our rainwater product offering, brings exciting
consolidation synergies, and will accelerate delivery of our
strategic growth ambitions.
Operational Review
Water Management
|
|
H1
FY24
|
H1
FY23
|
|
Revenue
|
£22.0m
|
£19.6m
|
|
Underlying operating
profit
|
£3.5m
|
£2.5m
|
|
Underlying operating
margin
|
16.0%
|
12.8%
|
|
Operating profit
|
£3.2m
|
£2.5m
|
In H1 FY24 the Water Management
division, after a quieter FY23, delivered a very strong performance
with revenue ahead by £2.4m (12%). This was augmented by a strong
export performance, driven by the recent investments in overseas
sales resource and project work at Chek Lap Kok airport in Hong
Kong, despite a further delay in call-offs from a £7m order,
announced in November 2022, which is now likely to be shipped after
our June 2024 year end. Underlying operating profit increased by
40% to £3.5m, and the division achieved an increased 16% operating
margin (H1 FY23: 13%).
Significant UK orders were delivered
to prison and naval projects, and a large data centre, helping to
offset lower levels of work on distribution warehouses. Overseas
sales benefited from work at a number of airports, mostly
significantly at Chek Lap Kok airport, and projects were also won
in New Zealand, Saudi Arabia, Ireland and Peru.
In the light of the subdued UK
demand, we announced in October 2023 the reorganisation of the UK
sales and commercial teams. This will deliver annualised savings of
£0.8m, while simplifying the management structure and improving
capability and customer service.
The division finished the half year
with a very strong order book, albeit this contains several
overseas projects whose financial impact will be after the FY24
year end. Several important projects are, however, expected to
support improved UK sales in the second half of the current
year.
Building Envelope
|
Continuing operations
|
H1
FY24
|
H1
FY23
|
|
Revenue
|
£18.7m
|
£18.3m
|
|
Underlying operating
profit
|
£2.4m
|
£2.6m
|
|
Underlying operating
margin
|
12.8%
|
14.1%
|
|
Operating profit
|
£2.4m
|
£2.6m
|
The Building Envelope Division grew
its revenue by 2%, despite a challenging marketplace. New
products continued to be an important contributor. The business
continued its development of carbon-reducing specified systems and
in Green and Blue Roofing areas whilst focusing on Bio Solar
techniques and the continued success of the CO2 reducing
product, Olivine. The portfolio was also supplemented by the
recently launched metal profiled roof and abutment system and
further enhancement of the liquid roofing systems.
The prior year's successful
strengthening of areas with previously limited sales
representation, whilst expanding the division's internal trainee
programme, continues to contribute to the overall
performance. A feature of the first half year has been the
winning of larger multi-site refurbishment projects, as a result of
Alumasc's service reputation. This provides a stronger
platform of ongoing work and helps underpin future
performance.
Despite the challenging market
conditions, the Building Envelope Division's underlying operating
profit was only marginally impacted.
Housebuilding Products
|
|
H1
FY24
|
H1
FY23
|
|
Revenue
|
£7.1m
|
£7.0m
|
|
Underlying operating
profit
|
£1.7m
|
£1.6m
|
|
Underlying operating
margin
|
24.5%
|
23.0%
|
|
Operating profit
|
£1.7m
|
£1.4m
|
Against a housebuilding market
widely reported to have declined by over 17% year-on-year, Timloc,
our Housebuilding Products Business, delivered a robust first half
year and grew its revenue by 1% to £7.1m.
This was partially achieved through
the extended distribution of its existing products, where new
customers appreciate the industry-leading next day service and low
carriage paid order values. In addition, sales were supported by
the continued growth of new products even though overall market
demand in the housebuilding sector has declined.
Inventive Roof Tile Vents and
additional Roofline products, launched in the second half of the
prior year, continue to take market share as Timloc expands its
distribution model to Roofing Merchants. These products have
been particularly well received for their quality and service
proposition. Improved efficiencies, through further
investment in automation, energy efficient moulding machines and
rigorous cost controls, have all contributed to the division
achieving a record first half underlying operating margin of 24.5%,
up from 23.0%.
Timloc's focus on sustainability,
including being the first building products manufacturer to achieve
carbon neutral operations (scope 1 and 2), leaves it well
positioned to support the housebuilders' drive to build zero carbon
homes and meet the current underlying demand for new
houses.
Financial Review
Tax
rate and earnings per share (continuing
operations)
The Group's underlying tax rate was
25.4% (H1 FY23: 21.2%), reflecting the increase in UK Corporation
Tax rate from 19% to 25% from April 2023. Underlying earnings per
share for the period was 13.0p (H1 FY23: 12.2p); 6% higher than the
prior period, but lower than the underlying profit increase due to
the higher tax rate. Basic earnings per share were 11.4p (H1 FY23:
12.5p).
Acquisition of ARP Group
The acquisition of ARP Group
completed on 21 December 2023, following its unconditional
clearance by the UK Competition and Markets Authority. The initial
net cash outflow on acquisition was £6.5m, representing the initial
cash and debt free consideration of £8.5m, plus a net debt and
working capital adjustment of £0.2m, less £2.2m of net cash held by
ARP at completion. A further £1.2m of working capital adjustment,
and the first earn out payment of £0.75m, were paid in January
2024. A final earn out payment of £0.75m, due for payment in
January 2025, subject to ARP's profit for the year to November
2024, has been accrued in full.
Cash flow and net debt
|
£m (continuing operations)
|
H1
FY24
|
H1
FY23
|
|
Underlying operating
profit
|
6.7
|
6.0
|
|
Depreciation/underlying
amortisation
|
1.5
|
1.3
|
|
Share-based payments
|
0.1
|
0.1
|
|
Working capital
inflow/(outflow)
|
1.7
|
(1.9)
|
|
Underlying operating cash
flow
|
10.0
|
5.5
|
|
Pension deficit funding
|
(0.6)
|
(1.0)
|
|
Non-underlying cash flows
|
(0.5)
|
(0.2)
|
|
Cash generated by operating
activities
|
8.9
|
4.3
|
|
Capital expenditure
|
(1.5)
|
(1.4)
|
|
Interest
|
(0.3)
|
(0.3)
|
|
Tax
|
(1.7)
|
(0.1)
|
|
Lease payments
|
(0.5)
|
(0.4)
|
|
Purchase of own shares
|
(0.4)
|
(0.1)
|
|
Dividend payment
|
(2.5)
|
(2.4)
|
|
Acquisition of ARP Group
|
(6.5)
|
-
|
|
Disposals
|
-
|
(1.7)
|
|
Increase in net bank debt
|
(4.5)
|
(2.1)
|
|
£m
|
H1
FY24
|
H1
FY23
|
|
Net bank debt
|
7.4
|
6.8
|
|
Lease liabilities
|
4.8
|
4.6
|
|
Total (IFRS 16) net debt
|
12.2
|
11.4
|
The Group's underlying operating
cash flow was £10.0m, 80% higher than H1 FY23, after a £1.7m inflow
from working capital (H1 FY23: £1.9m outflow). Average trade
working capital as a percentage of sales for the half year was
16.7% (H1 FY23: 19.4%), as surplus inventory holdings unwound with
the easing of supply chain pressures.
After pension deficit funding of
£0.6m (H1 FY23: £1.0m), reduced in line with the agreement with
trustees, and non-underlying cash flows of £0.5m (H1 FY23: £0.2m),
cash generated from operating activities was £8.9m (H1 FY23:
£4.3m).
Capital expenditure of £1.5m (H1
FY23: £1.4m) was 115% (H1 FY23: 111%) of depreciation. Principal
investments were in tooling for new products and capacity upgrades
at Timloc, our Housebuilding Products business.
Tax paid was £1.7m (H1 FY23: £0.1m),
reflecting the expiry of the capital allowance super deduction
which benefited the prior period.
After lease payments of £0.5m (H1
FY23: £0.4m), the payment of the prior year's final dividend of
£2.5m (H1 FY23 £2.4m), own share purchases to fulfil the vesting of
employee share options of £0.4m (H1 FY23: £0.1m), the initial net
consideration for ARP of £6.5m (H1 FY23: £nil), and the cash
outflow on disposal of Levolux of £nil (H1 FY23 : £1.7m), the
increase in net bank debt in the half year was £4.5m (H1 HY23:
£2.1m).
Net bank debt at December 2023 was
£7.4m (H1 FY23: £6.8m), representing gearing of 0.5x (H1 FY23:
0.5x), comfortably within our bank covenant of less than
2.5x.
Pension deficit and net assets
The Group's IAS 19 pension deficit
was £4.8m (H1 FY23: £8.4m), an increase of £0.5m since June 2023.
An increase in the value of scheme liabilities, on lower bond
yields, was only partially offset by company contributions and
higher asset values. The Group continues to expect the current
level of contributions, and a recovery in asset values, to bring
the scheme to a low dependency position within a reasonable
timeframe.
Group net assets increased to £26.3m
(H1 FY23: £20.7m, FY23: £25.7m).
Interim Dividend
The Board declared an increased
interim dividend of 3.45p (H1 FY23: 3.40p) per ordinary share,
payable on 8 April 2024 to shareholders on the register on 23
February 2024.
Outlook
The Board does not expect the
current demand headwinds to alleviate significantly in the second
half of the year. However Alumasc has a proven track record of
outperforming its UK construction end markets through product
innovation, experienced management teams and its focus on best in
class service and operational excellence. The Board therefore
remains confident in the Group achieving its full year
expectations.
Alumasc is well positioned, as a
producer of innovative products which meet the growing demand for
environmental solutions and sustainable products, to benefit when
markets recover and to deliver long-term significant shareholder
value.
Paul
Hooper, Chief Executive
6
February 2024
CONDENSED CONSOLIDATED
INTERIM STATEMENT OF COMPREHENSIVE INCOME
for the half year to 31
December 2023
|
|
|
Half year to 31 December
2023
|
Half year
to 31 December 2022
|
Year
to
30 June
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
Non-underlying
|
Total
|
Underlying
|
Non-underlying
|
Total
|
Total
|
|
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
Continuing operations:
|
Notes
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
5
|
47,812
|
-
|
47,812
|
44,953
|
-
|
44,953
|
89,135
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
17,948
|
-
|
17,948
|
16,504
|
-
|
16,504
|
32,729
|
|
|
|
|
|
|
|
|
|
|
|
Net operating expenses
|
|
|
|
|
|
|
|
|
|
Net operating expenses before
non-underlying items
|
|
(11,211)
|
-
|
(11,211)
|
(10,499)
|
-
|
(10,499)
|
(20,620)
|
|
Non-underlying items
|
4
|
-
|
(584)
|
(584)
|
-
|
(229)
|
(229)
|
(585)
|
|
Net
operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
4, 5
|
6,737
|
(584)
|
6,153
|
6,005
|
(229)
|
5,776
|
11,524
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
7
|
|
|
|
|
|
|
|
|
Profit before taxation
|
|
6,277
|
(688)
|
5,589
|
5,586
|
(253)
|
5,333
|
10,539
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense
|
8
|
|
|
|
|
|
|
|
|
Profit for the period from continuing
operations
|
|
4,683
|
(579)
|
4,104
|
4,402
|
84
|
4,486
|
8,353
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
Loss after taxation for the period
from discontinued operations
|
6
|
-
|
-
|
-
|
-
|
(1,795)
|
(1,795)
|
(1,750)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the period
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will not be reclassified to profit or
loss:
|
|
|
|
|
|
|
|
|
|
Actuarial loss on defined benefit
pensions, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that are or may be reclassified subsequently to profit
or loss:
|
|
|
|
|
|
|
|
|
|
Effective portion of changes in fair
value of cash flow hedges, net of tax
|
|
|
|
(46)
|
|
|
(27)
|
(285)
|
|
Exchange differences on
retranslation of foreign operations
|
|
|
|
(31)
|
|
|
12
|
(18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss for the period, net of
tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive profit/(loss) for the period, net of
tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
Pence
|
|
|
Pence
|
Pence
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
- Continuing
operations
|
11
|
|
|
11.4
|
|
|
12.5
|
23.3
|
|
- Discontinued
operations
|
|
|
|
-
|
|
|
(5.0)
|
(4.9)
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
- Continuing
operations
|
|
|
|
11.3
|
|
|
12.4
|
23.1
|
|
- Discontinued
operations
|
|
|
|
-
|
|
|
(5.0)
|
(4.9)
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of underlying to
statutory profit and earnings per share are provided in notes 4 and
11 respectively.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL
POSITION
at 31 December
2023
|
|
|
31 December
|
31
December
|
30
June
|
|
|
|
2023
(Unaudited)
|
2022
(Unaudited)
|
2023
(Audited)
|
|
|
Notes
|
£'000
|
£'000
|
£'000
|
|
Assets
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Property, plant and equipment - owned
assets
|
|
14,584
|
12,733
|
13,227
|
|
Property, plant and equipment - right
of use assets
|
|
4,517
|
4,444
|
5,007
|
|
Goodwill
|
14
|
13,493
|
8,526
|
8,526
|
|
Other intangible assets
|
|
5,292
|
2,035
|
2,073
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
39,089
|
29,832
|
29,914
|
|
Current assets
|
|
|
|
|
|
Inventories
|
|
12,952
|
14,376
|
11,561
|
|
Trade and other
receivables
|
|
18,350
|
15,462
|
20,748
|
|
Derivative financial
assets
|
|
-
|
314
|
-
|
|
Cash at bank
|
12
|
7,186
|
5,962
|
5,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Interest bearing loans and
borrowings
|
12
|
(14,556)
|
(12,782)
|
(8,848)
|
|
Lease liability
|
12
|
(3,979)
|
(3,696)
|
(4,366)
|
|
Employee benefits payable
|
|
(4,812)
|
(8,375)
|
(4,323)
|
|
Provisions
|
|
(1,503)
|
(811)
|
(1,185)
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
(27,715)
|
(27,571)
|
(20,336)
|
|
Current liabilities
|
|
|
|
|
|
Trade and other payables
|
|
(20,854)
|
(15,259)
|
(19,120)
|
|
Lease liability
|
12
|
(836)
|
(881)
|
(868)
|
|
Provisions
|
|
(776)
|
(1,033)
|
(612)
|
|
Corporation tax payable
|
|
(1,005)
|
(491)
|
(1,505)
|
|
Derivative financial
liabilities
|
|
(91)
|
-
|
(30)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Share capital
|
|
4,517
|
4,517
|
4,517
|
|
Share premium
|
|
445
|
445
|
445
|
|
Capital reserve - own
shares
|
|
(378)
|
(587)
|
(577)
|
|
Hedging reserve
|
|
(68)
|
236
|
(22)
|
|
Foreign currency reserve
|
|
167
|
228
|
198
|
|
Profit and loss account
reserve
|
|
21,617
|
15,872
|
21,186
|
|
Total equity
|
|
|
|
|
NOTES TO THE CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the half year to 31
December 2023
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
2023.
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 2023 and in accordance with AIM Rule 18, and the same
accounting policies will be adopted in the 2024 annual financial
statements.
The consolidated financial
statements of the Group as at and for the year ended 30 June 2023
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 2023 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 2023 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 2023.
These condensed consolidated interim
financial statements were approved by the Board of Directors on 6
February 2024.
The Group performed ahead of the
Base Case trading scenario modelled as part of the 30 June 2023
year end Going Concern review, and also ahead of the stress testing
performed. 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 2023, namely the valuation of defined benefit pension
obligations and the valuation of the Group's acquired
goodwill.
During the six months ended 31
December 2023, management reassessed and updated its estimates in
respect of retirement benefit obligations based on market data
available at 31 December 2023. The resulting impact was a £1.0
million pre-tax actuarial loss, calculated using IAS 19
conventions, recognised in the six month period to 31 December
2023.
3.
Risks and uncertainties
A summary of the Group's principal
risks and uncertainties was provided on pages 57 to 60 of Alumasc's
Report and Accounts for the year ended 30 June 2023. 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:
- Inflation and interest
rates, and their impact on the Group's construction
markets;
- Prolonged periods of bad
weather which may impact the Group's construction markets;
and
- Potential impacts on
customer demand or our supply chain from the current global
geopolitical environment.
4.
Underlying to statutory profit reconciliation
|
Profit before
tax
|
Half year to 31 December
2023
|
Half year
to 31 December 2022
|
Year to 30
June
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Underlying profit before tax from
continuing operations
|
6,277
|
5,586
|
11,172
|
|
|
|
|
|
|
Amortisation of acquired intangible
assets
|
(35)
|
(35)
|
(70)
|
|
IAS 19 net pension scheme finance
costs
|
(104)
|
(24)
|
(48)
|
|
Acquisition costs
|
(259)
|
-
|
(253)
|
|
Restructuring & legal
costs
|
(290)
|
(194)
|
(262)
|
|
|
|
|
|
|
Reported profit before tax from continuing
operations
|
|
|
|
|
Operating
profit
|
Half year to 31 December
2023
|
Half year
to 31 December 2022
|
Year to 30
June
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Underlying operating profit from
continuing operations
|
6,737
|
6,005
|
12,109
|
|
|
|
|
|
|
Amortisation of acquired intangible
assets
|
(35)
|
(35)
|
(70)
|
|
Acquisition costs
|
(259)
|
-
|
(253)
|
|
Restructuring & legal
costs
|
(290)
|
(194)
|
(262)
|
|
|
|
|
|
|
Reported operating profit from continuing
operations
|
|
|
|
The Group reports underlying profit
and underlying earnings in addition to the financial information
prepared under IFRS. The Board believes that underlying profit and
underlying earnings provide additional and more consistent measures
of underlying performance by removing items that are not closely
related to the Group's day-to-day trading activities and which
would typically be excluded in assessing the value of the business.
The following items have been treated as non-underlying, and
consequently disclosed separately from underlying profit and
earnings:
Amortisation of intangible assets
that are acquired through business combinations of £35,000 (H1
FY23: £35,000) are treated as non-underlying, as they are non-cash
items that are based on judgements about their value and economic
life and are not related to the Group's underlying trading
performance.
IAS 19 net pension scheme finance
costs of £104,000 (H1 FY23: £24,000) are considered non-underlying
as they are notional non-cash items, and as they are past service
costs they are not related to current trading
activities.
Acquisition costs of £259,000 (H1
FY23: £nil) relate to the acquisition of ARP Group, which completed
in December 2023. These are legal fees which are treated as
non-underlying as they are one-off, non-trading items.
Restructuring and legal costs of
£290,000 (H1 FY23: £194,000) represent the costs of a restructuring
of the Water Management division's sales and commercial teams and,
in the prior year, legal costs incurred in resolving a commercial
dispute. These items are considered non-underlying as they are
significant, one-off items that are non-trading or, in the case of
restructuring costs, incremental to normal operations undertaken to
add value to the business that will not be incurred in the ongoing
business.
5.
Segmental analysis
In accordance with IFRS 8 Operating
Segments, the segmental analysis below follows the Group's internal
management reporting structure.
|
Revenue
|
Half year to 31 December
2023
|
Half year
to 31 December 2022
|
Year to 30
June
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
Water Management
|
22,027
|
19,581
|
39,841
|
|
Building Envelope
|
18,680
|
18,324
|
34,559
|
|
Housebuilding Products
|
7,105
|
7,048
|
14,735
|
|
|
|
|
|
|
Group Revenue
|
|
|
|
|
Operating
profit
|
Half year to 31 December
2023
|
Half year
to 31 December 2022
|
Year to 30
June
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
Water Management
|
3,521
|
2,510
|
5,765
|
|
Building Envelope
|
2,384
|
2,589
|
4,084
|
|
Housebuilding Products
|
1,741
|
1,622
|
3,518
|
|
Unallocated central costs
|
(909)
|
(716)
|
(1,258)
|
|
|
|
|
|
|
Underlying operating profit from continuing
operations
|
6,737
|
6,005
|
12,109
|
|
|
|
|
|
|
Non-underlying items
|
(584)
|
(229)
|
(585)
|
|
|
|
|
|
|
Operating profit from continuing operations
|
|
|
|
6.
Discontinued operations
Discontinued operations relate to
the Levolux business which was divested by the Group on 26 August
2022 and therefore disclosed as held for sale at 30 June 2022. The
liabilities held for resale at 30 June 2022 were £3,859,000 and the
assets held for resale were written down to £3,859,001 to reflect
the sales proceeds of £1 received on 26 August 2022. In the year to
30 June 2023, a further loss on disposal of £1,750,000 was
recorded, representing cash held by Levolux at the date of
disposal, other related write downs and transaction
costs.
The results of Levolux included in
the condensed consolidated interim statement of comprehensive
income are as follows:
|
|
Half year to 31 December
2023
|
Half year
to 31 December 2022
|
Year to 30
June
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Revenue
|
-
|
436
|
436
|
|
|
|
|
|
|
Underlying operating loss
|
-
|
-
|
(350)
|
|
Write back of Assets held for
sale
|
-
|
-
|
350
|
|
Loss on disposal
|
|
|
|
|
Loss before taxation
|
-
|
(1,795)
|
(1,750)
|
|
Tax credit
|
-
|
-
|
-
|
|
Loss after taxation
|
|
|
|
7.
Finance expenses
|
|
Half year
to
|
Half year
to
|
Year
to
|
|
|
31 December
|
31
December
|
30
June
|
|
|
2023
|
2022
|
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Finance costs
- Bank overdrafts
|
14
|
12
|
29
|
|
- Revolving credit facility
|
358
|
327
|
754
|
|
- Interest on lease liabilities
|
|
|
|
|
|
460
|
419
|
937
|
|
- IAS 19 net pension scheme finance costs
|
104
|
24
|
48
|
|
|
|
|
|
8.
Tax expense
|
|
Half year to 31 December
2023
|
Half year
to 31 December
2022
|
Year to 30
June
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Current tax:
|
|
|
|
|
UK corporation tax - continuing
operations
|
729
|
438
|
1,704
|
|
Overseas tax
|
138
|
10
|
(6)
|
|
Amounts under provided in previous
years
|
-
|
-
|
175
|
|
Total current tax
|
|
|
|
|
|
|
|
|
|
Deferred tax:
|
|
|
|
|
Origination and reversal of temporary
differences
|
618
|
399
|
404
|
|
Amounts over provided in previous
years
|
-
|
-
|
(206)
|
|
Rate change adjustment
|
-
|
-
|
115
|
|
Total deferred tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total tax expense
|
|
|
|
|
Deferred tax recognised in other
comprehensive income:
|
|
|
|
|
Actuarial losses on pension
schemes
|
(246)
|
(1,801)
|
(932)
|
|
Cash flow hedge
|
(15)
|
17
|
(70)
|
|
Tax credited to other comprehensive
income
|
|
|
|
|
|
|
|
|
|
Total tax charge/(credit) in the
statement of comprehensive income
|
|
|
|
9.
Dividends
The Directors have approved an
interim dividend per share of 3.45 pence (FY23 interim dividend:
3.40 pence) which will be paid on 8 April 2024 to shareholders on
the register at the close of business on 23 February 2024. The cash
cost of the dividend is expected to be £1,240,000. 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 6.90 pence in respect of the 2022/23
financial year was paid at a cash cost of £2,482,000 during the six
months to 31 December 2023.
10.
Share Based Payments
During the period the Group awarded
210,000 options (H1 FY23: 225,000) under the Executive Share Option
Scheme ("ESOS"). These options have an exercise price of 160.3
pence and require certain criteria to be fulfilled before vesting.
90,000 existing options were exercised during the period (H1 FY23:
15,380) and no existing options lapsed (H1 FY23:
104,620).
Total awards granted under the
Group's Long Term Incentive Plans ("LTIP") amounted to 316,472 (H1
FY23: 307,264). LTIP awards have no exercise price but are
dependent on certain vesting criteria being met. 130,251 existing
LTIP awards were exercised during the period (H1 FY23: 22,175) and
53,691 existing LTIP awards lapsed (H1 FY23: 48,717).
11.
Earnings per share
Basic earnings per share is
calculated by dividing the net profit for the period attributable
to ordinary equity shareholders of the parent by the weighted
average number of ordinary shares in issue during the
period. Diluted earnings per share is
calculated by dividing the net profit attributable to ordinary
equity shareholders of the parent by the weighted average number of
ordinary shares in issue during the period, after allowing for the
exercise of outstanding share options. The following sets out the
income and share data used in the basic and diluted earnings per
share calculations:
|
|
Half year
to 31 December
2023
|
Half year
to 31 December 2022
|
Year
to
30
June
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Net profit attributable to equity
holders - continuing operations
|
4,104
|
4,486
|
8,353
|
|
Net profit attributable to equity
holders - discontinued operations
|
|
|
|
|
|
|
|
|
|
|
000s
|
000s
|
000s
|
|
|
|
|
|
|
|
|
Basic weighted average number of
shares
|
35,942
|
35,806
|
35,806
|
|
|
Dilutive potential ordinary shares -
employee share options
|
292
|
334
|
386
|
|
|
Diluted weighted average number of
shares
|
|
|
|
|
|
|
|
|
|
|
|
Half year to 31
December
2023
|
Half year
to 31 December 2022
|
Year
to
30
June
2023
|
|
|
|
Pence
|
Pence
|
Pence
|
|
|
Basic earnings per share:
|
|
|
|
|
|
Continuing operations
|
11.4
|
12.5
|
23.3
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
Continuing operations
|
11.3
|
12.4
|
23.1
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
11.
Earnings per share (continued)
Calculation of underlying earnings
per share:
|
|
|
|
|
Half year
to 31 December
2023
|
Half year
to 31 December 2022
|
Year
to
30
June
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Reported profit before taxation from
continuing operations
|
5,589
|
5,333
|
10,539
|
|
Amortisation of acquired intangible
assets
|
35
|
35
|
70
|
|
IAS 19 net pension scheme finance
costs
|
104
|
24
|
48
|
|
Restructuring & legal
costs
|
290
|
194
|
262
|
|
Acquisition costs
|
259
|
-
|
253
|
|
|
|
|
|
|
Underlying profit before taxation
from continuing operations
|
|
|
|
|
Tax at underlying Group tax rate of
25.4%
(2022/23 first half year: 21.2%; full
year: 20.0%)
|
(1,594)
|
(1,184)
|
(2,234)
|
|
Underlying earnings from continuing
operations
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares
|
|
|
|
|
Basic underlying earnings per share from continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Diluted underlying earnings per share from continuing
operations
|
|
|
|
12.
Movement in borrowings
|
|
Cash at
bank /bank
overdrafts
|
Bank loans
|
Net bank
cash/(debt)
|
Lease
liabilities
|
Total
borrowings
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
At 1 July 2023
|
5,995
|
(8,848)
|
(2,853)
|
(5,234)
|
(8,087)
|
|
Cash flow
movements
|
1,222
|
(5,622)
|
(4,400)
|
419
|
(3,981)
|
|
Non-cash
movements
|
-
|
(86)
|
(86)
|
-
|
(86)
|
|
Effect of
foreign exchange rates
|
(31)
|
-
|
(31)
|
-
|
(31)
|
|
|
|
|
|
|
|
|
At
31 December 2023
|
|
|
|
|
|
|
|
Cash
at
bank
/bank overdrafts
|
Bank
loans
|
Net bank
cash/(debt)
|
Lease
liabilities
|
Total
borrowings
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
At 1 July 2022
|
8,284
|
(13,000)
|
(4,716)
|
(5,132)
|
(9,848)
|
|
Cash flow
movements
|
(2,334)
|
262
|
(2,072)
|
362
|
(1,710)
|
|
Non-cash
movements
|
-
|
(44)
|
(44)
|
193
|
149
|
|
Effect of
foreign exchange rates
|
12
|
-
|
12
|
-
|
12
|
|
|
|
|
|
|
|
|
At 31 December 2022
|
|
|
|
|
|
13.
Related party disclosure
The Group has a related party
relationship with its Directors and with its UK pension schemes.
There has been no material change in the nature of the related
party transactions described in note 30 of Alumasc's Report and
Accounts for the year ended 30 June 2023.
14.
Acquisition of ARP
On 21 December 2023 the Group
acquired the entire issued share capital of ARP Group, a
manufacturer and distributor of specialist metal rainwater and
architectural aluminium products, for an initial cash consideration
of £8.5 million together with a £0.2 million adjustment for net
debt and working capital, with a further £1.5 million payable
subject to ARP Group's performance over the two years ending
November 2024 and a further £1.2 million working capital adjustment
payable by the end of January 2024. ARP's consolidated unaudited
results for the year ended February 2023 showed revenue of £10.8
million and adjusted EBITDA of £1.3 million. Reported net assets at
completion were £3.3 million, including £2.2 million of net
cash.
Directly attributable acquisition
costs of £259,000 were incurred in the period in respect of the
transaction and these have been recognised as non-recurring
expenses in the income statement. Business
combination accounting is expected to be finalised within 12 months
from the completion date of the acquisition.
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
