Final Results

Alumasc Group PLC 07 September 2005 THE ALUMASC GROUP PLC - PRELIMINARY ANNOUNCEMENT Alumasc (ALU.L), the premium building and engineering products company, announces its preliminary results for the year ended 30 June 2005. FINANCIAL HIGHLIGHTS â€¢ Group profit of Â£8.4m before tax and goodwill from ongoing businesses was in line with market expectations for the Group as a whole, prior to the demise of MG Rover, as a result of higher Building Products profits. â€¢ MG Rover write offs and increased pension deficit costs - Â£1.0m in aggregate - held ongoing underlying profits below 2004's equivalent of Â£8.7m. The total reported profit before tax of Â£0.7m includes losses in connection with the withdrawal from two non-core businesses, inclusive of goodwill of Â£3.3m previously written off to reserves. Year end net debt totalled Â£3.3m, equivalent to gearing of 8.5%. An unchanged final dividend per share of 6.3p is proposed, giving an unchanged total for the year of 9.3p, covered 1.8 times by pre-goodwill earnings from the ongoing business. COMMERCIAL HIGHLIGHTS â€¢ Building Products contributed two-thirds to Group profit pre-tax and goodwill compared with just one-third five years earlier. â€¢ Building Products increased its trading profit* by Â£1.2m (24%) to Â£6.2m on sales which were Â£8.2m (20%) ahead of the previous year at Â£48.7m. Excluding acquisitions, the organic sales growth was 5%. â€¢ Two Building Products acquisitions - Roof-Pro and Timloc - were concluded during the year at a combined net cost of Â£6.6m and both performed well. â€¢ Prospects are bright for further developing Building Products activities through organic growth and bolt-on acquisitions. â€¢ At Precision Components, ongoing trading profit* reduced by Â£0.8m (27%) to Â£2.2m on ongoing sales reduced by Â£2.8m (9%) to Â£27.5m, reflecting the approximately Â£1.0m profit impact of the collapse of MG Rover's sister company, Powertrain. â€¢ Precision Components will continue its strategy to grow sales outside the high volume automotive area and to grow its business with major international OEMs. â€¢ The disposal of Bissell and the expected disposal of Copal means that the long process of essential restructuring, is the Board believes, virtually complete." â€¢ The Industrial Products companies increased trading profit* by Â£0.3m (35%) to Â£1.3m on sales of Â£38.7m, an increase of Â£3.7m (10%). â€¢ In Industrial Products, Alumasc Dispense had an outstanding year with record countermount and tap sales, built on projects won such as Scottish Courage Fosters' "Super Chilled" Font. * Defined as operating profit pre pension deficit costs and goodwill amortisation from ongoing activities. John McCall, Chairman, stated "We enter the new financial year with strength in both our operations and our balance sheet, and the ability to invest in the marketing resources, bolt-on acquisitions and physical expansion that will drive the future growth of our company." Paul Hooper, Chief Executive, added "The Group's businesses will build upon the opportunities generated to date whilst managing the impacts of several cost variables which are predominately outside their control. The Group will continue its transition away from commodity type businesses towards increased added value areas which require high levels of technical and service input." Presentation: Today, Wednesday 7 September, from 09.30 to 10.30, Alumasc will be presenting to brokers' analysts and private client investment advisers at the offices of Bankside Consultants, 1 Frederick's Place, London EC2R 8AE. Enquiries: The Alumasc Group plc 01536-383 844 Paul Hooper (Chief Executive) (today from 10.30-12.30 at 020-7367 8851 John McCall (Chairman) Bankside Consultants Limited Charles Ponsonby 020-7367 8851 charles.ponsonby@bankside.com CHAIRMAN'S STATEMENT An important change has occurred in the balance of our Group as a consequence of five years of strong growth from our building products activities. Following a 24% increase, pre-goodwill, in the most recent year, building products now contribute two-thirds to Group profits compared with just one-third five years earlier. FINANCIAL For the year ended 30 June 2005, Group profit of Â£8.4 million before tax and goodwill from our ongoing businesses was in line with market expectations for the Group as a whole, prior to the demise of MG Rover. Write-offs incurred in connection with Rover and increased pension deficit costs - amounting to Â£1.0 million in aggregate - held ongoing profits below the previous year's equivalent of Â£8.7 million. Two building products acquisitions - Roof-Pro and Timloc - were concluded during the year at a combined net cost of Â£6.6 million and both have performed well. Borrowings rose to Â£3.3 million (2004: net cash of Â£3.3 million) at the year end largely as a result of these acquisitions, equivalent to gearing of 8.5%. The total reported profit before tax of Â£0.7 million includes losses in connection with the withdrawal from two non-core businesses, inclusive of goodwill of Â£3.3 million previously written off to reserves. The directors are recommending an unchanged final dividend of 6.3p per share, giving an unchanged total for the year of 9.3p covered 1.8 times by pre-goodwill earnings from the ongoing business. TRADING Trading profit (profit before interest, goodwill amortisation and pension deficit costs) from ongoing operations of Â£9.7 million was 8% higher than in the previous year. Our building products companies grew their turnover by 20% to Â£48.7 million, with organic growth of 5.3%, augmented by the acquisition of Roof-Pro and Timloc, acquired in July and September 2004 respectively. Divisional trading profits of Â£6.2 million showed a 24% increase over 2004. Within the division's two principal markets, commercial activity in the UK levelled off, while government spending on schools, hospitals and other public assets strengthened. The environment was less favourable for manufacturing and engineering companies, faced with softer markets and rising input costs. The loss of MG Rover's business, which in total represented 4% of Group sales in the previous year, was painful for Alumasc Precision, where ongoing turnover and trading profits fell from Â£30.2 million to Â£27.5 million and from Â£3.0 million to Â£2.2 million respectively. This activity is expected to recover as work grows with our newer partnerships. Our industrial products companies performed better thanks to renewed activity at Alumasc Dispense, with turnover and trading profits on continuing activities rising from Â£35.1 million to Â£38.7 million and Â£1.0 million to Â£1.3 million respectively. DEVELOPMENT The acquisitions in the year are in line with the Board's strategy of focusing development in our core business areas of premium building and engineering products where know-how and service are at a premium and, hence, valued by customers. The businesses from which we have chosen to withdraw - Bissell and Copal - operate in markets which have become increasingly commodity in nature, and both businesses were generating operating losses. While this has led to further losses on disposal and the recycling of Bissell's goodwill written off to reserves 10 years earlier, the disposals should be cash positive. The Board believes that the long process of costly but essential restructuring is virtually complete, enabling the Group to concentrate wholeheartedly on building the ongoing business. We continue to view bolt-on acquisitions as a useful adjunct to organic growth in the development of our building products activities, while investment in our engineering business is directed towards the manufacturing base, in support of new market opportunities. PROSPECTS Opportunities exist to continue the growth achieved in recent years by our building products companies. Order books were higher at the start of the new financial year than a year earlier with a number of major domestic and export projects in the pipeline. Sustained public sector spending is expected to counter any weakness in the private sector and, in the medium term, London 2012 is likely to boost demand for high specification building products. Alumasc will continue to grow its marketing resources in order to gain its share of these market opportunities. Our engineering business has been successful in developing new customers who represent major potential for Alumasc. This will help to replace the business lost through Rover's demise and counter any more general weakness in the UK manufacturing sector. This trend will also reduce the division's historic dependence on the automotive sector, in line with its stated policy. Energy is a significant cost to this division which has continued to rise, as expected, in the course of the current year. We enter the new financial year with strength in both our operations and our balance sheet, and the ability to invest in the marketing resources, bolt-on acquisitions and physical expansion that will drive the future growth of our company. J S McCall Chairman CHIEF EXECUTIVE'S REVIEW OVERVIEW The Group's trading profit (defined as operating profit, pre pension deficit cost and goodwill amortisation) from ongoing activities continued its growth with an increase of Â£0.7 million (8%) to Â£9.7 million. Turnover on the ongoing activities grew by 9% (3% excluding the benefit of the two acquisitions). The Group maintained its focus on efficiencies, especially in manufacturing. By the year end the headcount across the Group from ongoing buinesses, excluding acquisitions, had reduced by 5% (5% in 2004, 5% in 2003). An emphasis on the utilisation of assets led to a tight control on capital expenditure in the year, which came in at the depreciation level. The Group finished the year with net borrowings of Â£3.3 million versus net cash of Â£3.3 million in the prior year. The movement was principally linked to the acquisition of Roof-Pro and Timloc. DEVELOPMENT The two building product company acquisitions, Roof-Pro Limited and Timloc Building Products Limited, were in line with the Group's strategy to grow the Building Products division through both organic and acquisition growth. Both acquisitions have been immediately earnings enhancing for the Group. Despite major restructuring and other activities across several years which led to sporadic profitability at Copal and Bissell, both companies have operated in declining, consolidating, commodity markets. The Group is not strong in these areas and, therefore, Bissell has been divested and the Group is currently in negotiations to dispose of Copal. The Group will continue to focus its activities towards premium products requiring high quality technical support and service. Bolt-on acquisitions will feature further in the Group's expansion plans. BUILDING PRODUCTS The Building Products Division increased its trading profit by Â£1.2 million (24%) to Â£6.2 million on sales which were Â£8.2 million (20%) ahead of the previous year at Â£48.7 million. Excluding acquisitions, the organic sales growth was 5%. Alumasc Exterior Building Products AEBP grew its sales following a further investment in sales and marketing activity. Of particular note was the good growth seen for the MR facade product range which benefited from the increased refurbishment rate of social housing as higher levels of funding were released from Housing Associations under the Decent Homes Initiative. Armaseam, the standing seam metal roof product, also had a good year which culminated in the winning of a Â£2.4 million project for the supply of roofing products for a new aluminium smelter at Fjardaal in Iceland to be built for Alcoa. Approximately Â£1.6 million is expected to be invoiced in the current year. Roof-Pro had an excellent 11 months with the Group and fulfilled all expectations. Good opportunities exist for future expansion, particularly in the UK, and, with this in mind, investment has been made into additional sales resource. The continued refurbishment of social housing, schools and hospitals, combined with new build projects for both government and commercial properties, puts AEBP in a strong position for future growth. Alumasc Interior Building Products AIBP's investment in sales and marketing grew its sales into newly developed sectors. The business was particularly successful at developing sales in private housing with several housebuilders now specifying its main brand, Pendock. Merchant sales also moved well ahead as a result of a substantial expansion of stockists. Meanwhile, the roll-out into Europe has taken time to be established. New product development has been encouraging with four new initiatives either launched or imminent, including a range of washroom cubicles. A focus will be maintained in the current year on both social and private housing whilst activities in Europe should benefit from a product listing at a Saint Gobain subsidiary in France. Alumasc Construction Products Elkington Gatic had a record year for sales with its two main access and drainage products showing growth. Activity in the UK was strong for both regional airport expansion and maintenance replacement work. The agreement with Saint Gobain to distribute Gatic engineered access covers on the Continent resulted in a satisfactory expansion of sales into Europe. Elkington China, the marketing arm based in Hong Kong, contained its costs well in a depressed market place. Scaffold & Construction Products had a second successive record year for both sales and operating profit. New products are being introduced by this fast response company. While ACP was broadly successful in offsetting the high level of raw material cost increases suffered in the year, it is investing in additional manufacturing equipment to reduce costs further. ACP should make progress in the current year. Housebuilding Products Timloc had an encouraging first 10 months within the Group. Its main distribution contracts were renewed and in some cases augmented. Investment has been made into additional sales and marketing resource and, with several new products due for launch in the forthcoming year, there is an expectation for growth. This is on the assumption that housebuilders will at least maintain their current level of construction activity. PRECISION COMPONENTS At Precision Components ongoing sales reduced by Â£2.8 million (9%) to Â£27.5 million. Following the 53% trading profit improvement in the prior year, the impact of the loss of Powertrain of around Â£1 million, comprising both trading activity and write-offs, was the main contributor to a trading profit decline which reduced by Â£0.8 million (27%) to Â£2.2 million on ongoing activities. There were additional effects from energy cost increases along with the movement of some customer operations to offshore locations. With the exception of sales to BMW (for both the Valvetronic and the Mini Cooper S engines), all sales to automotive customers declined in the year, partly due to project run outs and partly due to flat automotive demand in Europe. Added to this was the impact of the loss of business to Powertrain (engine supplier to its sister company, MG Rover). Across the Division sales to automotive companies accounted for 37% of sales compared to the prior year of 47%. Good growth was seen outside the automotive area, particularly for two new customers, Deutz and JCB. Projects also ramped up with Garret Thermal Systems for Mercury Marine in the USA. Sales to Philips were developed and Siemens has returned as a customer at Dyson. During the year Precision Components worked hard to improve its manufacturing efficiencies and costs. The year end headcount was 8% lower than the year before. Precision Components will continue its strategy to grow sales outside the high volume automotive area, while retaining more complex, niche type projects such as the large multi-faceted component recently won with Aston Martin. By building on the engineering and technical support available in the organisation, combined with its reputation for the timely supply of quality components, Alumasc Precision is expected to recover from a difficult 2005. There are several projects coming on stream in the second half of the current year that will help to uplift sales. These will include the expansion to supply five Caterpillar plants while commencing a new project with its subsidiary, Perkins Engines. INDUSTRIAL PRODUCTS The Industrial Products companies had sales, on continuing activities, of Â£38.7 million, an increase of Â£3.7 million (10%). Trading profit increased by Â£0.3 million (35%) to Â£1.3 million. Alumasc Dispense had an outstanding year with record countermount and tap sales, built on projects won such as Scottish Courage Foster's 'Super Chilled' Font. The business also negotiated a worldwide licence for a patented technology called Wireless Energy Transfer (WET) offering exciting opportunities for wireless illumination applications in point of sale products. In addition to this, Alumasc Dispense will have several other product launches in the current financial year. Brock Metal had a challenging year. Whilst its sales grew, and it remained in profit, its margins were impacted by severe competition in a softening UK market. Export sales were successfully developed. Demand from China drove up prices for scrap aluminium which, in turn, had an adverse effect on Brock's secondary aluminium business. For the current year, Brock's exports are expected to develop further. PROSPECTS The Group has seen the benefit from investing in additional sales and marketing resource to drive sales forward. This activity will be augmented in the current year with further investment. New products will be launched and new markets will be sought for the Group's established products. Efficiencies will once more be targeted at all the Group's businesses and it is essential that customer service levels are not only maintained but also built upon. The UK building product market place, in general, looks relatively healthy with good levels of government expenditure continuing on new build and refurbishment projects. The forthcoming Olympic Games in London will also benefit construction activities in an area where the Group's products are present. The Precision Components business has new projects coming on stream in the current financial year which will help to offset the demise of Powertrain. These projects are mainly in non-automotive areas where the business has positioned itself for the future. Investment is already in place for several of these forthcoming activities. Whilst raw material costs, particularly steel and cast iron, appear to have stabilised at the high levels seen last year, this is not the case for energy costs. Significant increased costs will be incurred in the current financial year. Much effort has been made to reduce energy consumption including changing the working week times at our two Precision Components foundries to maximise energy efficiencies. Price increases for customers are also being advised where possible. However, there will inevitably be some impact from the energy cost increases. The Group's businesses will build upon the opportunities generated to date whilst managing the impacts of several cost variables which are predominately outside their control. The Group will continue its transition away from commodity type businesses towards increased added value areas which require high levels of technical and service input. G P Hooper Chief Executive FINANCIAL REVIEW During the past year, the Group's activities were strengthened by two building product acquisitions, a loss-making spring pin manufacturing business was sold, and progress has been made in disposing of a loss-making precision component manufacturing unit badly hit by the collapse of MG Rover. Thus, in addition to the results of ongoing activities, the Group's total result contains the results of discontinued activities and activities to be discontinued during 2005/6. The results of discontinued and to be discontinued businesses include operating exceptional costs of Â£2.0 million and the write-off of Â£3.3 million goodwill originally written-off to reserves at the time of acquisition in 1995. The latter item, whilst having no effect on shareholders' funds, does affect total reported earnings per share in 2004/5. Profit before tax Profit before tax from ongoing activities, including acquisitions, evolved as follows:- 2005 2004 Â£m Â£m Trading profit plus associates 9.7 9.0 --------------- Goodwill (0.2) - Pension deficit costs (1.0) (0.1) Profit on fixed assets disposals - 0.8 Interest (0.4) (0.2) ---------------- Profit before tax from ongoing activities 8.1 9.5 ---------------- Total profit before tax was Â£0.7 million after the losses from discontinued activities (including recycled goodwill) and activities to be discontinued. Overheads in ongoing activities increased by Â£2.3 million during the year, of which Â£1.8 million related to acquisitions. The balance reflects increased pension costs (see below) and an investment in additional sales and marketing resources. Underlying administration costs were reduced. Earnings, tax and dividends Earnings per share on ongoing activities were 15.7p (loss per share 2.1p overall). The effective tax rate on profit from ongoing activities was 31.9% (2004: 30.4% on ongoing activities, excluding the impact of the sale of land). The effective tax rate was increased by 0.9 percentage points in the current year by the non-allowable goodwill charge of Â£0.26 million relating to acquisitions in the year. The Board is recommending an unchanged total dividend per share of 9.3p (2004: 9.3p) covered 1.8 times by the profit on ongoing activities excluding goodwill. The directors propose a final dividend per share of 6.3p (2004: 6.3p) payable on 28 October 2005 to shareholders on the register at 7 October 2005. Shareholders' funds Shareholders' funds decreased to Â£39.2 million (2004: Â£39.4 million). The goodwill adjustment of Â£3.3 million relating to the business disposal has no effect on shareholders' funds. Business acquisitions Two building product businesses, Roof-Pro Limited and Timloc Building Products Limited, were acquired during the year for a combined cost of Â£6.6 million net of cash acquired. Both have performed well since their acquisition. The impact of the acquisitions, together with organic growth in the building product sector, has been to change the proportion of the Group's profits deriving from building products. From one-third five years ago building products now contributes two-thirds to the Group's on going trading profits. Business disposals In January 2005 the Group disposed of GE Bissell & Co, its loss-making spring pin manufacturing business. This disposal generated a cash inflow of Â£0.4 million during 2004/5, with further amounts expected in 2005/6. In addition, the Group is in discussions to dispose of its loss-making precision component manufacturing unit, Copal Casting, treated as "to be discontinued" in the accounts. Cash The Group moved into a net borrowing position of Â£3.3 million at 30 June 2005 (2004: net cash Â£3.3 million) mainly as a result of its two acquisitions, with gearing at the year end of 8.5% (2004: nil). Net interest costs increased by Â£0.2 million to Â£0.4 million, reflecting good underlying cash control which mitigated the effect of the net acquisition cost in the period. Capital expenditure was Â£3.7 million (2004: Â£2.5 million) compared with depreciation of Â£3.6 million (2004: Â£3.6 million). Share price and market capitalisation As at close of business on 5 September 2005 the share price was 173.5p compared with 142.5p at 1 July 2004. The market capitalisation of the Group at 5 September 2005 was Â£61.2 million. Pensions Overall pension costs in the Group increased by Â£0.5 million during the year. This comprises a year on year increase of Â£0.9 million in the cost of funding the Group's pension deficit less a current year saving of Â£0.4 million reflecting the full year effect of cost reduction arrangements introduced in the last quarter of the year ended 30 June 2004. The overall funding position of the Group's two final salary pension schemes measured under FRS 17 improved by Â£1.1 million during the year; a Â£5.9 million increase in the market value of the schemes' assets (2004: Â£2.2 million) compared with a Â£4.8 million increase in the schemes' liabilities (2004: Â£5.9 million). Net of deferred tax, the overall deficit was Â£20.6 million (2004: Â£21.4 million). IFRS implementation The Group will adopt International Financial Reporting Standards (IFRS) in reporting its consolidated financial statements for the year to 30 June 2006. Thus the present report is the last to be prepared in accordance with UK accounting standards (UK GAAP). Under IFRS, the results for the year to 30 June 2005 will be restated and reconciled to the previously reported UK GAAP numbers. The interim financial statements for the 6 months to 31 December 2005 will be the first to be based on IFRS. The process of dealing with conversion is well under way; the major balance sheet impact will come from the adoption of IAS 19 dealing with pension accounting. There will also be impacts arising from the standards on goodwill and the treatment of proposed dividends. There is also likely to be some impact arising from the standards on financial instruments. Deferred tax on property held in the balance sheet at a valuation will be eliminated by the benefit of the Group's Â£22 million capital losses. The overall presentation and disclosure requirements will also result in extensive changes from UK GAAP. Further changes may arise when the Group has concluded its detailed assessment of the impact of IFRS. The Group remains well positioned to take advantage of its strong balance sheet, positive cash flow and low gearing to grow both by internal investment and by acquisition. D R Sowerby Group Finance Director CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 30 June 2005 2005 Continuing activities Notes Ongoing To be Total Discontinued Total activities discontinued continuing activities Â£000 Â£000 Â£000 Â£000 Â£000 Turnover: Existing operations 108,778 5,234 114,012 - 114,012 Acquisitions 6,091 - 6,091 - 6,091 Discontinued operations - - - 1,494 1,494 --------------------------------------------------------- 1 114,869 5,234 120,103 1,494 121,597 Cost of sales 83,852 5,072 88,924 1,205 90,129 ---------------------------------------------------------- Gross profit 31,017 162 31,179 289 31,468 Selling and distribution costs 10,706 122 10,828 176 11,004 Administrative expenses (including exceptional costs) 2 11,871 2,665 14,536 761 15,297 Operating profit/ (loss): Before goodwill amortisation 8,696 (2,625) 6,071 (648) 5,423 Goodwill amortisation arising on acquisitions (256) - (256) - (256) Existing operations 7,491 (2,625) 4,866 - 4,866 Acquisitions 949 - 949 - 949 Discontinued operations - - - (648) (648) Operating profit/(loss) 8,440 (2,625) 5,815 (648) 5,167 --------------------------------------------------------- Share of operating profit in associates 55 - 55 - 55 Profit on fixed asset - - - - - disposals Loss on business disposal: Loss on sale - - - (824) (824) Goodwill write back - - - (3,260) (3,260) - - - (4,084) (4,084) ------------------------------------------------------- Profit/(loss) on ordinary activities before interest 8,495 (2,625) 5,870 (4,732) 1,138 Interest receivable 24 - 24 - 24 Interest payable (419) - (419) - (419) ---------------------------------------------------------- Profit/(loss) on ordinary activities before taxation 1 8,100 (2,625) 5,475 (4,732) 743 Tax (charge)/credit on profit on ordinary activities (2,587) 718 (1,869) 399 (1,470) ----------------------------------------------------------- (Loss)/profit on ordinary activities after taxation 5,513 (1,907) 3,606 (4,333) (727) Equity minority - - - - - --------------------------------------------------------- interest (Loss)/profit for the financial period attributable to shareholders 5,513 (1,907) 3,606 (4,333) (727) Dividends 3 (3,282) - (3,282) - (3,282) ----------------------------------------------------------- Retained (loss)/profit for the financial year 2,231 (1,907) 324 (4,333) 4,009) ---------------------------------------------------------- Basic (loss)/earnings per share 4 15.7p (5.4)p 10.3p (12.4)p (2.1)p ---------------------------------------------------------- Diluted (loss)/earnings per share 4 15.6p (5.4)p 10.2p (12.3)p (2.1)p --------------------------------------------------------- CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 30 June 2005 2005 2004 Â£000 Â£000 (Loss)/profit for the financial year attributable to shareholders (727) 6,481 Currency translation differences on foreign currency net investments - (6) --------------- Total recognised gains and losses for the year (727) 6,475 --------------- CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 30 June 2004 2004 Continuing activities Notes Ongoing To be Total Discontinued Total activities discontinued continuing activities Â£000 Â£000 Â£000 Â£000 Â£000 Turnover: Existing operations 105,768 6,590 112,358 - 112,358 Acquisitions - - - - - Discontinued operations - - - 2,954 2,954 ---------------------------------------------------------- 1 105,768 6,590 112,358 2,954 115,312 Cost of sales 76,609 6,234 82,843 2,366 85,209 ---------------------------------------------------------- Gross profit 29,159 356 29,515 588 30,103 Selling and distribution costs 9,267 131 9,398 405 9,803 Administrative expenses 11,056 585 11,641 413 12,054 Operating profit/ (loss): Before goodwill amortisation 8,836 (360) 8,476 (230) 8,246 Goodwill - - - - - amortisation arising on acquisitions Existing operations 8,836 (360) 8,476 - 8,476 Acquisitions - - - - - Discontinued operations - - - (230) (230) Operating profit/(loss) 8,836 (360) 8,476 (230) 8,246 --------------------------------------------------------- Share of operating profit in associates 50 - 50 - 50 Profit on fixed asset disposals 880 - 880 - 880 Loss on business disposal: Loss on sale - - - - - Goodwill write - - - - - back - - - - - ------------------------------------------------------- Profit/(loss) on ordinary activities before interest 9,766 (360) 9,406 (230) 9,176 Interest receivable 13 - 13 - 13 Interest payable (242) - (242) - (242) --------------------------------------------------------- Profit/(loss) on ordinary activities before taxation 1 9,537 (360) 9,177 (230) 8,947 Tax (charge)/credit on profit on ordinary activities (2,632) 105 (2,527) 68 (2,459) ---------------------------------------------------------- (Loss)/profit on ordinary activities after taxation 6,905 (255) 6,650 (162) 6,488 Equity minority interest (7) - (7) - (7) ---------------------------------------------------------- (Loss)/profit for the financial period attributable to shareholders 6,898 (255) 6,643 (162) 6,481 Dividends 3 (3,225) - (3,225) - (3,225) ----------------------------------------------------------- Retained (loss)/profit for the financial year 3,673 (255) 3,418 (162) 3,256 ---------------------------------------------------------- Basic (loss)/earning s per share 4 19.8p (0.7)p 19.1p (0.5)p 18.6p --------------------------------------------------------- Diluted (loss)/earning s per share 4 19.7p (0.7)p 19.0p (0.5)p 18.5p --------------------------------------------------------- CONSOLIDATED BALANCE SHEET at 30 June 2005 2005 2004 Â£000 Â£000 Fixed assets Intangible assets 5,324 50 Tangible assets 26,138 25,901 Investments 487 515 ----------------- 31,949 26,466 ------------------ Current assets Stocks 12,248 11,745 Debtors 30,209 26,875 Cash at bank and in hand - 5,625 ----------------- 42,457 44,245 ------------------ Creditors: amounts falling due within one year Trade and other creditors 29,125 24,966 Corporation tax 704 1,151 Proposed dividend 2,219 2,185 ------------------ 32,048 28,302 ----------------- Net current assets 10,409 15,943 Total assets less current liabilities 42,358 42,409 Creditors: amounts falling due after more than one year 1,106 1,907 Provisions for liabilities and charges 2,050 1,040 Equity minority interest 28 28 ----------------- Net assets 39,174 39,434 ----------------- Capital and reserves Called up share capital 4,409 4,352 Share premium 27,387 26,909 Revaluation reserve 1,551 1,727 Capital redemption reserve 693 693 Capital reserve - own shares (165) (164) Profit and loss account 5,299 5,917 ----------------- Equity shareholders' funds 39,174 39,434 ----------------- CONSOLIDATED CASH FLOW STATEMENT for the year ended 30 June 2005 2005 2004 Â£000 Â£000 Net cash inflow from operating activities 6,224 9,637 ------------------- Returns on investments and servicing of finance Interest received 24 13 Interest paid (301) (85) Interest element of lease/ hire purchase payments (118) (157) Dividends paid to minority interests - (15) Return of capital from associate 52 - ------------------- Net cash outflow from returns on investments and servicing of finance (343) (244) ------------------- Taxation UK corporation tax paid (2,082) (2,192) --------------------- Capital expenditure and financial investment Purchase of tangible fixed assets (3,709) (2,490) Proceeds from sale of tangible fixed assets 2,043 264 ---------------------- (1,666) (2,226) --------------------- Acquisitions and disposals Purchase of subsidiary undertakings (7,354) - Cash acquired with subsidiary undertakings 864 - Proceeds from sale of business activities 449 - -------------------- (6,041) - --------------------- Equity dividends paid (3,248) (3,225) --------------------- Cash (outflow)/inflow before use of liquid resources and (7,156) 1,750 -------------------- financing Financing Issue of ordinary share capital 535 2 Repayment of amounts borrowed (784) (735) ------------------- (249) (733) ------------------- (Decrease)/Increase in cash in the year (7,405) 1,017 --------------------- Notes on the Accounts for the year ended 30 June 2005 1 Analysis of turnover, assets employed and profits between activities and markets Turnover comprises the invoice value of goods and services supplied by the Group exclusive of VAT and intragroup transactions. Certain sales are made on a consignment stock basis but these are not recognised in revenue until title transfers to the customer. Turnover, assets employed and profit/(loss) on ordinary activities before taxation attributable to each of the classes of activity of the Group are as follows: Segmental analysis 2005 Turnover Ongoing To be Total Discontinued Total activities discontinued continuing activities Â£000 Â£000 Â£000 Â£000 Â£000 Building 48,674 - 48,674 - 48,674 products Engineering products - Precision components 27,449 5,234 32,683 - 32,683 - Industrial products 38,746 - 38,746 1,494 40,240 ------------------------------------------------------------ 114,869 5,234 120,103 1,494 121,597 ------------------------------------------------------------- Included in ongoing activities for the year to 30 June 2005 are amounts within Building products relating to acquisitions of Â£6,091,000. 2004 Turnover Ongoing To be Total Discontinued Total activities discontinued continuing activities Â£000 Â£000 Â£000 Â£000 Â£000 Building 40,430 - 40,430 - 40,430 products Engineering products - Precision components 30,246 6,590 36,836 - 36,836 - Industrial products 35,092 - 35,092 2,954 38,046 ------------------------------------------------------------ 105,768 6,590 112,358 2,954 115,312 ------------------------------------------------------------ Segmental analysis Assets employed 2005 2004 Total Total Â£000 Â£000 Building products 13,912 10,292 Engineering products - Precision components 16,518 15,992 - Industrial products 11,317 12,895 --------------------- 41,747 39,179 Net (debt)/cash (3,332) 3,288 Non-operating and miscellaneous 759 (3,033) ---------------------- 39,174 39,434 --------------------- Included in assets employed for the year to 30 June 2005 are amounts within Building products relating to acquisitions of Â£1,878,000, which form part of continuing activities. Included in assets employed are amounts within Precision components relating to activities to be discontinued comprising: Â£1,054,000 at 30 June 2005 and Â£2,193,000 at 30 June 2004. Included in assets employed are amounts within Industrial products relating to discontinued activities comprising: Â£974,000 at 30 June 2005 and Â£2,774,000 at 30 June 2004. Net (debt)/cash comprises cash less overdrafts, medium term secured asset backed borrowings and lease/hire purchase financing. Non-operating and miscellaneous items include tax balances, pension creditors and dividends. Notes on the Accounts for the year ended 30 June 2005 1 Analysis of turnover, assets employed and profits between activities and markets (continued) Segmental analysis 2005 Profit Ongoing To be Total Discontinued Total activities discontinued continuing activities Â£000 Â£000 Â£000 Â£000 Â£000 Building 6,148 - 6,148 - 6,148 products Engineering products - Precision components 2,208 (2,625) (417) - (417) - Industrial products 1,324 - 1,324 (648) 676 --------------------------------------------------------- Trading profit/(loss) 9,680 (2,625) 7,055 (648) 6,407 Pension deficit cost (984) - (984) - (984) Goodwill (all Building products) (256) - (256) - (256) ---------------------------------------------------------- Operating profit/(loss) 8,440 (2,625) 5,815 (648) 5,167 Share of operating profit 55 - 55 - 55 in associates Loss on business disposal before goodwill write - - - (824) (824) back Goodwill write back - - - (3,260) (3,260) Net interest (395) - (395) - (395) ----------------------------------------------------------- Profit/(loss) before tax 8,100 (2,625) 5,475 (4,732) 743 ---------------------------------------------------------- Included in ongoing activities for the year to 30 June 2005 are amounts within Building products relating to acquisitions of Â£1,191,000, before goodwill amortisation of Â£242,000. 2004 Profit Ongoing To be Total Discontinued Total activities discontinued continuing activities Â£000 Â£000 Â£000 Â£000 Â£000 Building 4,961 - 4,961 - 4,961 products Engineering products - Precision components 3,044 (360) 2,684 - 2,684 - Industrial products 978 - 978 (230) 748 -------------------------------------------------------- Trading profit/(loss) 8,983 (360) 8,623 (230) 8,393 Pension deficit cost (139) - (139) - (139) Goodwill (all Building products) (8) - (8) - (8) --------------------------------------------------------- Operating profit/(loss) 8,836 (360) 8,476 (230) 8,246 Share of operating profit in associates 50 - 50 - 50 Profit on sale of 880 - 880 - 880 land Net interest (229) - (229) - (229) --------------------------------------------------------- Profit/(loss) before tax 9,537 (360) 9,177 (230) 8,947 -------------------------------------------------------- The amounts disclosed as pension deficit cost have been shown separately because they relate to closed schemes, 91% of whose members are not now employed by the Group, (2004: 89%). NOTES TO THE ACCOUNTS for the year ended 30 June 2005 1. Analysis of turnover, assets employed and profits between activities and markets (continued) Geographical analysis All business operations are located in the United Kingdom and all turnover is generated there with the exception of Elkington China Limited, based in Hong Kong, whose turnover is not significant. Turnover by destination is as follows: 2005 2004 Continuing Discontinued Total Continuing Discontinued Total activities activities Â£000 activities activities Â£000 United 98,562 736 99,298 92,878 1,358 94,236 Kingdom Europe 14,573 564 15,137 11,847 1,280 13,127 - EU - Non 1,619 80 1,699 1,017 52 1,069 EU Other 5,349 114 5,463 6,616 264 6,880 -------------------------------------------------------------------- 120,103 1,494 121,597 112,358 2,954 115,312 ---------------------------------------------------------------------- Included in continuing activities for the year to 30 June 2005 are amounts relating to acquisitions of: UK Â£5,730,000 and Europe - EU Â£361,000. Included in continuing activities for the year to 30 June 2005 are amounts relating to activities to be discontinued of: UK Â£5,109,000 and Europe - EU Â£125,000 (2004: UK Â£6,446,000 and Europe - EU Â£144,000). 2. Administration expenses Included within administrative expenses within activities to be discontinued are exceptional costs of Â£1,500,000 relating to fixed asset impairments, stock write downs, and other costs of discontinuance. Included within administrative expenses within discontinued activities are exceptional costs of Â£466,000 relating to fixed asset impairments. 3. Dividends 2005 2004 Â£000 Â£000 Interim dividend of 3.0p per share (2004: 3.0p), paid 6 April 1,063 1,040 2005 Proposed final dividend of 6.3p per share (2004: 6.3p), payable 28 October 2005 2,219 2,185 ---------------- 3,282 3,225 ----------------- 4. Earnings per share Both the earnings per share and the diluted earnings per share are based on the loss after tax attributable to shareholders for the financial year of Â£727,000 (2004: profit Â£6,481,000). Earnings per share is based on the weighted average number of ordinary shares in issue during the year ended 30 June 2005 of 35,039,846 (2004: 34,817,592). Diluted earnings per share is based on the weighted average number of ordinary shares in issue during the year, after allowing for the exercise of outstanding share options, of 35,186,032 (2004: 34,980,410). NOTES TO THE ACCOUNTS for the year ended 30 June 2005 5. Reconciliation of movement in shareholders' funds 2005 2004 Â£000 Â£000 (Loss)/profit attributable to shareholders (727) 6,481 Dividends (3,282) (3,225) ------------------- (4,009) 3,256 Exchange difference - (6) New shares issued 535 2 UITF 17 charge on long-term incentive plan 37 113 Goodwill written back on disposals 3,260 - Increase in capital reserve (83) - ------------------ Net (decrease)/ increase in shareholders' funds (260) 3,365 Opening shareholders' funds 39,434 36,069 ------------------ Closing shareholders' funds 39,174 39,434 ------------------ 6. Audited Accounts The above financial information is derived from the statutory accounts for the years ended 30 June 2005 and 30 June 2004, on both of which the auditors have issued an unqualified opinion. The preliminary announcement is prepared on the same basis as set out in the previous year's annual accounts. The information does not constitute statutory accounts as defined in Section 240 (1) of the Companies Act 1985. The accounts for the year ended 30 June 2004 have been filed with the Registrar of Companies and the accounts for the year ended 30 June 2005 will be filed in due course. Copies of the Annual Report and Accounts will be posted to all shareholders on 16 September 2005. Copies will be available from the Company Secretary, The Alumasc Group plc, Burton Latimer, Kettering, Northamptonshire, NN15 5JP, and can be viewed on www.alumasc.co.uk from 19 September 2005. This information is provided by RNS The company news service from the London Stock Exchange

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