Interim Results

Alumasc Group PLC 20 February 2001 THE ALUMASC GROUP plc - INTERIM RESULTS * Alumasc, the high specification engineering and building products group, announces a pre-tax profit of £1.7 m (99/00: £5.1 m) on a continuing turnover of £58.2 m (99/00: £62.8 m) - a disappointing performance following the improvement achieved in the previous year, but consistent with the AGM statement of 20 October 2000. * Engineering Products achieved an operating profit of £1.5 m (99/00:£3.1 m) on a turnover of £41.0 m (99/00: £44.4 m), with a £1 m adverse profit impact from both the restructuring of Rover and the decline in business from the UK brewing industry. The resumption of production at Longbridge and significant new business won in the period give an expectation of second half recovery. * Building Products made an operating profit of £0.6 m (99/00: £2.1 m) on a turnover of £17.2 m (99/00: £18.3 m), reflecting competitive conditions and exceptionally poor weather. The rising levels of quotations and specifications won provide hopeful signs for an improved second half performance. * On 1 February 2001, Alumasc announced the appointment of Paul Hooper to the new post of Group Managing Director with primary responsibility for the Group's operations from April 2001. * Following strategic reviews undertaken during the period, the Board has committed to a major expansion of Alumasc Precision Limited aimed at doubling its business in the medium term. * A review of the Group's Building Products activities confirms, in the Board's view, an opportunity to develop the excellent brands which have been grown in conjunction with its premium product ranges. * The Board maintains an active policy for the purchase of the Company's shares. * John McCall, Chairman & Chief Executive, stated 'The causes underlying the poor H1 performance are in contrast with the improving trend of the previous period and our current view that emerging market conditions should lead to a trading recovery in H2. In these circumstances, the directors have declared an interim dividend of 2.45 p per share, unchanged from the previous year'. Enquiries: The Alumasc Group plc 01536-383844 John McCall (Chairman & Chief Executive) Bankside Consultants Limited 020-72 20 74 77 Charles Ponsonby THE ALUMASC GROUP PLC CHAIRMAN'S STATEMENT Trading It was apparent from trading during the first quarter of this financial year that the half year would be very difficult for Alumasc. I issued a statement to this effect at the Annual General Meeting held on 20 October, drawing particular attention to the contrast with the closing quarter of the previous year, when the Group's performance was strong. In the event, the Group earned profits before tax of £1.7 million compared with £5.1 million in the previous year, on turnover £4.6 million lower at £ 58.2 million - a disappointing performance, particularly given the improvement achieved in the previous year. A number of the issues underlying this performance were set out in the preliminary announcement of 5 September 2000 and the October statement. These included the fact that the closure of Rover's Longbridge plant during the restructuring of that business would have a significant impact on turnover and profits until such time as the production of Rover cars recommenced and new business was obtained to replace the permanent down-sizing of our largest customer. These events have occurred much as anticipated with a profit impact of around £1 million in the period. Production has now recommenced at Longbridge and, significantly, Alumasc Precision has been winning new business from major customers including Filtronic in the telecommunications sector, and global systems manufacturers such as Denso Marston and Garretts. Alumasc Precision is one of only eight UK component suppliers to BMW's recently opened Hams Hall engine plant near Birmingham. This provides encouragement for an improved second half and the prospects for expanding the Group's core precision component business remain positive and provide a solid block in the Group's ongoing strategy. The decline in business available from the UK brewing industry (which in the last full year generated turnover of some £17 million) was severe, reducing profits earned by approximately £1 million in the half year, the period when historically the major proportion of profit is earned from this sector. The extent to which this decline reflects the uncertainties associated with takeover activity in the sector - particularly the OFT investigation of the Interbrew purchase of the brewing interests of Whitbread and Bass - is difficult to assess. However the rationalisation of the industry is likely to result in a significant proportion of this decline being permanent. The progress achieved by the businesses within our Group, which depend on the brewing industry for their living, in reducing costs and developing new products has been unable to match this sudden decline in demand. The Group's building products activities earned profits £1.5 million lower at £0.6 million, reflecting both lower turnover and lower margins. The results were impacted by trading losses of £0.3 million in a satellite operation which remains to be sold following the disposal of Corofil Woodall, its parent company, during the previous year. Most of the turnover decline of £1.2 million can be attributed to the exceptional weather conditions prevailing during the Autumn months which have had a serious effect on all external building trades in the UK. The squeeze on margins is a reflection of the universally competitive conditions in which we operate and the conscious investment that has been made by each of our building products activities to counter this pressure and resume market growth. The rising level of enquiries, quotations and specifications in our building products division provides hopeful signs of a recovery in trading volumes in the second half year. This coupled with actions to reduce costs and modest opportunities for price improvements gives an expectation of an improved trading performance in the current period. Leonardo, the Group's 55 per cent owned building products internet search engine, continues to earn modest revenues and is currently being redesigned prior to marketing a wider range of web services. Appointments On 1 February 2001, Alumasc announced the appointment to the Board of two executive directors. In line with previously announced plans, Paul Hooper will join the Group in April in the new role of Group Managing Director with primary responsibility for the Group's operations. Paul's recent career included senior positions within BTR plc, Williams Holdings plc and Rexam plc, and I warmly welcome him on your behalf. Martin Rhodes has played an important role as Managing Director of Alumasc Precision Limited and joins the Board to give impetus to the expansion of that core business in line with its excellent prospects. Development Following a detailed strategic review during the period, the Board has committed to a major expansion programme for Alumasc Precision Limited, aimed at doubling the business in the medium term. While expected to span a number of years, the exact timing of this programme will depend on the pace at which the commercial opportunities which have been identified proceed in practice. Investment by the Group will similarly take place project by project, while engineering capabilities continue to be developed in parallel. The Group will finance this expansion from its existing resources, without recourse to shareholders. The review of the Group's building products activities has confirmed, in the Board's view, the opportunity to develop the excellent brands which have been grown in conjunction with its premium product ranges. As a result, the search for new products to fill and extend those ranges will continue. As a demonstration of this, Alumasc acquired Forrest Maughan, the Leeds-based standing seam roofing business, for £0.25 million on 5 February 2001, extending the product family in Alumasc Exterior Building Products into a growth sector. The Board continues to adopt an active policy for the purchase of the Group's shares within the authority granted at the Annual General Meeting held in October. During the 6 months to December 2000, 2.55 million shares were bought, equivalent to 6.5 per cent of the issued share capital at 30 June 2000, at an average price of £1.39 per share. Dividend and prospects The causes underlying the poor first half performance are in contrast with the improving trend of the previous period and our current view that emerging market conditions should lead to a trading recovery in the second half. In these circumstances, the directors have declared an interim dividend of 2.45p per share, unchanged from the previous year, which will be payable on 9 April 2001 to shareholders on the register at close of business on 9 March 2001. J S McCall Chairman and Chief Executive 20 February 2001 UNAUDITED CONSOLIDATED BALANCE SHEET at 31 December 2000 31 31 30 December December June 2000 1999 2000 £000 £000 £000 Fixed assets Intangible assets 347 86 356 Tangible assets 28,642 30,374 28,490 Investments 462 891 451 ______ ______ ______ 29,451 31,351 29,297 Current assets Stocks 11,940 11,961 11,744 Debtors 25,197 30,959 28,821 Cash at bank - - 5,623 ______ ______ ______ 37,137 42,920 46,188 Creditors: amounts falling due within one year Trade and other creditors 24,973 28,054 28,527 Taxation 1,564 3,016 1,899 Proposed dividend 892 965 2,358 ______ ______ ______ 27,429 32,035 32,784 Net current assets 9,708 10,885 13,404 Total assets less current liabilities 39,159 42,236 42,701 Creditors: amounts falling due after more than one 3,187 3,141 3,433 year Provisions for liabilities and charges 170 258 228 Equity minority interest 187 5 224 ______ ______ ______ Net assets 35,615 38,832 38,816 Capital and reserves Called up share capital 4,570 4,983 4,889 Share premium 26,907 26,907 26,907 Revaluation reserve 2,271 2,374 2,271 Capital redemption reserve 475 62 156 Profit and loss account 1,392 4,506 4,593 ______ ______ ______ Shareholders' funds (note 6) 35,615 38,832 38,816 UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT for the half year to 31 December 2000 31 December 31 December 30 June 2000 1999 2000 £000 Continuing Discontinued Continuing Discontinued activities activities activities activities Total Total £000 £000 £000 £000 £000 £000 Turnover 58,178 62,760 5,506 68,266 127,638 8,402 136,040 _____ _____ _____ _____ _____ _____ _____ Operating 1,756 5,169 2 5,171 10,221 53 10,274 profit Share of 33 31 - 31 111 - 111 operating profit in associates Profit on - - - - - 426 426 sale of business activities Interest (83) (147) - (147) (271) - (271) _____ _____ _____ _____ _____ _____ _____ Profit on ordinary activities 1,706 5,053 2 5,055 10,061 479 10,540 before taxation Taxation 512 1,314 - 1,314 2,746 211 2,957 charge _____ _____ _____ _____ _____ _____ _____ Profit on ordinary activities 1,194 3,739 2 3,741 7,315 268 7,583 after taxation Equity 37 9 - 9 145 - 145 minority interest _____ _____ _____ _____ _____ _____ _____ Profit for the financial period attributable to the members of 1,231 3,748 2 3,750 7,460 268 7,728 the parent company Dividends 892 965 - 965 3,323 - 3,323 _____ _____ _____ _____ _____ _____ _____ Retained profit for the 339 2,783 2 2,785 4,137 268 4,405 financial period _____ _____ _____ _____ _____ _____ _____ Earnings per share and diluted earnings per share 3.2p 9.3p - 9.3p 18.6p 0.7p 19.3p (note 2) Dividend per share (note 3) 2.45p 2.45p 8.5p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES There are no recognised gains or losses other than the profits attributable to shareholders of the company of £1,231,000 for the half year to 31 December 2000 (£3,750,000 for the half year to December 1999 and £7,728,000 for the year to 30 June 2000). UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the half year to 31 December 2000 Half Year Half Year Year 31 31 30 June December December 2000 2000 1999 £000 £000 £000 Cash flow from operating activities + 2,207 1,291 10,213 Returns on investments and servicing of finance Net interest (83) (147) (271) Taxation UK corporation tax (paid)/received (825) 206 (1,951) Capital expenditure and financial investment Purchase of tangible fixed assets (2,215) (2,028) (3,919) Proceeds from sale of tangible fixed assets 470 153 149 Proceeds from sale of investments - - 441 _____ _____ _____ (1,745) (1,875) (3,329) Acquisitions and disposals Proceeds from sale of business activities - 2,293 4,604 Purchase of subsidiary undertaking - - (802) Net cash acquired with subsidiary undertaking - - 750 _____ _____ _____ - 2,293 4,552 _____ _____ _____ Equity dividends paid (2,358) (2,440) (3,405) Financing Issue of ordinary share capital - 18 18 Repurchase of ordinary share capital (3,540) (562) (562) Repayment of debt (477) (82) (163) _____ _____ _____ (4,017) (626) (707) _____ _____ _____ (Decrease)/increase in cash in the period (note 5) (6,821) (1,298) 5,102 + Reconciliation of operating profit to net cash inflow from operating activities Operating profit 1,756 5,171 10,274 Depreciation 1,659 1,967 3,955 Amortisation of goodwill 9 - 5 Profit on disposal of tangible fixed assets/ (66) (85) (128) investments Increase in working capital (847) (5,574) (3,277) Warranty and other provisions (304) (188) (616) _____ _____ _____ 2,207 1,291 10,213 _____ _____ _____ NOTES TO THE UNAUDITED ACCOUNTS at 31 December 2000 1. BASIS OF PREPARATION The interim financial statements for the half year ended 31 December 2000 have been prepared in accordance with the accounting policies detailed in the 2000 Annual Report & Accounts. The financial information for the year ended 30 June 2000 is an abridged version of the financial statements filed with the Registrar of Companies, on which the auditors gave an unqualified report. The financial information for the half year ended 31 December 1999 is restated for business activities discontinued in the six months to 30 June 2000. The interim report is being posted to shareholders and copies are available to the public at the registered office, Burton Latimer, Kettering, Northamptonshire NN15 5JP. 2. EARNINGS PER SHARE Earnings per share is based on the weighted average number of ordinary shares in issue for the period of 38,101,476 (31 December 1999: 40,161,131; year ended 30 June 2000: 40,008,259). 3. DIVIDENDS The directors have declared an interim dividend of 2.45p per share (1999: 2.45p) which will be paid on 9 April 2001 to shareholders on the register at the close of business on 9 March 2001. 4. TRADING 6 months to December 2000 6 months to December 1999 Turnover Profit Turnover Profit £000 £000 £000 £000 Engineering Products 40,981 1,460 44,437 3,128 Building Products 17,162 617 18,323 2,072 Leonardo 35 (288) - - _____ ____ _____ ____ 58,178 1,789 62,760 5,200 Discontinued - - 5,506 2 _____ ____ _____ ____ 58,178 1,789 68,266 5,202 Interest (83) (147) ____ ____ Profit before tax 1,706 5,055 5. REPURCHASE OF SHARES FOR CANCELLATION Half Year Half Year Year 31 December 31 December 30 June 2000 1999 2000 000 000 000 Shares (number) 2,555 500 1,250 Value (£) 3,540 562 1,387 6. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (DEBT)/CASH Half Year Half Year Year 31 31 30 December December June 2000 1999 2000 £000 £000 £000 (Decrease)/increase in cash in period (6,821) (1,297) 5,102 Cash outflow from decrease in debt and lease financing 477 119 163 _____ _____ _____ Change in net debt resulting from cash flows (6,344) (1,178) 5,265 Surrender of loan notes for non-cash - - 263 consideration _____ _____ _____ Movement in net debt in the period (6,344) (1,178) 5,528 Net cash/(debt) at start of period 4,839 (689) (689) _____ _____ _____ Net (debt)/cash at end of period (1,505) (1,867) 4,839 _____ _____ _____ 7. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS Half Year Half Year Year 31 31 30 December December June 2000 1999 2000 £000 £000 £000 Retained profit for the financial 339 2,785 4,405 period Repurchase of shares (3,540) (562)(1,387) New share capital - 19 18 Exchange difference - (3) (11) Goodwill written back - - (803) _____ _____ _____ Net (reduction in)/addition to (3,201) 2,239 2,222 shareholders' funds Opening shareholders' funds 38,816 36,594 36,594 _____ _____ _____ Closing shareholders' funds 35,615 38,833 38,816 _____ _____ _____

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