Interim Results
Alumasc Group PLC
12 February 2004
THE ALUMASC GROUP plc - INTERIM ANNOUNCEMENT
• Alumasc, the high specification engineering and building products
group, announces pre-tax profits of £3.3m in the half year ended 31
December 2003, a £0.1m reduction against underlying profit in the first
half of the previous year and consistent with the Board's AGM-announced
expectation that second half profits will increase relative to the first
half.
•Net borrowings at 31 December, a seasonal high point, decreased to £1.9m
from £2.4m a year earlier, reflecting continuing net cash generation.
•As promised, the Board has re-balanced the Group's dividend payments by
declaring an interim dividend per share of 3.0p (2002: 2.45p), equal to 34%
of last year's total.
•Alumasc Precision increased operating profit by £0.3m (29%), following
improved cost control and increased business with non-automotive customers.
The drive to improve margins, and to focus the business where satisfactory
margins can be achieved, will continue during the second half year.
•Industrial Products reduced operating profit by £0.8m, reflecting the
anticipated lower demand for brewery dispense and brand promotion products
and a more general weakness in the markets for industrial commodities.
•Building Products increased operating profit by £0.3m (19%), reflecting
the success of internal developments as well as continued firmness in its
commercial and public sector markets. As part of plans for developing
opportunities in European markets, agreement was reached in December 2003
with Saint-Gobain to distribute Gatic engineered access covers on the
Continent.
•John McCall, Chairman, stated "Our markets, and the economy generally,
are calmer than for some years. However, in many U.K. manufacturing sectors,
talk of recovery remains more wishful than established. Suppliers of
commodity products continue to feel extreme competitive pressure, as do
those customers whose products have failed to develop in line with the
demands of their markets. The consequent weakness in first half demand from
certain customers is expected to continue as a result.
Our new business initiatives are increasingly contributing to Alumasc's
performance and, supported by the strong Group balance sheet, will carry through
to the second half year and beyond. Any strengthening of the economy will be a
bonus. We expect the pattern of trading, which favours our second half year, to
continue."
Presentation:
A presentation for brokers' analysts and private client investment advisers will
be held from 9.30 a.m. to 10.30 a.m. today at Bankside Consultants Limited, 123
Cannon Street, London EC4N 5AU (100yds east of the station, on the opposite side
of the road).
Enquiries:
The Alumasc Group plc 01536-383 844
John McCall (Chairman)
Paul Hooper (Chief Executive)
Bankside Consultants Limited
Charles Ponsonby charles.ponsonb
y@bankside.com
/ 020-7444 4166
-----------------------------------------------
CHAIRMAN'S STATEMENT
Summary
Pre-tax profits for the 6 months to December 2003 of £3.3 million are below
those of the previous year (2002 : £3.75 million) but in line with our
expectations. The Group's Precision Components and Building Products divisions
were both ahead in turnover and operating profit. Excluding the previous year's
profit on the sale of land of £0.3 million, the current year's reduction is £0.1
million and consistent with our expectation, alluded to in my AGM statement of
16 October 2003, that second half profits will increase relative to the first
half.
Historically, the Group's borrowings have tended to be higher in the first 6
months of our trading year. The Group's net borrowings of £1.9 million at 31
December 2003 (2002: £2.4 million) followed this pattern, and interest costs of
£0.1 million (2002: £0.2 million) reflect continuing net cash generation by the
Group.
Dividend
Following last year's increase in dividends, the Board declared its intention to
rebalance the Group's dividend payments less heavily towards the final payment,
commencing with the interim dividend in the current financial year. Accordingly,
the Board has declared an interim dividend per share of 3.0p (2002: 2.45p),
equal to 34% of last year's total. Recommendations in respect of a final
dividend will make allowance for this rebalancing.
Operations
Alumasc Precision continued to increase its business with non-automotive
customers during the half year. Turnover was modestly ahead as a result, despite
weak demand from its automotive customer base. Operating profits grew by £0.3
million (29%), showing the benefit of improved cost control. In particular, a
reduction in headcount contributed to productivity improvements and generated
savings to set against the recent hike in national insurance costs. The drive to
improve margins, and to focus the business where satisfactory margins can be
achieved, will continue during the second half year.
The Group's Industrial Products activities were well below the previous year in
both turnover, down by £3.0 million, and operating profits, by £0.8 million. In
part, this reflects the lower demand for our brewery dispense and brand
promotion products, foreshadowed in earlier reviews of last year's activities.
Demand for these products is project related and such variation in activity
levels is not unusual. A more general weakness was evident in the markets for
industrial commodities.
Alumasc Building Products continued the advances of recent years with turnover
growth in each operating company and operating profits ahead by £0.3 million
(19%). This encouraging performance reflects both the success of developments
within our own businesses, as well as continued firmness in our commercial and
public sector markets. As part of our plans for developing opportunities in
European markets, agreement was reached in December 2003 with Saint-Gobain to
distribute Gatic engineered access covers on the Continent.
Prospects
Our markets, and the economy generally, are calmer than for some years. However,
in many U.K. manufacturing sectors, talk of recovery remains more wishful than
established. Suppliers of commodity products continue to feel extreme
competitive pressure, as do those customers whose products have failed to
develop in line with the demands of their markets. The consequent weakness in
first half demand from certain customers is expected to continue as a result.
Our new business initiatives are increasingly contributing to Alumasc's
performance and, supported by the strong Group balance sheet, will carry through
to the second half year and beyond. Any strengthening of the economy will be a
bonus. We expect the pattern of trading, which favours our second half year, to
continue.
John McCall
Chairman 12 February 2004
UNAUDITED CONSOLIDATED BALANCE SHEET
At 31 December 2003
31 December 31 December 30 June
2003 2002 2003
Notes £000 £000 £000
------------------ ------ ---------- ---------- ---------
Fixed assets
Intangible assets 54 62 58
Tangible assets 27,901 29,931 28,411
Investments 493 524 493
------------------ ------ ---------- ---------- ---------
28,448 30,517 28,962
------------------ ------ ---------- ---------- ---------
Current assets
Stocks 11,830 12,530 11,698
Debtors 22,068 20,880 24,356
Cash at bank and in hand 816 989 4,608
------------------ ------ ---------- ---------- ---------
34,714 34,399 40,662
------------------ ------ ---------- ---------- ---------
Creditors: amounts falling due
within one year
Trade and other creditors 19,653 22,024 25,608
Taxation 1,132 1,311 1,202
Proposed dividend 1,041 850 2,185
------------------ ------ ---------- ---------- ---------
21,826 24,185 28,995
------------------ ------ ---------- ---------- ---------
Net current assets 12,888 10,214 11,667
------------------ ------ ---------- ---------- ---------
Total assets less current 41,336 40,731 40,629
liabilities
Creditors: amounts falling due
after more than one year 2,966 4,161 3,656
Provisions for liabilities and 825 809 704
charges
Equity minority interest 31 102 36
------------------ ------ ---------- ---------- ---------
Net assets 37,514 35,659 36,233
------------------ ------ ---------- ---------- ---------
Capital and reserves
Called up share capital 4,352 4,352 4,352
Share premium 26,907 26,907 26,907
Revaluation reserve 1,874 2,021 1,874
Capital redemption reserve 693 693 693
Profit and loss account 3,688 1,686 2,407
------------------ ------ ---------- ---------- ---------
Equity shareholders' funds 8 37,514 35,659 36,233
------------------ ------ ---------- ---------- ---------
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the half year to 31 December 2003
--------------- ---------------------------------
Half year Half year
31 December 31 December
2003 2002
--------------- ---------------------------------
Continuing Discontinued
activities activities Total
£000 £000 £000 £000
Notes
--------------- -------------------- --------- -------
2 Turnover 54,810 56,272 1,976 58,248
2 Operating profit/(loss) 3,416 3,592 45 3,637
2 Share of operating profit 25 55 - 55
in associates
Profit on fixed asset - 305 - 305
disposals
------- -------------------- --------- -------
Loss on business closure:
Costs of business closure/loss on - - (854) (854)
sale
Goodwill write back - - (2,388) (2,388)
------- -------------------- --------- -------
- - (3,242) (3,242)
Net interest payable (123) (199) - (199)
-------------------------- --------------- -------------------- --------- -------
Profit/(loss) on ordinary 3,318 3,753 (3,197) 556
activities before
taxation
4 Taxation (charge)/credit (985) (1,170) 236 (934)
-------------------------- --------------- -------------------- --------- -------
Profit/(loss) on ordinary 2,333 2,583 (2,961) (378)
activities after taxation
Equity minority interest (11) (6) - (6)
-------------------------- --------------- -------------------- --------- -------
Profit/(loss) for the 2,322 2,577 (2,961) (384)
financial period
attributable to
shareholders
Dividends (1,041) (850) - (850)
-------------------------- --------------- -------------------- --------- -------
Retained profit/(loss) for 1,281 1,727 (2,961) (1,234)
the financial period
-------------------------- --------------- -------------------- --------- -------
5 Basic earnings per share 6.7p 7.4p (8.5)p (1.1)p
-------------------------- --------------- -------------------- --------- -------
5 Diluted earnings per 6.6p 7.4p (8.5)p (1.1)p
share
-------------------------- --------------- -------------------- --------- -------
6 Dividend per share 3.0p 2.45p
-------------------------- --------------- -------------------- --------- -------
---------------------------------------
Year
30 June
2003
Continuing Discontinued
activities activities Total
£000 £000 £000
--------------- --------------- ---------------
117,425 2,499 119,924
7,738 (51) 7,687
55 - 55
305 - 305
--------------- --------------- ---------------
- (875) (875)
- (2,388) (2,388)
--------------- --------------- ---------------
- (3,263) (3,263)
(322) - (322)
--------------- --------------- ---------------
7,776 (3,314) 4,462
(2,302) 246 (2,056)
--------------- --------------- ---------------
5,474 (3,068) 2,406
(22) - (22)
--------------- --------------- ---------------
5,452 (3,068) 2,384
(3,035) - (3,035)
--------------- --------------- ---------------
2,417 (3,068) (651)
--------------- --------------- ---------------
15.7p (8.8)p 6.9p
--------------- --------------- ---------------
15.6p (8.8)p 6.8p
--------------- --------------- ---------------
8.75p
--------------- --------------- ---------------
UNAUDITED CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the half year to 31 December 2003
Half year Half year Year
31 December 31 December 30 June
2003 2002 2003
£000 £000 £000
---------------------- ---------- --------- ---------
Profit/(loss) for the financial
period
attributable to shareholders 2,322 (384) 2,384
Currency translation differences on
foreign currency net investments - - (9)
---------------------- ---------- --------- ---------
Total recognised gains and losses for 2,322 (384) 2,375
the period
---------------------- ---------- --------- ---------
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the half year to 31 December 2003
Half year Half year Year
31 December 31 December 30 June
2003 2002 2003
£000 £000 £000
------------------ ------- ---------- --------- --------
Net cash inflow from 1,088 2,892 9,464
operating activities
------------------ ------- ---------- --------- --------
Returns on investments and servicing of finance
Net interest paid (123) (199) (322)
Dividends paid to minority (16) (17) (16)
shareholders
--------------------- ------- ---------- --------- --------
(139) (216) (338)
------------------ ------- ---------- --------- --------
Taxation
UK corporation tax paid (963) (911) (2,095)
------------------ ------- ---------- --------- --------
Capital expenditure and financial investment
Purchase of tangible fixed (1,505) (1,238) (2,217)
assets
Proceeds from sale of tangible 273 1,060 1,520
fixed assets
--------------------- ---- ---------- --------- --------
(1,232) (178) (697)
------------------ ------- ---------- --------- --------
Acquisitions and
disposals
Sale of subsidiary - - 109
undertaking
Net cash disposed of with - - (108)
subsidiary undertaking
------------------ ------- ---------- --------- --------
- - 1
------------------ ------- ---------- --------- --------
Equity dividends paid (2,185) (2,098) (2,948)
------------------ ------- ---------- --------- --------
Financing
Repayment of amounts (361) (409) (688)
borrowed
------------------ ------- ---------- --------- --------
(Decrease)/ increase in (3,792) (920) 2,699
cash in the period
------------------ ------- ---------- --------- --------
Reconciliation of operating profit to net cash inflow from operating
activities
Operating profit 3,416 3,637 7,687
Business closure costs - (854) (870)
Depreciation 1,720 1,979 3,964
Amortisation of goodwill 4 4 8
Loss/ (profit) on disposal of tangible 22 (2) 21
fixed assets
Increase in working capital (3,752) (1,846) (880)
Decrease in warranty and other provisions (322) (26) (466)
------------------------ --------- --------- --------
1,088 2,892 9,464
--------- --------- --------
NOTES ON THE UNAUDITED ACCOUNTS
For the half year to 31 December 2003
1 Basis of preparation
The interim financial statements for the half year ended 31 December 2003 are
not statutory accounts. They have been prepared in accordance with the
accounting policies detailed in the 2003 annual report and accounts. The
financial information for the year ended 30 June 2003 is an abridged version of
the financial statements filed with the Registrar of Companies, on which the
auditors gave an unqualified report. 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 Analysis of turnover and operating profit, including associates on continuing
activities
Half year Half year
31 December 2003 31 December 2002
--------------- -------------
Turnover Profit Turnover Profit
£000 £000 £000 £000
------------------- --------- -------- -------- --------
Engineering Products
- Precision Components 17,740 1,224 17,720 952
- Industrial Products 17,972 285 20,941 1,072
Building Products 19,098 2,083 17,611 1,751
------------------- --------- -------- -------- --------
54,810 3,592 56,272 3,775
Pension deficit cost (151) (128)
Interest (123) (199)
------------------- --------- -------- -------- --------
3,318 3,448
Profit on fixed asset - 305
disposals
------------------- --------- -------- -------- --------
3,318 3,753
------------------- --------- -------- -------- --------
The amounts disclosed as pension deficit cost have been shown separately because
they relate to closed schemes, 86% of whose members are not now employed by the
Group.
3 Activities discontinued
Discontinued activities in the half year to 31 December 2002 and the full year
to 30 June 2003 comprise the results of Leonardo Internet Limited, a web
development business which was sold on 7 February 2003, and the Alumasc Grundy
business which manufactured and repaired beer barrels, and which was closed in
March 2003.
NOTES ON THE UNAUDITED ACCOUNTS
For the half year to 31 December 2003
4 Taxation
The taxation provided is based on an estimated effective rate for the year.
Half year Half year Year
31 December 31 December 30 June
2003 2002 2003
£000 £000 £000
---------------------- ---------- --------- ---------
Current tax - UK Corporation tax 893 812 1,878
- Foreign tax - - 15
Share of associate's current tax - - - 30
overseas
Deferred tax 92 122 133
---------------------- ---------- --------- ---------
985 934 2,056
---------------------- ---------- --------- ---------
5 Earnings per share
Earnings per share is based on the weighted average number of ordinary shares in
issue for the period of 34,817,305 (31 December 2002: 34,816,788, year ended 30
June 2003: 34,816,788). Diluted earnings per share is based on the weighted
average number of ordinary shares in issue during the period, after allowing for
the exercise of outstanding share options, of 34,988,648 (31 December 2002:
34,878,487, year ended 30 June 2003: 34,864,434).
6 Dividends
The directors have declared an interim dividend per share of 3.0p (2002: 2.45p)
which will be paid on 6 April 2004 to shareholders on the register at the close
of business on 12 March 2004.
7 Reconciliation of net cash flow to movement in net (debt)/cash
Half year Half year Year
31 December 31 December 30 June
2003 2002 2003
£000 £000 £000
--------------------- ----------- ---------- ---------
(Decrease)/ increase in cash in the (3,792) (920) 2,699
period
Repayment of debt 361 409 688
--------------------- ----------- ---------- ---------
Change in net (debt)/cash from cash (3,431) (511) 3,387
flows in the period ----------- ---------- ---------
---------------------
Net cash/(debt) at start of period 1,536 (1,851) (1,851)
Net (debt)/cash at end of period (1,895) (2,362) 1,536
--------------------- ----------- ---------- ---------
NOTES ON THE UNAUDITED ACCOUNTS
For the half year to 31 December 2003
8 Reconciliation of movement in shareholders' funds
Half year Half year Year
31 December 31 December 30 June
2003 2002 2003
£000 £000 £000
--------------------- ---------- ---------- ---------
Retained profit/(loss) for the 1,281 (1,234) (651)
financial period
Exchange difference - - (9)
Goodwill write back on disposal of - 2,388 2,388
business ---------- ---------- ---------
---------------------
Net increase in shareholders' funds 1,281 1,154 1,728
Opening shareholders' funds 36,233 34,505 34,505
--------------------- ----------- ---------- ---------
Closing shareholders' funds 37,514 35,659 36,233
--------------------- ----------- ---------- ---------
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