Revised Interim Announcement
Alumasc Group PLC
12 February 2007
Revised release - re dividend payment date
Further to the Interim Announcement of Thursday 8 February 2007, the dividend
payment date should read 10 April 2007 and not 5 April 2007.
The revised announcement follows.
______________________________________________________________________
Thursday 8 February 2007
THE ALUMASC GROUP PLC - INTERIM ANNOUNCEMENT
Alumasc (ALU.L), the premium building and engineering products group, announces
a much improved first-half trading performance in respect of the half year to 31
December 2006 compared with the half year to 31 December 2005, with increased
revenue and operating profit in both of the Group's divisions, Building Products
and Engineering Products.
FINANCIAL HIGHLIGHTS
• Revenue increased by 26% to £75.1m from £59.4m.
• Profit before tax on continuing operations increased by 34% to £3.6m
from £2.7m on a like-for-like basis (excluding the £0.2m gain on a property
disposal last year).
• Earnings per share on continuing operations increased by 18.6% to 7.0p
from 5.9p (an increase of 34.6% excluding the prior year property disposal
gain).
• Interim dividend per share is increased by 3.3% to 3.1p from 3.0p,
payable on 5 April 2007 to shareholders on the register at the close of business
on 9 March 2007.
• Dividend cover increased to 2.3 times from 2.0 times.
COMMERCIAL HIGHLIGHTS
• The main drivers of first-half profitable growth were:
- increased customer demand for specialist construction products, namely GATIC
access covers and Slotdrain products;
- focus on non-automotive diesel engine component supply at Alumasc Precision;
and
- a near trebling in worldwide zinc prices benefiting Brock Metal.
• Alumasc's Building Products division increased revenue by 2.9% to
£26.7m and grew operating profit by 2.4% to £2.6m, representing approximately
36% of group revenue and 63% of group operating profit. Revenue and profit
growth were constrained by a lower level of building refurbishment work,
particularly in the social housing sector, although there were good performances
in Construction Products and in other niche businesses.
• In Engineering Products, Precision Components grew first-half revenue
from continuing operations by almost 30% to over £16.5m. Operating profit from
continuing operations increased by more than 40% to £0.9m, further evidence of
the strong recovery in this business since the loss of MG Rover in 2005.
• Also in Engineering Products, Industrial Products reported a growth in
revenue of £11.2m to £31.9m with first-half operating profit increasing to £0.6m
from £0.1m, driven by an exceptional half year performance from Brock Metal, a
producer of zinc and aluminium alloys.
John McCall, Chairman, stated:
"As has been the case in recent years, the Board expects that there will be a
seasonal bias in favour of the Group's second-half results although, after this
year's stronger first half, the bias is unlikely to be as marked as last year.
We expect that second-half year trading conditions will be broadly similar to
those in the first half and therefore the Board is optimistic that Alumasc will
report another good full year result, particularly if the early signs of a
recovery in social housing spend translate into higher activity levels as the
year progresses.
The Group continues actively to seek acquisitions for its Building Products
Division"
Presentation:
Today, from 09:30am to 10:30am, a presentation to broker's analysts and private
client investment advisers will be held at the offices of KBC Peel Hunt, 111 Old
Broad Street, London EC2N 1PH.
Enquiries:
The Alumasc Group plc 01536 383844
Paul Hooper (Chief Executive) info@alumasc.co.uk
Andrew Magson (Finance Director)
Bankside Consultants Limited
Charles Ponsonby 020 7367 8851
charles.ponsonby@bankside.com
CHAIRMAN'S STATEMENT
Overview
Alumasc's first-half trading performance was much improved, with Group revenue
up by 26% to £75.1 million and profit before tax on continuing operations up by
over 34% to £3.6 million on a like-for-like basis (excluding the gain on a
property disposal last year). Revenue and operating profit both increased
compared with the prior period in each of the Group's divisions, Building
Products and Engineering Products. The main drivers of this profitable growth
were increased customer demand for Alumasc's specialist construction products,
further success in the focus on non-automotive diesel engine component supply at
Alumasc Precision and a near trebling in worldwide zinc prices benefiting Brock
Metal.
First-half earnings per share from continuing activities increased by 18.6% (or
34.6% excluding the prior year property gain) to 7.0p. In the absence of any
discontinued operations in the first half of this year, overall Group earnings
per share increased substantially from 2.8p to 7.0p.
At the interim stage last year, the Group dividend was maintained at 3.0p per
share, despite a 26% reduction in interim trading profit following the loss of
MG Rover, Alumasc Precision's major customer, in 2005. As a consequence, interim
dividend cover reduced to 2.0 times continuing earnings. Following the recovery
in profitability in the first half of this year, the Board has declared a 3.3%
increase in the interim dividend from 3.0p per share to 3.1p per share, covered
2.3 times by earnings.
Building Products
Alumasc's Building Products division increased revenue by 2.9% to £26.7 million
and grew operating profit by 2.4% to £2.6 million, representing approximately
36% of Group revenue and 63% of Group operating profit. First-half divisional
return on sales was maintained at 9.8%. Divisional revenue and profit growth
were constrained by a lower general level of building refurbishment work,
particularly in the social housing sector where there were delays in funds being
released by local authorities and housing associations under the Decent Homes
Initiative, leading to lower sales of MR facade and Pendock casing products.
Revenue rose by over 30% across Alumasc's Construction Products businesses, with
strong demand experienced by Elkington Gatic for both specialist access covers
and Slotdrain products. An increasing proportion of sales is now being made
overseas.
Within Alumasc Exterior Building Products (AEBP), sales of specialist
waterproofing systems and green roof products grew by over 15%, and revenue from
rainwater and drainage products grew by nearly 5%. The metal roofing business
had a quieter first half, following lower sales to the major Fjaardal project in
Iceland, which was substantially complete at the end of the last financial year.
Both the MR facades business within AEBP and Alumasc Interior Building Products
(AIBP) more generally suffered from the lower public housing refurbishment
activity described above, leading to a reduction of 20% in the combined revenue
of these businesses. Both have responded with cost reduction initiatives,
including improved sourcing arrangements and lowering overhead costs.
Roof-Pro, a provider of modern support systems that elevate building services
such as air-conditioning and cooling units above the waterproofing layer on flat
roofs thereby enabling lower maintenance and refurbishment costs, experienced
improving activity levels as the first half progressed whilst strengthening its
sales team during the period. Timloc had a good first half with revenue 12%
ahead driven by growth in demand for cavity trays and roof and wall ventilation
products, which are used in new homes.
Engineering Products
Precision Components
First-half revenue from continuing operations grew by almost 30% at Alumasc
Precision to over £16.5 million, further evidence of the strong recovery in this
business since the loss of MG Rover in 2005. Operating profit from continuing
operations increased by more than 40% to £0.9 million, with operating margins
improving from 5.0% to 5.6%. Of the revenue growth, approximately one-third was
attributable to the recovery of increased metal input costs (principally
aluminium) from customers through increased selling prices. Management is
focused on improving the efficiency of the manufacturing processes as many of
the new customer projects won over the last eighteen months become more mature,
and also sourcing bought-in components and materials more economically where
possible. There have been particular successes in increasing sales of precision
components to non-automotive diesel engine manufacturers such as Caterpillar,
Perkins, Deutz and JCB with around two-thirds of sales now to the non-automotive
sector and ongoing automotive sales focused on premium brand manufacturers such
as Aston Martin and BMW.
Industrial Products
Alumasc's Industrial Products businesses reported a growth in revenue of £11.2
million to £31.9 million with first-half operating profit increasing to £0.6
million from £0.1 million driven by an exceptional half-year performance from
Brock Metal, a producer of zinc and aluminium alloys. Some £10.0 million of the
revenue growth was attributable to recovery of increased zinc costs following a
near trebling of average year-on-year zinc prices caused by a worldwide shortage
in supply. Brock has managed the tight zinc supply situation well by focusing on
provision of quality service to core, long-standing customers. While the
increased profitability is welcome, increased zinc prices have also led to
higher working capital requirements, and a higher concentration of customer
credit risk, both of which are being managed carefully. Worldwide spot zinc
prices have now fallen from their peak in the Autumn, but remain significantly
above prior year levels.
Alumasc's other Industrial Products business, Alumasc Dispense, a supplier to
the brewing industry, experienced weak first-half demand due to a down-turn in
brewers' capital spend on point-of-sale dispense equipment.
Finance
The Group's net borrowings rose in the period from £3.4 million to £5.9 million,
driven by the impact on working capital of the substantial increase in revenue
at Brock Metal described above and the Group's normal working capital cycle,
including the payment of last year's final dividend. Management continues to
focus on tight working capital control and efficient conversion of profit into
cash.
Following last year's higher full year capital investment spend of £5.3 million,
capital expenditure requirements were lower in this year's first half, at just
£1.7 million.
Annualised first-half post tax return on average capital invested improved from
10.1% to 12.4%, well ahead of Alumasc's estimated cost of capital, driven by the
increased level of profitability. The Group is also taking steps to dispose of
surplus property wherever possible to reduce overall capital invested, while
benefiting from utilisation of tax losses brought forward.
Outlook
As has been the case in recent years, the Board expects that there will be a
seasonal bias in favour of the Group's second-half results although, after this
year's stronger first half, the bias is unlikely to be as marked as last year.
We expect that second-half year trading conditions will be broadly similar to
those in the first half and therefore the Board is optimistic that Alumasc will
report another good full year result, particularly if the early signs of a
recovery in social housing spend translate into higher activity levels as the
year progresses.
The Group continues actively to seek acquisitions for its Building Products
division.
John McCall
Chairman 8 February 2007
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the half year to 31 December 2006
Half year Year
ended
31 December 30 June
2006 2005 2006
Notes £'000 £'000 £'000
Continuing operations
Revenue 2 75,058 59,380 132,706
Cost of sales (59,158) (44,898) (99,757)
Gross profit 15,900 14,482 32,949
Net operating expenses (11,777) (11,196) (23,979)
Trading profit 2 4,123 3,286 8,970
Profit on disposal of property 242 242
Operating profit 4,123 3,528 9,212
Finance revenue 14 17 22
Finance costs (335) (252) (568)
Other finance expense - pensions (200) (398) (786)
Share of post tax profit in associates 2 - 30 23
Profit before taxation 3,602 2,925 7,903
Income tax expense 4 (1,124) (844) (2,408)
Profit for the period from continuing 2,478 2,081 5,495
operations
Discontinued operations
Loss for the period from discontinued 3 - (1,103) (1,551)
operations
Profit for the period 2,478 978 3,944
Profit for the period attributable to:
Equity holders of the parent 2,455 978 3,928
Minority interest 23 - 16
2,478 978 3,944
Pence Pence Pence
Basic earnings per share
- continuing operations 7.0 5.9 15.5
- discontinued operations - (3.1) (4.4)
6 7.0 2.8 11.1
Diluted earnings per share
- continuing operations 6.9 5.9 15.5
- discontinued operations - (3.1) (4.4)
6 6.9 2.8 11.1
UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the half year to 31 December 2006
Half year Half year Year
31 December 31 December 30 June
2006 2005 2006
As restated
£'000 £'000 £'000
Income and expense recognised directly
in equity
Actuarial (loss)/ gain on defined (1,900) (3,249) 3,784
benefit pensions
Movement in cash flow hedging position 7 (37) 1
Tax on items taken directly to or 569 727 (1,135)
transferred from equity
Net (expense)/ income recognised directly in (1,324) (2,559) 2,650
equity
for the period
Profit for the period 2,478 978 3,944
Total recognised income/ (expense) for the 1,154 (1,581) 6,594
period
Attributable to:
Equity holders of the parent 1,131 (1,581) 6,578
Minority interest 23 - 16
1,154 (1,581) 6,594
UNAUDITED CONSOLIDATED BALANCE SHEET
at 31 December 2006
31 December 31 30 June
December
2006 2005 2006
As
restated
Notes £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 24,525 27,029 25,407
Goodwill 5,556 5,556 5,556
Other intangible assets 435 334 563
Investments in associates - 280 -
Financial assets 34 17 34
Deferred tax assets 7,570 9,600 7,292
38,120 42,816 38,852
Current assets
Inventories 13,823 13,371 14,626
Trade and other receivables 29,612 25,037 31,744
Cash and short term deposits - - 167
Derivative financial assets 295 564 1,346
43,730 38,972 47,883
Non-current assets classified as held for 2,377 - 1,618
sale
Total assets 84,227 81,788 88,353
Liabilities
Non-current liabilities
Interest bearing loans and borrowings - (288) -
Employee benefits payable (22,232) (29,329) (21,283)
Provisions (344) (1,342) (430)
Deferred tax liabilities (1,320) (1,236) (1,245)
(23,896) (32,195) (22,958)
Current liabilities
Bank overdraft (5,650) (3,694) (2,817)
Interest bearing loans and borrowings (289) (855) (722)
Employee benefits payable (3,000) (2,670) (3,024)
Trade and other payables (26,136) (24,292) (31,684)
Provisions (812) - (962)
Income tax payable (879) (257) (534)
Derivative financial liabilities (288) (601) (1,333)
(37,054) (32,369) (41,076)
Total liabilities (60,950) (64,564) (64,034)
Net assets 23,277 17,224 24,319
Equity
Called up share capital 4,412 4,412 4,412
Share premium 27,406 27,406 27,406
Other reserve 1,401 1,551 1,401
Capital redemption reserve 693 693 693
Capital reserve - own shares (133) (133) (133)
Hedging reserve 8 (37) 1
Retained earnings (10,567) (16,696) (9,495)
Equity attributable to equity holders of 23,220 17,196 24,285
the parent
Minority interest 57 28 34
Total equity 8 23,277 17,224 24,319
CONSOLIDATED CASH FLOW STATEMENT
for the half year ended 31 December 2006
Half year Half year Year
31 December 31 December 30 June
2006 2005 2006
Notes £'000 £'000 £'000
Operating activities
Operating profit from continuing 4,123 3,528 9,212
operations
Adjustments for:
Loss before taxation from discontinued - (1,441) (2,225)
operations
Depreciation 1,635 1,620 3,302
Gain on disposal of property, plant and (17) (244) (297)
equipment
Gain on sale of investments (32) (79) (78)
Decrease/ (increase) in inventories 803 (1,347) (2,602)
Decrease/ (increase) in receivables 2,138 5,017 (1,559)
(Decrease)/ increase in trade and other (5,526) (2,039) 5,332
payables
Movement in provisions (236) (41) 9
Movement in retirement benefit (1,175) (1,224) (2,272)
obligations
Cash generated from operations 1,713 3,750 8,822
Tax paid (413) (768) (1,264)
Net cash inflow from operating activities 1,300 2,982 7,558
Investing activities
Purchase of property, plant and equipment (1,635) (3,302) (4,953)
Payments to acquire intangible fixed (34) - (390)
assets
Proceeds from sale of property, plant and 29 789 1,108
equipment
Acquisition of subsidiary undertakings - (50) (50)
net of cash acquired
Proceeds from sale of business activities - 225 201
Proceeds from sale of investments 305 281 281
Net cash outflow from investing (1,335) (2,057) (3,803)
activities
Financing activities
Net interest paid (321) (235) (546)
Equity dividends paid (2,218) (2,216) (3,271)
Repayment of amounts borrowed 7 (433) (410) (831)
Proceeds from issue of share capital - 22 22
Net cash outflow from financing (2,972) (2,839) (4,626)
activities
Net decrease in cash and cash equivalents 7 (3,007) (1,914) (871)
Cash and cash equivalents at beginning of (2,650) (1,780) (1,780)
period
Effect of foreign exchange rate changes 7 - 1
Cash and cash equivalents at end of (5,650) (3,694) (2,650)
period
NOTES ON THE UNAUDITED ACCOUNTS
for the half year to 31 December 2006
1. Basis of preparation
The interim consolidated accounts of The Alumasc Group plc and its subsidiaries
have been prepared on the basis of International Financial Reporting Standards
(IFRS), as adopted by the European Union, that are effective at 31 December
2006.
The interim consolidated accounts have been prepared using the accounting
policies set out in the statutory accounts for the financial year to 30 June
2006. The Group has not applied IAS 34: 'Interim Financial Reporting' which is
not mandatory for UK groups.
The interim consolidated accounts include comparative figures for the financial
year ended 30 June 2006 which are an extract from the Group's statutory accounts
for that financial year. Those accounts have been reported on by the Company's
auditors and delivered to the Registrar of Companies. The report of the auditors
was unqualified and did not contain statements under section 237(2) or (3) of
the Companies Act 1985.
The relevant comparative financial information for the interim period to 31
December 2005, which was unaudited, has been restated to reflect a
reclassification in the balance sheet of the fair value of forward metal price
contracts from equity to financial liabilities following further analysis of
these contracts at the year end. The impact is to decrease net assets and
increase financial liabilities at 31 December 2005 by £0.6 million.
The interim accounts for the half year ended 31 December 2006 are not statutory
accounts; they have been neither audited nor reviewed by the Group's auditors.
2. Analysis of revenue and trading profit including associates
Half year Half year
31 December 2006 31 December 2005
Total Total Continuing
activities
Revenue Profit Revenue Profit Revenue Profit
£'000 £'000 £'000 £'000 £'000 £'000
Building Products 26,651 2,602 25,898 2,541 25,898 2,541
Engineering Products
- Precision Components 16,540 928 14,163 (796) 12,783 645
- Industrial Products 31,867 593 20,699 130 20,699 130
75,058 4,123 60,760 1,875 59,380 3,316
2. Analysis of revenue and trading profit including associates (continued)
Year
30 June 2006
Total Continuing
activities
Revenue Profit Revenue Profit
£'000 £'000 £'000 £'000
Building Products 55,529 6,455 55,529 6,455
Engineering Products
- Precision Components 30,245 (234) 28,587 1,991
- Industrial Products 48,590 547 48,590 547
134,364 6,768 132,706 8,993
3. Discontinued operations
Discontinued operations in the prior periods comprise the closure of Copal
Casting, a gravity aluminium diecasting manufacturer. The loss on closure
comprises redundancy and other closure costs. Production ceased by the end of
February 2006 and plant and equipment was either sold externally or transferred
to other Alumasc Precision businesses.
The results of the discontinued operations that have been included in the
consolidated income statement of the prior periods are as follows:
Half year Half year Year
31 December 31 December 30 June
2006 2005 2006
£'000 £'000 £'000
Revenue - 1,380 1,658
Cost of sales - (1,995) (2,695)
Gross profit - (615) (1,037)
Net operating expenses - - (1,188)
Loss before tax - (1,441) (2,225)
Income tax expense - 338 674
Loss after taxation - (1,103) (1,551)
The net cash flows attributable to discontinued operations are as
follows:
Half year Half year Year
31 December 31 December 30 June
2006 2005 2006
£'000 £'000 £'000
Operating cash flows (202) (1,193) (1,675)
Investing cash flows - (10) 241
Net cash outflow (202) (1,203) (1,434)
The cash flows relating to discontinued activities in the six months to 31
December 2006 all related to items that were provided for in the prior year
financial statements. Therefore there is no impact on the current half year
income statement.
4. Taxation
Half year Half year Year
31 December 31 December 30 June
2006 2005 2006
£'000 £'000 £'000
Current tax - UK Corporation
tax
- continuing operations 758 735 1,809
- discontinued operations - (415) (674)
758 320 1,135
Amounts overprovided in previous years - - (41)
Total current tax 758 320 1,094
Deferred tax
- continuing operations 366 109 676
- discontinued operations - 77 -
366 186 676
Amounts overprovided in previous years - - (36)
Total deferred 366 186 640
tax
Tax charge in the income statement 1,124 506 1,734
The tax charge in the income statement is disclosed as follows:
Income tax expense on continuing 1,124 844 2,408
operations
Income tax credit on discontinued - (338) (674)
operations
1,124 506 1,734
5. Dividends
The directors approved an interim dividend per share of 3.1p (2005: 3.0p) which will
be paid on 10 April 2007 to shareholders on the register at the close of business on 9
March 2007. In accordance with IFRS accounting requirements, as the dividend was
approved after the balance sheet date, it has not been accrued in the interim
consolidated financial statements.
6. 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 underlying earnings per share figure is based on profit adjusted for gains
or losses on disposal of property and on the same weighted average number of
shares used in the basic earnings per share calculation above.
The following sets out the income and share data used in the basic, diluted and
underlying earnings per share calculations:
Half year Half year Year
31 December 2006 31 December 2005 30 June 2006
Effect on EPS Effect on EPS Effect on EPS
£'000 pence £'000 pence £'000 pence
Total net profit
attributable to equity
holders of the parent 2,455 7.0 978 2.8 3,928 11.1
Loss attributable to
equity holders of
the parent - discontinued - - 1,103 3.1 1,551 4.4
operations
Net profit attributable to
equity holders
of the parent - continuing 2,455 7.0 2,081 5.9 5,479 15.5
operations
Less: Profit on property - - (242) (0.7) (242) (0.7)
disposal net
of tax
Underlying earnings and 2,455 7.0 1,839 5.2 5,237 14.8
EPS
31 December 31 December 30 June
2006 2005 2006
Restated
000's 000's 000's
Basic weighted average number of 35,293 35,288 35,291
shares
Dilutive potential ordinary shares - 66 140 59
employee share options
Diluted weighted average number of 35,359 35,428 35,350
shares
The basic weighted average number of shares for the prior period to 31 December 2005
has been revised from 35,483,000 to 35,288,000. The resulting comparative basic
earnings per share remains unchanged but the diluted earnings per share increases by
0.1p.
7. Reconciliation of net cash flow to movement in net (debt)
/ cash
Half year Half year Year
31 December 31 December 30 June
2006 2005 2006
£'000 £'000 £'000
Decrease in cash and cash equivalents in (3,007) (1,914) (871)
the period
Repayment of net debt 433 410 831
Change in net debt from cash flows in the (2,574) (1,504) (40)
period
Effect of foreign exchange rate changes 7 0 1
Net (debt)/ cash and cash equivalents at (3,372) (3,333) (3,333)
start of period
Net (debt)/ cash and cash equivalents at (5,939) (4,837) (3,372)
end of period
8. Reconciliation of Changes in Total Equity
For the half year to 31 December 2006
31 December 31 December 30 June
2006 2005 2006
As restated
£'000 £'000 £'000
At beginning of period 24,319 21,002 21,002
Shares issued - 22 22
Net gains/ (losses) on cash flow hedges 7 (37) 1
Actuarial (loss)/ gain on defined
benefit
pensions net of tax (1,331) (2,522) 2,649
Dividends (2,218) (2,219) (3,281)
Profit for the period 2,478 978 3,944
Share based payments 22 - (18)
At end of period 23,277 17,224 24,319
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