TIDMALU

RNS Number : 0867P

Alumasc Group PLC

07 February 2023

Tuesday 7 February 2023

The Alumasc Group plc

Interim results

Confidence in delivering full year expectations

Alumasc (ALU.L) the sustainable building products, systems and solutions Group today announces results for the six months ended 31 December 2022.

Commenting on the interim results, Paul Hooper, Chief Executive of Alumasc said:

" This was a strong first half performance, against a comparative that included significant sales to Chek Lap Kok airport in Hong Kong. While the short term market remains uncertain, we enter the second half with encouraging momentum and a record half year order book, which includes the next phase of the Chek Lap Kok project, giving us confidence in the delivery of our expectations for the full year."

Financial Overview: continuing operations

-- Group revenues up by 5% to GBP45.0m (H1 FY22: GBP42.6m), with organic growth and pricing offsetting significant export orders in the first half of the prior year:

o Building Envelope delivered a 29% increase in revenues to GBP18.3m (H1 FY22: GBP14.2m).

o Housebuilding Products delivered a 24% increase in revenues to GBP7.0m (H1 FY22: GBP5.7m).

o Water Management delivered revenues of GBP19.6m (H1 FY22: GBP22.8m), reflecting significant export project sales in the prior half year.

   --    Underlying(1) operating margin(2) of 13.4% (H1 FY22: 15.3%): 

o Building Envelope underlying operating margin of 14.1% (H1 FY22: 13.3%).

o Housebuilding Products underlying operating margin of 23.0% (H1 FY22: 19.3%).

o Water Management underlying operating margin of 12.8% (H1 FY22: 18.1%), reflecting the prior year divisional mix benefitting from large export orders.

   --    Underlying(1) profit before tax of GBP5.6m (H1 FY22: GBP6.3m). 
   --    Reported profit before tax of GBP5.3m (H1 FY22: GBP6.2m). 
   --    Underlying(1) earnings per share of 12.3p (H1 FY22: 14.1p). 

-- Dividend per share increased to 3.40p (H1 FY22: 3.35p) reflecting the Board's confidence in the future performance of the business.

Outlook

-- Building Envelope and Housebuilding Products had strong first half performances and good momentum going into the second half.

-- Water Management has seen lower first half export volumes, but a stronger performance is expected in H2 as a result of the next phase of the Chek Lap Kok airport project and other overseas project phasing.

-- Whilst market conditions remain uncertain in the near term, the Group continues to demonstrate its ability to outperform underlying markets through innovation and service, as well as manage costs and improve efficiency.

   --    As a result, the Board remains confident in the Group achieving its full year expectations. 

-- With a clear strategy and the majority of revenues directly linked to sustainability benefits to its customers, the Group remains well positioned to deliver long term market outperformance.

Notes:

(1) A reconciliation of underlying to statutory profit is provided in note 4 to the interim financial statements

(2) Underlying operating margin: underlying operating profit as a percentage of sales

Enquiries:

 
 The Alumasc Group plc                 +44 (0) 1536 383844 
 Paul Hooper, Chief Executive 
 Simon Dray, Group Finance Director 
 
 Peel Hunt (Broker) 
 Mike Bell                             +44 (0) 20 7418 8831 
 Ed Allsopp 
 
 finnCap (Nominated Adviser) 
 Julian Blunt, Edward Whiley           + 44 (0)207 220 0561 
 
 Camarco (Financial PR)                alumasc@camarco.co.uk 
 Ginny Pulbrook                        + 44 (0)203 757 4992 
 Rosie Driscoll                        + 44 (0)203 757 4981 
 
 

REVIEW OF INTERIM RESULTS

Chief Executive's Statement

Group sales from continuing operations for the six months ended 31 December 2022 were GBP45.0m (2021: GBP42.6m). UK sales were strong, increasing by GBP6.7m (18%). In particular, the Building Envelope and Housebuilding Products Divisions had strong first half performances driven by very good sales, the result of efforts in taking market share and the launch of new products into existing and adjacent markets.

As expected, Export sales in the period were lower, due to the timing of several significant contracts in Asia. The prior period included c.GBP2.8m of sales of Gatic access and drainage products into a number of projects, notably Chek Lap Kok airport in Hong Kong. This project was successfully completed in the prior year, and the next phase is due to commence in the final quarter of this financial year. Export sales outside Asia were also lower, due to project timings and in particular to the temporary slowing of sales to the Middle East caused by the FIFA World Cup in Qatar, but are expected to recover in the second half of the year.

The results of Levolux, which was sold by the Group on 26 August 2022, have been excluded from continuing operations in the current and prior period, and presented as discontinued operations.

Operational Review

Water Management

 
                          H1 FY23    H1 FY22 
 Revenue                 GBP19.6m   GBP22.8m 
                        ---------  --------- 
 Underlying operating     GBP2.5m    GBP4.1m 
  profit 
                        ---------  --------- 
 Underlying operating 
  margin                    12.8%      18.1% 
                        ---------  --------- 
 Operating profit         GBP2.5m    GBP4.1m 
                        ---------  --------- 
 

Following two successive years of record performance, the Water Management Division fell back predominantly due to the timing of several significant projects, including at Chek Lap Kok airport in Hong Kong, which delivered c.GBP2.8m of sales to the prior period. Export sales are expected to recover in the second half of the financial year, as the next phase of the Chek Lap Kok development starts.

UK sales were strong, with several large projects for Gatic Slotdrain and Access Covers and another very good performance by our Architectural Aluminium business, Skyline, which benefitted from the successful introduction of a number of new products to complement the existing ranges.

With its greater exposure to self-build projects, Rainclear had a slower performance than the prior period, due to pressure on household income. However, it mitigated some of these effects through work with regional housebuilders, and the high profile launches of its new canopy and veranda ranges, both of which are showing early promise.

Building Envelope

 
 Continuing operations     H1 FY23   H1 FY22* 
 Revenue                  GBP18.3m   GBP14.2m 
                         ---------  --------- 
 Underlying operating      GBP2.6m    GBP1.9m 
  profit 
                         ---------  --------- 
 Underlying operating 
  margin                     14.1%      13.3% 
                         ---------  --------- 
 Operating profit          GBP2.6m    GBP1.9m 
                         ---------  --------- 
 

* The results for the half year to 31 December 2021 have been re-presented to show the Levolux business as a discontinued operation.

The Building Envelope Division had a very strong first half year, growing its revenue by 29%, the result of investment in high quality employees and some new products, including a very successful flat to pitch roof system along with the successfully increased promotion of the CO(2) reducing product, Olivine.

Previously weaker areas of the UK have improved significantly following the strengthened representation in those areas. A good level of Academy work was won in the year. Some reasonably significant cost increases were successfully passed on. The Roofing business continues to focus on high end specification offers supported by the highest standards, and a customer focused service level which delivers low carbon systems combined with safety in installation, all supported by long term warranties. This has allowed the business to increase market share in its core areas.

Housebuilding Products

 
                         H1 FY23   H1 FY22 
 Revenue                 GBP7.0m   GBP5.7m 
                        --------  -------- 
 Underlying operating    GBP1.6m   GBP1.1m 
  profit 
                        --------  -------- 
 Underlying operating 
  margin                   23.0%     19.3% 
                        --------  -------- 
 Operating profit        GBP1.4m   GBP1.1m 
                        --------  -------- 
 

Timloc, our Housebuilding Products business, had an outstanding first half, growing its revenue by 24%. This was achieved through the extended distribution of its existing products and the continued growth of new products, including the significant launch of its new range of Tile Vents. These have been very well received by the marketplace for their quality and service proposition and take Timloc into a new distribution channel of roofing merchants.

Despite the challenges of cost increases, which were successfully passed on, the Housebuilding Products Division managed to increase its operating margin to a record 23.0%. Improved efficiencies, outstanding next day service and rigorous cost controls contributed significantly to this performance.

Timloc's continued investment and focus on sustainability, including being the first building products company to become a carbon neutral manufacturer, leaves it well positioned to support the Housebuilders drive to build carbon zero homes. During 2022 Timloc moved all of its company vehicles to fully electric.

Strategic Overview

The significant improvement in the Group's performance across the last two years emanate from the execution of the Group's strategy which includes the stated objectives of:

Short-term:

   --    Continuing to simplify, streamline and reduce fixed costs across the Group. 

Long-term:

-- Drive organic growth across the Group by increasing market share and entering adjacent categories.

   --    Continual efficiency improvements. 
   --    Geographical expansion within selected territories. 
   --    New product development focused on environmental and sustainable solutions. 
   --    Bolt-on M&A to expand products and markets. 
   --    Use of sustainable materials with recycled and fully recyclable materials. 

We have managed to streamline the business and have removed reasonable levels of cost in the last three years, while continuing to invest in capacity and capability. The Group's full year operating margin from its continuing operations increased from 8.4% in FY20 to 14.9% in FY22, and our medium term target is to increase this to between 15% and 20%.

The Group has continued to progress its long-term strategy to deliver profitable growth through leveraging its strong strategic positions in sustainable building products, and to outperform the UK construction market while continuing development of export markets. The Group's 18% increase in UK revenues is testament to that.

Alumasc is also in a very strong position to benefit from the move towards sustainable construction and green buildings, both in terms of its own actions and through the development of its portfolio of products to manage energy consumption in buildings, to produce a greener built environment, and to manage the scarce resource of water. Many internal initiatives have also been taken to act in an environmentally sustainable manner, including the sourcing of electricity from renewable sources for 100% of the Group's supply. The Group's Net Zero planning is underway.

Financial Review

Discontinued operations

The Group sold Levolux Ltd on 26 August 2022, for an initial consideration of GBP1. Additional consideration, contingent on a subsequent sale of the business, is unlikely to be paid and has not been included in the loss on disposal. Levolux's trading results up to the date of disposal, which were formerly reported within the Building Envelope division, have been presented within discontinued operations, together with the loss arising on disposal. Results for H1 FY22 have been re-presented accordingly.

Tax rate and earnings per share

The Group's underlying tax rate was 21.2%, above the H1 FY22 rate of 19.4% reflecting the increase of UK corporation tax rate from 19% to 25% which comes into effect from April 2023, part way through our financial year ending 30 June 2023. Underlying earnings per share for the period were 12.3p, 12.8% lower than H1 FY22 (14.1p), reflecting the lower underlying profit before tax and the higher effective tax rate. Basic earnings per share were 7.5p (H1 FY22: 11.2p).

Cash flows and net debt

 
                                                   H1 FY23     H1 FY22 
                                                      GBPm        GBPm 
 Underlying operating profit from continuing 
  operations                                           6.0         6.5 
 Underlying depreciation/amortisation                  1.4         1.3 
                                                  --------  ---------- 
 Underlying EBITDA                                     7.4         7.8 
 Change in working capital                           (1.9)       (2.1) 
 Deferred VAT paid                                       -       (0.6) 
 Operating cash flow from continuing 
  operations                                           5.5         5.1 
 
 Discontinued operation                                  -       (0.7) 
                                                  --------  ---------- 
 Operating cash flow from continuing 
  and discontinued operations                          5.5         4.4 
 
 Capital expenditure                                 (1.4)       (1.4) 
 Interest                                            (0.3)       (0.2) 
 Tax                                                 (0.1)       (1.3) 
 Pension deficit funding                             (1.0)       (1.3) 
 Lease payments                                      (0.4)       (0.4) 
 Dividend payments                                   (2.4)       (2.2) 
 Purchase of own shares                              (0.1)       (0.4) 
                                                  --------  ---------- 
 Sub total                                           (0.2)       (2.8) 
 
 Cash outflow on Levolux disposal                    (1.7)           - 
 Other non-underlying payments                       (0.2)       (0.3) 
 Net cash flow                                       (2.1)       (3.1) 
                                                  ========  ========== 
 
 Net bank debt at 31 December                          6.8       4.1 
                                                  ========  ======== 
 
 

The Group's operating cash inflow was GBP5.5m (H1 FY22: GBP4.4m). Operating cash inflow from continuing operations as a percentage of underlying operating profit was 92% (H1 FY22: 78%). Supply chain disruption and cost price inflation eased over the period, allowing partial reversal of the selective inventory investments made over FY22 to maintain customer service. Provided these pressures continue to ease, this trend will continue in H2 FY23. Average trade working capital as a percentage of sales for the half year was 19.4% (H1 FY22: 14.6%).

Capital expenditure was GBP1.4m (H1 FY22: GBP1.4m), representing 111% of depreciation (H1 FY22: 111%). Key investments were made on capacity/capability upgrades (GBP0.9m), tooling for new products (GBP0.4m) and system upgrades (GBP0.1m).

Tax paid of GBP0.1m included the benefit of the capital allowance super-deduction, which is in place until April 2023.

The GBP1.0m (H1 FY22: GBP1.3m) of pension fund payments reflects the GBP1.1m reduction in annual employer contributions, from 1 October 2022, agreed at the latest triennial valuation.

The disposal of Levolux, which completed on 26 August 2022, led to a GBP1.7m cash outflow in the period, which represented transaction costs together with cash held by Levolux on disposal.

The net cash outflow for the period was GBP2.1m (H1 FY22: GBP3.1m). Net bank debt at December 2022 was GBP6.8m (December 2021: GBP4.1m).

Pensions and net assets

The Group's IAS19 pension deficit increased to GBP8.4m at December 2022 (June 2022: GBP2.1m, December 2021: GBP2.5m), as a result of market volatility reducing the value of the scheme's growth assets. This reduction exceeds the reduction in liabilities over the period, driven by the increase in bond yields, which was partially hedged, as intended, by matching assets. The deficit remains within performance scenarios considered at the 2022 triennial valuation, and the Group continues to expect the lower level of contributions agreed with trustees to bring the scheme to a fully funded position over a reasonable timeframe.

Group net assets decreased in the period by GBP5.0m to GBP20.7m, as the retained profit was exceeded by the increase in pension deficit, payment of the final dividend for FY22 and the loss on disposal of Levolux. Post tax return on investment (rolling twelve month underlying operating profit from continuing operations divided by capital invested) was 23.1% (December 2022: 19.0%, June 2022: 25.8%).

Interim Dividend

The Board has decided to declare an increased interim dividend of 3.40p (H1 FY22: 3.35p) per ordinary share, payable on 6 April 2023 to shareholders on the register on 24 February 2023.

Outlook

The Group has entered the second half with encouraging momentum, and a record half year order book fortified by the GBP7.0 m+ Chek Lap Kok Airport project. As a result, the Board remains confident in the Group achieving its full year expectations.

Whilst market expectations remain uncertain in the near term, the Group continues to demonstrate its ability to outperform underlying markets, through innovation and service, as well as manage costs and improve efficiency. With the majority of revenues directly linked to sustainability benefits to its customers, the Board remains confident in the significant opportunity available to the Group over the longer term.

Paul Hooper, Chief Executive

7 February 2023

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

for the half year to 31 December 2022

 
                                                                                                                                  Year to 
                                                     Half year to 31 December                  Half year to 31 December            30 June 
                                                               2022                                2021 (restated)*                 2022 
 
                                                          Non-underlying                            Non-underlying 
                                              Underlying                        Total   Underlying                        Total       Total 
                                             (Unaudited)     (Unaudited)  (Unaudited)  (Unaudited)     (Unaudited)  (Unaudited)   (Audited) 
Continuing operations:                Notes      GBP'000         GBP'000      GBP'000      GBP'000         GBP'000      GBP'000     GBP'000 
 
Revenue                                   5       44,953               -       44,953       42,649               -       42,649      89,381 
Cost of sales                                   (28,449)               -     (28,449)     (26,889)               -     (26,889)    (56,015) 
                                             -----------  --------------  -----------  -----------  --------------  -----------  ---------- 
Gross profit                                      16,504               -       16,504       15,760               -       15,760      33,366 
 
Net operating expenses 
  Net operating expenses 
   before non-underlying 
   items                                        (10,499)               -     (10,499)      (9,224)               -      (9,224)    (20,033) 
  Other non-underlying 
   items                                  4            -           (229)        (229)            -            (35)         (35)       (634) 
Net operating expenses                          (10,499)           (229)     (10,728)      (9,224)            (35)      (9,259)    (20,667) 
 
                                         4, 
Operating profit                          5        6,005           (229)        5,776        6,536            (35)        6,501      12,699 
 
Net finance costs                         7        (419)            (24)        (443)        (265)            (67)        (332)       (668) 
                                             -----------  --------------  -----------  -----------  --------------  -----------  ---------- 
Profit before taxation                             5,586           (253)        5,333        6,271           (102)        6,169      12,031 
 
Tax expense                               8      (1,184)             337        (847)      (1,217)            (34)      (1,251)     (2,421) 
                                             -----------  --------------  -----------  -----------  --------------  -----------  ---------- 
Profit for the period 
 from continuing operations                        4,402              84        4,486        5,054           (136)        4,918       9,610 
 
Discontinued operations: 
Loss after taxation 
 for the period from 
 discontinued operations                  6            -         (1,795)      (1,795)        (816)            (84)        (900)    (16,657) 
 
 
Profit/(loss) for 
 the period                                        4,402         (1,711)        2,691        4,238           (220)        4,018     (7,047) 
                                             ===========  ==============  ===========  ===========  ==============  ===========  ========== 
 
  Other comprehensive 
  income: 
 
Items that will not 
 be reclassified to 
 profit or loss: 
  Actuarial (loss)/gain 
   on defined benefit 
   pensions, net of tax                                                       (5,404)                                       616        (25) 
                                                                          -----------                               -----------  ---------- 
 
Items that are or 
 may be reclassified 
 subsequently to profit 
 or loss: 
  Effective portion 
   of changes in fair 
   value of cash flow 
   hedges, net of tax                                                            (27)                                        83         480 
  Exchange differences 
   on retranslation of 
   foreign operations                                                              12                                        10         161 
                                                                                 (15)                                        93     641 
                                                                          -----------                               -----------  ---------- 
 
Other comprehensive 
 (loss)/gain for the 
 period, net of tax                                                           (5,419)                                       709     616 
                                                                          -----------                               -----------  ---------- 
 
Total comprehensive 
 (loss)/profit for 
 the period, net of 
 tax                                                                          (2,728)                                     4,727     (6,431) 
                                                                          ===========                               ===========  ========== 
 
Earnings per share:                                                             Pence                                     Pence       Pence 
 
Basic earnings per 
 share 
 
        *    Continuing operations       11                                      12.5                                      13.7        26.8 
 
        *    Discontinued operations                                            (5.0)                                     (2.5)      (46.5) 
                                         11                                       7.5                                      11.2      (19.7) 
                                                                          ===========                               ===========  ========== 
 
Diluted earnings 
 per share 
 
        *    Continuing operations                                               12.4                                      13.5        26.4 
 
        *    Discontinued operations                                            (5.0)                                     (2.5)      (46.5) 
                                         11                                       7.4                                      11.0      (20.1) 
                                                                          ===========                               ===========  ========== 
 
 
 

* The results for the half year to 31 December 2021 have been re-presented to show the Levolux business as a discontinued operation.

Reconciliations of underlying to statutory profit and earnings per share are provided in notes 4 and 11 respectively.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

at 31 December 2022

 
                                               31 December    31 December      30 June 
                                                      2022           2021         2022 
                                               (Unaudited)    (Unaudited)    (Audited) 
                                     Notes         GBP'000        GBP'000      GBP'000 
 Assets 
 Non-current assets 
 Property, plant and equipment 
  - owned assets                                    12,733         12,368       12,573 
 Property, plant and equipment 
  - right of use assets                              4,444          5,081        4,926 
 Goodwill                                            8,526         18,705        8,526 
 Other intangible assets                             2,035          3,152        2,126 
 Deferred tax assets                                 2,094            630          529 
                                            --------------  -------------  ----------- 
                                                    29,832         39,936       28,680 
 Current assets 
 Inventories                                        14,376         13,488       13,394 
 Trade and other receivables                        15,462         16,895       18,786 
 Derivative financial assets                           314              -          325 
 Cash at bank                           12           5,962          2,878        8,284 
                                                    36,114         33,261       40,789 
 
 Total assets                                       65,946         73,197       69,469 
                                            --------------  -------------  ----------- 
 
 Liabilities 
 Non-current liabilities 
 Interest bearing loans and 
  borrowings                            12        (12,782)        (6,963)     (13,000) 
 Lease liability                                   (3,696)        (4,475)      (4,251) 
 Employee benefits payable                         (8,375)        (2,520)      (2,114) 
 Provisions                                          (811)        (1,251)      (1,061) 
 Deferred tax liabilities                          (1,907)        (1,010)      (1,730) 
                                            --------------  -------------  ----------- 
                                                  (27,571)       (16,219)     (22,156) 
 Current liabilities 
 Trade and other payables                         (15,259)       (16,449)     (19,031) 
 Lease liability                                     (881)        (1,145)        (881) 
 Provisions                                        (1,033)          (471)      (1,360) 
 Corporation tax payable                             (491)          (419)        (309) 
 Derivative financial liabilities                        -          (165)            - 
                                                  (17,664)       (18,649)     (21,581) 
 
 Total liabilities                                (45,235)       (34,868)     (43,737) 
                                            --------------  -------------  ----------- 
 
 Net assets                                         20,711         38,329       25,732 
                                            ==============  =============  =========== 
 
 Equity 
 Share capital                                       4,517          4,517        4,517 
 Share premium                                         445            445          445 
 Capital reserve - own shares                        (587)          (435)        (601) 
 Hedging reserve                                       236          (134)          263 
 Foreign currency reserve                              228             65          216 
 Profit and loss account reserve                    15,872         33,871       20,892 
 Total equity                                       20,711         38,329       25,732 
                                            ==============  =============  =========== 
 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

for the half year to 31 December 2022

 
                                                             Half year      Half year 
                                                                    to             to      Year to 
                                                           31 December    31 December      30 June 
                                                                  2022           2021         2022 
                                                           (Unaudited)    (Unaudited)    (Audited) 
                                                Notes          GBP'000        GBP'000      GBP'000 
 Operating activities 
 Operating profit from continuing 
  operations                                                     5,776          6,501       12,699 
 Adjustments for: 
 Depreciation                                                    1,249          1,137        2,459 
 Amortisation                                                       98             90          257 
 Loss/(gain) on disposal of property, 
  plant and equipment                                               12             17         (18) 
 Increase in inventories                                         (982)        (2,617)      (2,573) 
 Decrease/(increase) in receivables                              3,324          3,175      (2,536) 
 (Decrease)/increase in trade and 
  other payables                                               (3,796)        (3,218)          279 
 Movement in provisions                                          (577)          (379)        (298) 
 Cash contributions to retirement 
  benefit schemes                                                (967)        (1,307)      (2,561) 
 Share based payments                                              130             50          118 
                                                        --------------  -------------  ----------- 
 Cash generated by operating activities 
  of continuing operations                                       4,267          3,449        7,826 
 
 Operating loss from discontinued 
  operations                                                         -        (1,097)      (2,125) 
 Depreciation/amortisation                                           -            113          224 
 Movement in working capital from 
  discontinued operations                                            -            259        (438) 
                                                        --------------  -------------  ----------- 
 Cash utilised by operating activities 
  of discontinued operations                                         -          (725)      (2,339) 
 
 Tax paid                                                        (139)        (1,320)      (1,615) 
 Net cash inflow from operating 
  activities                                                     4,128          1,404        3,872 
                                                        --------------  -------------  ----------- 
 
 Investing activities 
 Purchase of property, plant and 
  equipment                                                    (1,378)        (1,361)      (2,449) 
 Payments to acquire intangible fixed 
  assets                                                           (7)            (5)        (123) 
 Proceeds from sales of property, 
  plant and equipment                                                -              -           22 
 Payments for disposal costs of discontinued 
  operation                                                    (1,686)              -            - 
 Net cash outflow from investing 
  activities                                                   (3,071)        (1,366)      (2,550) 
                                                        --------------  -------------  ----------- 
 
 Financing activities 
 Bank interest paid                                              (264)          (141)        (356) 
 Equity dividends paid                                         (2,381)        (2,233)      (3,434) 
 Draw down of amounts borrowed                                       -          1,000        7,000 
 Principal paid on lease liabilities                             (362)          (352)        (713) 
 Interest paid on lease liabilities                               (80)           (83)        (169) 
 Purchase of own shares                                           (54)          (430)        (526) 
 Exercise of share based payments                                   12             70            - 
 Refinancing costs                                               (262)              -            - 
 Net cash (outflow)/inflow from 
  financing activities                                         (3,391)        (2,169)        1,802 
                                                        --------------  -------------  ----------- 
 
 Net (decrease)/increase in cash 
  at bank and bank overdrafts                                  (2,334)        (2,131)        3,124 
 
 Net cash at bank and bank overdraft 
  brought forward                                                8,284          4,999        4,999 
 Net (decrease)/increase in cash 
  at bank and bank overdraft                                   (2,334)        (2,131)        3,124 
 Effect of foreign exchange rate 
  changes                                                           12             10          161 
 Net cash at bank and bank overdraft 
  carried forward                                   12           5,962          2,878        8,284 
                                                        ==============  =============  =========== 
 
 
                              CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
                                 for the half year to 31 December 2022 
 
                                                                                                 Profit 
                                                             Capital                Foreign    and loss 
                                          Share    Share   reserve -    Hedging    currency     account 
                                        capital  premium  own shares    reserve     reserve     reserve    Total 
                                        GBP'000  GBP'000     GBP'000    GBP'000     GBP'000     GBP'000  GBP'000 
 
At 1 July 2022                            4,517      445       (601)        263         216      20,892   25,732 
Profit for the period                         -        -           -          -           -       2,691    2,691 
Exchange differences on retranslation 
 of foreign operations                        -        -           -          -          12           -       12 
Net loss on cash flow hedges                  -        -           -       (10)           -           -     (10) 
Tax on derivative financial liability         -        -           -       (17)           -           -     (17) 
Share based payments                          -        -           -          -           -         130      130 
Actuarial loss on defined benefit 
 pension schemes, net of tax                  -        -           -          -           -     (5,404)  (5,404) 
Acquisition of own shares                     -        -        (55)          -           -           -     (55) 
Own shares used to satisfy exercise 
 of share awards                              -        -          69          -           -           -       69 
Exercise of share based incentives            -        -           -          -           -        (56)     (56) 
Dividends                                     -        -           -          -           -     (2,381)  (2,381) 
At 31 December 2022                       4,517      445       (587)        236     228          15,872   20,711 
                                        =======  =======  ==========  =========  ==========  ==========  ======= 
 
                                                                                                 Profit 
                                                             Capital                Foreign    and loss 
                                          Share    Share   reserve -    Hedging    currency     account 
                                        capital  premium  own shares    reserve     reserve     reserve    Total 
                                        GBP'000  GBP'000     GBP'000    GBP'000     GBP'000     GBP'000  GBP'000 
 
At 1 July 2021                            4,517      445       (406)      (217)          55      31,751   36,145 
Profit for the period                         -        -           -          -           -       4,018    4,018 
Exchange differences on retranslation 
 of foreign operations                        -        -           -          -          10           -       10 
Net gain on cash flow hedges                  -        -           -        103           -           -      103 
Tax on derivative financial liability         -        -           -       (20)           -           -     (20) 
Share based payments                          -        -           -          -           -          50       50 
Actuarial gain on defined benefit 
 pension schemes, net of tax                  -        -           -          -           -         616      616 
Own shares used to satisfy exercise 
 of share awards                              -        -         402          -           -           -      402 
Acquisition of own shares                     -        -       (431)          -           -           -    (431) 
Exercise of share based incentives            -        -           -          -           -       (331)    (331) 
Dividends                                     -        -           -          -           -     (2,233)  (2,233) 
At 31 December 2021                       4,517      445       (435)      (134)          65      33,871   38,329 
                                        =======  =======  ==========  =========  ==========  ==========  ======= 
 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the half year to 31 December 2022

1. Basis of preparation

The condensed consolidated interim financial statements of The Alumasc Group plc and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS) in conformity with the requirements of the Companies Act 2006 that are effective at 31 December 2022.

The condensed consolidated interim financial statements have been prepared using the accounting policies set out in the statutory accounts for the financial year to 30 June 2022 and in accordance with AIM Rule 18, and the same accounting policies will be adopted in the 2023 annual financial statements.

The consolidated financial statements of the Group as at and for the year ended 30 June 2022 are available on request from the Company's registered office at Burton Latimer, Kettering, Northants, NN15 5JP or on the website www.alumasc.co.uk .

The comparative figures for the financial year ended 30 June 2022 are not the Company's statutory accounts for that financial year but have been extracted from those accounts. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The condensed consolidated interim financial statements for the half year ended 31 December 2022 are not statutory accounts and have been neither audited nor reviewed by the Group's auditors. They do not contain all of the information required for full financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 June 2022.

These condensed consolidated interim financial statements were approved by the Board of Directors on

7 February 2023.

The Group performed ahead of the Base Case trading scenario modelled as part of the 30 June 2022 year end Going Concern review, and also compared to the stress testing performed. On the basis of the Group's financing facilities and current financial plans and sensitivity analyses, the Board is satisfied that the Group has adequate resources to continue in operational existence for twelve months from the date of signing this report and accordingly continues to adopt the going concern basis in preparing these condensed consolidated interim financial statements.

2. Estimates

The preparation of condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expense. Actual results may differ from these estimates.

Except as described below, in preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 June 2022, namely the valuation of defined benefit pension obligations and the recognition of revenue and profit on contracts with customers where revenue is recognised over time.

During the six months ended 31 December 2022, management reassessed and updated its estimates in respect of retirement benefit obligations based on market data available at 31 December 2022. The resulting impact was a GBP7.2 million pre-tax actuarial loss, calculated using IAS 19 conventions, recognised in the six month period to 31 December 2022.

3. Risks and uncertainties

A summary of the Group's principal risks and uncertainties was provided on pages 46 to 49 of Alumasc's Report and Accounts for the year ended 30 June 2022. The Board considers these risks and uncertainties remain relevant to the current financial year.

Specific risks and uncertainties relating to the Group's performance in the second half year are:

- Continued inflation and interest increases, negatively impacting the Group's construction markets;

   -       Prolonged period of bad weather impacting the Group's construction markets; and 
   -       Potential impact of the current geopolitical uncertainty globally. 

4. Underlying to statutory profit reconciliation

 
                                                     Half year        Half year   Year to 
                                                to 31 December   to 31 December   30 June 
Profit before tax                                         2022             2021      2022 
                                                       GBP'000          GBP'000   GBP'000 
 
 
Underlying profit before tax from continuing 
 operations                                              5,586            6,271    12,725 
 
Brand amortisation                                        (35)             (35)      (70) 
IAS 19 net pension scheme finance costs                   (24)             (67)      (60) 
Restructuring costs                                      (194)                -     (564) 
 
Reported profit before tax from continuing 
 operations                                              5,333            6,169    12,031 
                                               ===============  ===============  ======== 
 
 
                                                    Half year        Half year   Year to 
                                               to 31 December   to 31 December   30 June 
Operating profit                                         2022             2021      2022 
                                                      GBP'000          GBP'000   GBP'000 
 
Underlying operating profit from continuing 
 operations                                             6,005            6,536    13,333 
 
Brand amortisation                                       (35)             (35)      (70) 
Restructuring costs                                     (194)                -     (564) 
 
Reported operating profit from continuing 
 operations                                             5,776            6,501    12,699 
                                              ===============  ===============  ======== 
 

In the presentation of underlying profits, management disclose the amortisation of acquired brands and IAS 19 pension costs consistently as non-underlying items because they are material non-cash and non-trading items that would typically be excluded in assessing the value of the business.

In addition, management has presented certain items as non-underlying as they are non-recurring items that are judged to be significant enough to affect the understanding of the underlying trading performance of the business. In the period to December 2022, these related to one-off professional fees incurred in resolving a commercial dispute.

5. Segmental analysis

In accordance with IFRS 8 Operating Segments, the segmental analysis below follows the Group's internal management reporting structure.

 
                               Half year        Half year   Year to 
                          to 31 December   to 31 December   30 June 
Revenue                             2022             2021      2022 
                                 GBP'000          GBP'000   GBP'000 
 
 
Water Management                  19,581           22,783    47,564 
Building Envelope                 18,324           14,197    29,389 
Housebuilding Products             7,048            5,669    12,428 
 
Group Revenue                     44,953           42,649    89,381 
                         ===============  ===============  ======== 
 
 
                                                    Half year        Half year   Year to 
                                               to 31 December   to 31 December   30 June 
Operating profit                                         2022             2021      2022 
                                                      GBP'000          GBP'000   GBP'000 
 
 
Water Management                                        2,510            4,118     8,753 
Building Envelope                                       2,589            1,894     3,580 
Housebuilding Products                                  1,622            1,096     2,447 
Unallocated central costs                               (716)            (572)   (1,447) 
 
Underlying operating profit from continuing 
 operations                                             6,005            6,536    13,333 
 
Non-underlying items                                    (229)             (35)     (634) 
 
Operating profit from continuing operations             5,776            6,501    12,699 
                                              ===============  ===============  ======== 
 

6. Discontinued operations

Discontinued operations relate to the Levolux business which was divested by the Group on 26 August 2022 and therefore disclosed as held for sale at 30 June 2022. At the year end the discontinued operation had liabilities of GBP3,859,000. The assets held for resale were written down to a value equivalent to the liabilities to reflect the sales proceeds of GBP1 received on 26 August 2022. In the period to 31 December 2022, a further loss on disposal of GBP1,795,000 was recorded, representing cash held by Levolux at the date of disposal, other related write downs and transaction costs.

The results of Levolux included in the condensed consolidated interim statement of comprehensive income are as follows:

 
                                           Half year        Half year   Year to 
                                      to 31 December   to 31 December   30 June 
                                                2022             2021      2022 
                                             GBP'000          GBP'000   GBP'000 
 
Revenue                                          436            3,620     7,820 
 
Underlying operating loss                          -          (1,013)   (1,957) 
Brand amortisation                                 -             (84)     (168) 
Write down of goodwill                             -                -  (10,179) 
Write down of brand                                -                -     (874) 
Write down of Assets held for sale                 -                -   (3,859) 
Loss on disposal                             (1,795)                -         - 
                                     ---------------  ---------------  -------- 
Loss before taxation                         (1,795)          (1,097)  (17,037) 
Tax credit                                         -              197       380 
 
Loss after taxation                          (1,795)            (900)  (16,657) 
                                     ===============  ===============  ======== 
 

7. Finance expenses

 
                                                                  Half year     Half year 
                                                                         to            to   Year to 
                                                                31 December   31 December   30 June 
                                                                       2022          2021      2022 
                                                                    GBP'000       GBP'000   GBP'000 
 
 Finance costs - Bank overdrafts                                         12            19        48 
                         - Revolving credit facility                    327           163       391 
                         - Interest on lease liabilities                 80            83       169 
                                                               ------------  ------------  -------- 
                                                                        419           265       608 
                         - IAS 19 net pension scheme finance 
                          costs                                          24            67        60 
                                                                        443           332       668 
                                                               ============  ============  ======== 
 

8. Tax expense

 
                                                                 Half year         Half year    Year to 
                                                            to 31 December    to 31 December    30 June 
                                                                      2022              2021       2022 
                                                                   GBP'000           GBP'000    GBP'000 
 
 Current tax: 
 UK corporation tax - continuing operations                            438               868      1,094 
                              - discontinued operations                  -             (197)      (380) 
 Overseas tax                                                           10                54        207 
 Amounts over provided in previous years                                 -                 -       (16) 
 Total current tax                                                     448               725        905 
 
 Deferred tax: 
 Origination and reversal of temporary 
  differences                                                          399               329        833 
 Amounts under provided in previous 
  years                                                                  -                 -         78 
 Rate change adjustment                                                  -                 -        225 
 Total deferred tax                                                    847               329      1,136 
 
 Total tax expense                                                     847             1,054      2,041 
                                                          ----------------  ----------------  --------- 
 
 Tax charge on continuing operations                                   847             1,251      2,421 
 Tax credit on discontinued operations                                   -             (197)      (380) 
 
 Total tax expense                                                     847             1,054      2,041 
                                                          ================  ================  ========= 
 
 
 
   Deferred tax recognised in other comprehensive 
   income: 
 Actuarial (losses)/gains on pension 
  schemes                                            (1,801)     205     (9) 
 Cash flow hedge                                          17      20     113 
 Tax (credited)/charged to other comprehensive 
  income                                             (1,784)     225     104 
 
 Total tax (credit)/charge in the statement 
  of comprehensive income                              (937)   1,279   2,145 
                                                    ========  ======  ====== 
 

9. Dividends

The Directors have approved an interim dividend per share of 3.40 pence (2021/22: 3.35 pence) which will be paid on 6 April 2023 to shareholders on the register at the close of business on 24 February 2023. The cash cost of the dividend is expected to be GBP1,217,000. In accordance with accounting requirements, as the dividend was approved after the statement of financial position date, it has not been accrued in the interim consolidated financial statements. A final dividend per share of 6.65 pence in respect of the 2021/22 financial year was paid at a cash cost of GBP2,381,000 during the six months to 31 December 2022.

10. Share Based Payments

During the period the Group awarded 225,000 options (2021/22: 160,000) under the Executive Share Option Scheme ("ESOS"). These options have an exercise price of 150 pence and require certain criteria to be fulfilled before vesting. 15,380 existing options were exercised during the period (2021/22: 78,810) and 104,620 existing options lapsed (2021/22: 41,190).

Total awards granted under the Group's Long Term Incentive Plans ("LTIP") amounted to 307,264 (2021/22: 214,020). LTIP awards have no exercise price but are dependent on certain vesting criteria being met. 22,175 existing LTIP awards were exercised during the period (2021/22: 228,511) and 48,717 existing LTIP awards lapsed (2021/22: 109,713).

11. Earnings per share

Basic earnings per share is calculated by dividing the net profit for the period attributable to ordinary equity shareholders of the parent by the weighted average number of ordinary shares in issue during the period. Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity shareholders of the parent by the weighted average number of ordinary shares in issue during the period, after allowing for the exercise of outstanding share options. The following sets out the income and share data used in the basic and diluted earnings per share calculations:

 
                                             Half year         Half year        Year to 
                                        to 31 December    to 31 December        30 June 
                                                  2022              2021           2022 
                                               GBP'000           GBP'000        GBP'000 
 
 Net profit attributable to equity 
  holders - continuing operations                4,486             4,918          9,610 
 Net profit attributable to equity 
  holders - discontinued operations            (1,795)             (900)       (16,657) 
                                      ----------------  ----------------  ------------- 
                                                 2,691             4,018        (7,047) 
                                      ================  ================  ============= 
 
 
                                                    000s              000s             000s 
 
 Basic weighted average number of 
  shares                                          35,806            35,821           35,825 
 Dilutive potential ordinary shares 
  - employee share options                           334               549              586 
 Diluted weighted average number of 
  shares                                          36,140            36,370           36,411 
                                        ================  ================  =============== 
 
                                               Half year         Half year          Year to 
                                          to 31 December    to 31 December          30 June 
                                                    2022              2021             2022 
                                                   Pence             Pence            Pence 
 Basic earnings per share: 
 Continuing operations                              12.5              13.7             26.8 
 Discontinued operations                           (5.0)             (2.5)           (46.5) 
                                        ----------------  ----------------  --------------- 
                                                     7.5              11.2           (19.7) 
                                        ================  ================  =============== 
 Diluted earnings per share: 
 Continuing operations                              12.4              13.5             26.4 
 Discontinued operations                           (5.0)             (2.5)           (46.5) 
                                        ----------------  ----------------  --------------- 
                                                     7.4              11.0           (20.1) 
                                        ================  ================  =============== 
 
   11. Earnings per share (continued) 
 
   Calculation of underlying earnings per share: 
 
                                               Half year         Half year        Year to 
                                          to 31 December    to 31 December        30 June 
                                                    2022              2021           2022 
                                                 GBP'000           GBP'000        GBP'000 
 
 Reported profit before taxation from 
  continuing operations                            5,333             6,169         12,031 
 Brand amortisation                                   35                35             70 
 IAS 19 net pension scheme finance 
  costs                                               24                67             60 
 Restructuring costs                                 194                 -            564 
 
 Underlying profit before taxation 
  from continuing operations                       5,586             6,271         12,725 
 Tax at underlying Group tax rate 
  of 21.2% 
  (2021/22 first half year: 19.4%; 
  full year: 19.4%)                              (1,184)           (1,217)        (2,469) 
 Underlying earnings from continuing 
  operations                                       4,402             5,054         10,256 
                                        ----------------  ----------------  ------------- 
 
 Weighted average number of shares                35,806            35,821         35,825 
                                        ----------------  ----------------  ------------- 
 Underlying earnings per share from 
  continuing operations                            12.3p             14.1p          28.6p 
                                        ================  ================  ============= 
 

12. Movement in borrowings

 
 
                                  Cash at 
                               bank /bank    Bank loans       Net bank          Lease    Total borrowings 
                               overdrafts                  cash/(debt)    liabilities 
                                  GBP'000       GBP'000        GBP'000        GBP'000             GBP'000 
 
At 1 July 2022                      8,284      (13,000)        (4,716)        (5,132)             (9,848) 
        Cash flow movements       (2,334)           262        (2,072)            362             (1,710) 
         Non-cash movements             -          (44)           (44)            193                 149 
 Effect of foreign exchange 
                      rates            12             -             12              -                  12 
 
At 31 December 2022                 5,962      (12,782)        (6,820)        (4,577)            (11,397) 
                             ============  ============  =============  =============  ================== 
 
 
                                 Cash at 
                              bank /bank    Bank loans       Net bank    Lease liabilities    Total borrowings 
                              overdrafts                  cash/(debt) 
                                 GBP'000       GBP'000        GBP'000              GBP'000             GBP'000 
 
At 1 July 2021                     4,999       (5,936)          (937)              (5,606)             (6,543) 
        Cash flow movements      (2,131)       (1,000)        (3,131)                  352             (2,779) 
         Non-cash movements            -          (27)           (27)                (366)               (393) 
 Effect of foreign exchange 
                      rates           10             -             10                    -                  10 
 
At 31 December 2021                2,878       (6,963)        (4,085)              (5,620)             (9,705) 
                             ===========  ============  =============  ===================  ================== 
 

13. Related party disclosure

The Group has a related party relationship with its Directors and with its UK pension schemes. There has been no material change in the nature of the related party transactions described in note 29 of Alumasc's Report and Accounts for the year ended 30 June 2022.

Responsibility Statement

The Directors confirm that, to the best of their knowledge, the condensed consolidated interim financial statements have been prepared in accordance with Alternative Investment Market ("AIM") Rule 18.

On behalf of the Board

   Paul Hooper                                        Simon Dray 
   Chief Executive                                   Group Finance Director 

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