REG - Alumasc Group Plc - Final Results

Tue Sep 4, 2012 2:01am EDT

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RNS Number : 4025L
Alumasc Group PLC
04 September 2012
 



 

IMMEDIATE RELEASE

4 September 2012

 

THE ALUMASC GROUP PLC - ANNUAL RESULTS ANNOUNCEMENT

 

Alumasc (ALU.L), the premium building and engineering products group, announces results for the year ended 30 June 2012.

 

 

Financial summary

 

2011/12

2010/11

Group revenues (£m)

110.6

106.8

Underlying profit before tax (£m)

1.6

4.3

Underlying earnings per share (pence)

3.0

8.3

Reported profit before tax* (£m)

0.4

5.4

Basic earnings per share (pence)

1.2

10.7

Dividend per share (pence)

2.0

10.0

 

* After non-recurring costs of £1.2m (2010/11: £1.1m credit)

Key points

 

·    Building Products revenues were up 5% to £74.9m with operating profit up 12% to £4.4m, despite a decline in UK construction activity, reflecting growth in export, roofing & walling, and construction product sales. 

·    Engineering Products revenues were maintained at £36.8m but an operating loss of £0.8m (2010/11: operating profit of £3.0m) reflected a number of operational issues at Alumasc Precision Components which led to lower gross margins in that business during the year. A profit recovery plan is underway following the appointment of a new management team and divisional board, chaired by Keith Walden who joins the Alumasc Group plc board as a non-executive director.

·    Net debt was £13.2m at 30 June 2012 (30 June 2011: £10.7m). Overdraft facilities, which supplement existing committed banking facilities, have recently been renewed for a further year. The Group is targeting positive cash flow for the current year.

·    Group order books grew to a record £53 million at 30 June, helping to underpin improved prospects for the current year.

·    A proposed final dividend of 1.0p makes a total for the year of 2.0p for the year, with the Board intending to restore meaningful dividend payments once cover is achieved from underlying earnings.

 

 

 

Chairman, John McCall, commented:

 

"Alumasc's prospects depend on external markets, the pace of the Engineering Products division's return to profitability, and the continuing success of our Building Products companies in winning contracts for completion during the current year.  On balance, the Board anticipates a much improved performance following the disappointment of the past 12 months"

 

 

 

 

Enquiries:

 

The Alumasc Group plc

01536 383844

Paul Hooper (Chief Executive)

Andrew Magson (Finance Director)

 

 

 

Bankside Consultants Limited

020 7367 8888

Simon Bloomfield or James Irvine-Fortescue

 

 

 

 

 

 

Chairman's Statement:

 

Underlying profit before tax of £1.6 million for the year ending 30 June 2012 was a deeply disappointing result, albeit in line with recent expectations and the outcome of contrasting individual performances.

 

Despite the severe and much publicised decline in construction activity in the UK, our Building Products companies posted underlying operating profits 12% ahead of the prior year at £4.4 million. This advance should accelerate in the current year, in contrast to the weakness in our markets, given the major projects already won and announced.

 

However, divisional Engineering underlying operating profit fell from £3.0 million in the prior year to a loss of £0.8 million. This was principally due to the loss of profitability in Alumasc Precision Components, which resulted in a turnaround from profit of £1.6 million to a loss of £1.8 million on similar turnover. In contrast, Alumasc Precision's sister company, Dyson Diecasting, continued to perform well.

 

As reported in May, the problems at Alumasc Precision were both serious and complex, including an erosion of manufacturing disciplines and the mispricing of certain work. In order to recover this situation, it has been necessary to restructure Alumasc Precision with a new management team, within a new governance structure. As part of a rigorous appointment process, we were fortunate in being able to draw on the proven expertise and track record within Dyson Diecasting to provide an initial response, which is being followed by a measured programme of recruitment. There is also an opportunity to strengthen and combine certain functions which will in future be performed on a divisional basis. In addition, a new divisional Board has been established under the direction of a Non-Executive Chairman of precisely relevant experience. Further appointments will follow to bring together the full range of skills essential to its future success.

 

Accordingly, the group's Engineering division will now operate as an independent and self-sufficient entity, with a full Board of Directors responsible to the group board for the recovery and sustained profitability of the division. Keith Walden, who was appointed divisional Non-Executive Chairman in June, has been appointed to the Alumasc Group Board with effect from 4 September 2012.

 

Alumasc Building Products, the larger of the group's two divisions, will continue to operate under four divisional boards, chaired by Group Chief Executive Paul Hooper, who is responsible to the group board for their further success and development.

 

Under this structure, it is the Board's intention and belief that, while the essential job of restoring profitability to Alumasc Precision receives priority, a greater focus can simultaneously be applied to the domestic and international development of our market-leading Building Products group of companies.

 

The Board is recommending a final dividend of 1 pence, making a total of 2 pence for the year (2010/11: 10 pence). As group profits recover, it is the Board's intention to restore meaningful dividend payments once cover is achieved from underlying earnings.

 

The group's prospects remain dependent on three major factors: external markets, which remain unpredictable at best; the pace at which the group's engineering business returns to profitability, which is discussed in the operations report that follows; and the continuing success of our Building Products companies in winning contracts for completion during the coming year.

 

On balance, the Board anticipates a much improved performance following the disappointment of the past twelve months.

 

 

 

John McCall

Chairman

 

 

 

 

Business Review

 

Chief Executive's Operating Review

 

Strategic and management developments

 

•        Strong performance in the Building Products division in spite of challenging conditions in UK construction markets. Successful new product roll out and increased activity in new target markets, both in the UK and internationally, have positioned the division well to benefit from growth rates above UK construction industry averages through the economic cycle.

 

•        Management restructuring of the group's Precision Engineering business to maximise the skill and know-how of its two constituent businesses and leverage its strong customer and invested asset base. In response to the issues identified during the year, a new divisional management team has been appointed which includes several experienced operations and engineering managers from Dyson Diecasting. In April, former Alumasc Group director, Keith Walden, who has 40 years of foundry experience, was appointed as non-executive director of Alumasc Precision.  In order to oversee the recovery of Alumasc Precision he became non-executive chairman of that subsidiary in June.

 

•        Investing further in the significant growth potential of export markets for both divisions.  Export sales as a proportion of total group sales rose from 20% for 2010/11 to 21% for 2011/12.  Absolute export revenues grew by 10%.

 

•        The separation of our rainwater and drainage business from our roofing and walling business has proved a success, achieving fresh impetus with customer service improvements and there has been the development of several new markets and products under the group's well established brand names Levolux, Elkington Gatic, Timloc, Alumasc, Harmer and Euroroof.

 

•        A contributor to the financial performance of building products was the investment of approximately £0.7 million in management, sales, marketing, including web-based activities, new products and expansion into new international markets.

 

Health, Safety and Environment

 

The group's number one priority continues to be to provide a safe place of work for employees.  Significant progress has been made in this area in the last five years albeit the performance rate index in this year fell back to 5.3 from a record prior year of 2.8.  The safety rate in 2006/07 was 9.5. 

 

 

 

Performance Overview

 

Continuing Operations




2011/12

2010/11




Revenue (£m)

110.6

106.8




Underlying operating profit (£m)

2.6

5.7

Operating margin (%)

2.3

5.3




Net financing costs (£m)

(1.0)

(1.4)


 

 

Underlying profit before tax (£m)

1.6

4.3




Non-recurring items and brand amortisation (£m)

(1.2)

1.1




Profit before tax (£m)

 

0.4

5.4

 

In terms of the Group result for the year, progress in the Building Products division has been overshadowed by a major setback in our engineering business, Alumasc Precision.  Group revenues grew by 4% to £111 million.  However, underlying profit before tax fell 64% to £1.6 million (2010/11 £4.3 million).

 

Building Products divisional revenues grew by 5% to £74.9 million with divisional operating profit rising by £0.5 million, or 12%, to £4.4 million (2010/2011 profit £3.9m). Overall divisional gross margin remained broadly stable at 32%, despite strong pressure from a highly competitive UK market place. 

 

Alumasc Precision's revenue remained at a similar level to the prior year with a £0.1 million increase to £36.8 million.  However, divisional margins were impacted by the challenges outlined below resulting in an operating loss of £0.8 million (2010/11 profit of £3.0 million).

 

Net financing costs were lower at £1.0 million (2010/11 £1.4 million, excluding refinancing costs) mainly due to a lower pension interest charge on the low pension deficit at the start of the year.

 

The company's overall net debt increase for the year was £2.5 million (2010/11: increase of £1.4 million).  The group expects to return to positive cash flow in 2012/13.

 

Reported profit before tax reduced to £0.4 million (2010/11: £5.4 million) due to the lower level of underlying profit and the incidence of non-recurring cost in 2011/12 as opposed to non-recurring gains in 2010/11.  Further details are given in the Group Finance Director's Review. 

 

The group finished the year with a record order book of £53.1 million, £9.0 million (20%) ahead of the prior year end.

 

 

 

 

 

Building Products Division

 

Building Products' Divisional Operating Performance



2011/12

2010/11




Revenue (£m)

74.9

71.2




Underlying operating profit (£m)

4.4

3.9

Operating margin (%)

5.9

5.5




Restructuring costs (£m)

(0.3)

(0.2)

Brand amortisation(£m)

(0.3)

(0.3)




Reported operating profit (£m)

3.8

3.4

 

Divisional revenues grew by 5% to £74.9 million with operating profit up 12% to £4.4 million during the year.  

 

This performance was achieved even though approximately 35% of the division's revenue is linked to UK commercial construction activity which, despite positive signs in 2011, experienced significant declines in the first half of calendar year 2012. 

 

Against the UK market backdrop, the outperformance by the Building Products division has been notable, reflecting the increased focus on developing export sales (which grew by 46% to £10.0 million), with new product and market activity being combined with well controlled overhead costs which increased by £0.4 million (2%).  In the last quarter of the financial year, divisional revenue grew by £2.8 million (15%) and operating profit by £1.4 million (271%), representing the continuing progress of this strategy. 

 

Energy Management

 

Solar Shading

 

In the UK, Levolux experienced another year of low activity in high profile, private and public sector construction activity incorporating complex solar shading designs.  Revenue fell by £0.3 million to £16.8 million against the prior year which benefited from significant work at the Olympic Park, especially linked to the Aquatics Centre and the Media Hub.

 

Levolux continued to develop its international presence and increased sales into France, the Middle East and the USA.  There were some significant projects in London which helped to offset some of the shortfall associated with the subdued activity in the rest of the UK.  US activity involved the supply of two projects to Long Island and a further supply of the Infiniti system and aerofoil fins to the Bainbridge Art Museum in Seattle.  Sales into this area grew by 148% on a low base.  New products launched in the year included a new screening louvre, Simpliciti, and a new acoustic louvre, Infiniti dB.

 

During the second half of the year, Levolux won two very significant projects, which will benefit the current and next financial year.  The first of these is a multi-million pound order at Chiswick Park in West London to design and install a new motorised solar shading unit for the latest building.  The second is a £4.7 million order for a non-commercial project in central London to design and install a new family of roof-top screening louvres in laminated glass, perforated and solid aluminium as well as photovoltaic cells laminated within glass.

Despite the continuing weak market conditions, Levolux has positioned itself well to have a much stronger year in 2012/13, both in the UK and overseas.

 

Roofing and Walling

 

While the final quarter's very inclement weather (the wettest three months to June on record) impacted construction activity, the Roofing and Walling division had a strong end to the year driven in particular by projects under the CESP ("Community Energy Saving Programme") umbrella where Alumasc supplies specialist insulated render systems.  Although the CESP initiative will finish at the end of 2012, a new ECO ("Energy Company Obligation") initiative will replace it, offering further opportunities. Alumasc's Insulated Renders business has also developed a broader market product offering with several major high street retailers in preparation for the launch of the Green Deal.

 

In the final quarter of the year, the Roofing business benefited from the first shipments under the £10 million contract to supply Alumasc Armaseam and other products as part of the modernisation of a large aluminium smelter at Kitimat in Canada.  It also won the supply of roofing product to the South Beds Council on a 3-year term basis. 

 

New products were launched in the year, in particular under the Euroroof banner including a liquid PU roofing range and other products contributing to the formation of a mid-range Euroroof brand offering.

 

Markets have continued to be particularly difficult and highly competitive for our green roofing brands, Blackdown and ZinCo.  A notable success for Blackdown was the Scottish Arena green roof project win (valued at around £0.6 million) which will benefit the current year.

 

Water management & other

 

Construction Products

 

Segmental revenues grew strongly by £2.2 million (17%) to £15.1 million, driven by a record level of international sales for Gatic's access covers and Slotdrain, predominantly in the Middle East, Far East and Africa.  Tight cost management, combined with these increased sales, resulted in segmental profit growing by £0.3 million (22%) to £1.9 million, a commendable effort against the current backdrop of constrained construction activity around the world.

 

UK Slotdrain sales grew by over 20%, supported by sales of the recently introduced CastSlot drainage system and investment in the Gatic brand.  New products launched in the year included a range of Assist Lift Access Covers with Gatic ProSlot and Streetwise being developed for launch early in the new financial year.  The Board believes that significant opportunities remain in the US and, during the second half year, Gatic Inc. was formed and an experienced US executive appointed to lead further development of this market including the US Slotdrain opportunity. 

 

Slotdrain sales in the US grew by 273% on a low base with 70% of sales being to airports including Atlanta, San Francisco and McCarran Airport, Las Vegas.  

 

SCP grew its revenue but increased material costs and more active competition impacted results.  Elkington China, now fully owned, had a record year for both sales and profit with a sizeable project at Kai Tak Cruise Terminal in Hong Kong assisting this performance. 

Rainwater, Drainage & Other

 

The Group's rainwater, drainage and other brands delivered a strong performance, although revenues and underlying profit were lower than the prior year which had the benefit of a large project to supply the London Olympics. 

 

Segmental revenues reduced by 3% to £20.7 million and underlying operating profit reduced by 8% to £1.8 million.

 

During the year there has been a significant improvement in rainwater and drainage service levels, with on-time-in-full deliveries to customers rising to 98.5% as an average in the last 6 months.  Harmer Drainage continued its renaissance following the launch of a new drainage range and drainage calculator, resulting in a 20% sales increase.  In an industry first, Alumasc has designed a new rainwater and drainage calculator that saves architects and specifiers significant time.  Helping building designers this early in the construction process improves the ability of Harmer and Alumasc brands to secure specification later on.

 

Pendock, the group's pre-formed plywood pipe boxing brand had a reasonable year up until the final quarter when cuts in council budgets after April had a negative impact on social housing refurbishment activity. A number of further important improvements in manufacturing efficiency took place, several of which were in the final quarter of the year and will benefit the new financial year.

 

Timloc, the group's house building products business, had yet another successful year, winning market share and launching new products including a range of access covers that offer a practical solution to the increasing demands of building regulations.  New channels of distribution were also established into light-side merchants.  The operations team was restructured in the year and improved manufacturing efficiencies came through into the second half year.  Having been operating close to capacity, the decision was taken in 2011 to move into larger premises locally.  This move took place during the year and it was carried out without interruption to operations or customer service. 

 

In 2011/12, Timloc reported its highest revenue and profit since acquisition by Alumasc in 2004.

 

The Building Products division finished the year with a record order book of almost £29 million (30 June 2011: £14 million).

                       

 

 

Engineering Products Division

 

Engineering Products' Divisional Operating Performance


Continuing Operations




2011/12

2010/11




Revenue (£m)

36.8

36.7




Underlying operating (loss) / profit (£m)

(0.8)

3.0

Operating margin (%)

(2.1)

8.1




Restructuring costs (£m)

(0.6)

-

Impairment charge reversal (£m)

-

1.2




Reported operating (loss) / profit (£m)

(1.4)

4.2

 

Revenues for the year remained at a similar level to the prior year at £36.8 million and, as a result of the difficulties outlined below, the underlying operating loss was £0.8 million compared to an underlying profit in the prior year of £3.0 million.

 

Following two years of recovery within the division, the year under review proved very challenging for Alumasc Precision Components. The financial year started with a strong order book.  However, the resultant increase in demand, particularly in the final quarter of the first half year, created unexpected capacity constraints leading to higher than expected costs, the full extent of which only became clear following receipt of the results of the December month's stock take in January 2012.  This led to a significant write-down in the value of inventory as at 31 December 2011.

 

The causes underlying the cost overruns proved to be complex, reflecting a deterioration in engineering disciplines over a period of rapid increases in demand.  This necessitated the initiation of a comprehensive profit recovery plan, starting with the appointment of a new managing director for Alumasc Precision, Les White, who was promoted into this position having run Alumasc Precision Components' very successful sister company, Dyson Diecasting, for 15 years. A new divisional finance director was also appointed in January and with management being further strengthened through sharing of operational expertise and resources with Dyson Diecasting. The management restructuring was completed in June with the appointment as Chairman of the divisional board of Keith Walden, a former Alumasc group director with substantial industry experience, whose remit is to oversee the recovery of Alumasc Precision.

 

The new management team has set about addressing the complex challenges at Alumasc Precision Components.  Costs have been reduced in many areas, with a particular focus on improving manufacturing efficiencies, including scrap and supplier costs.  The new product introduction process, an area that impacted costs in the second half year, has been improved and the engineering functions strengthened.  Following a review of product costings, in addition to identifying areas for improving productivity, selling price increases have been implemented with a number of customers. During this period of recovery Alumasc Precision Components chose not to take on further significant new work during the year so that it could concentrate on its profit improvement plan.

 

The benefit of all of the above actions, and others, is expected to bring Alumasc Precision Components back into profit on a run rate basis during the second half of the current financial year. 

 

Meanwhile Dyson Diecasting produced a double digit operating margin on increased revenue.  Its very good reputation in the market place led to additional project wins towards the year end for Bentley, Siemens and TRW.  These will benefit the current year and assist in helping to mitigate a potential softening in demand from global OEM companies such as Caterpillar which recently announced a lowering of its full-year sales outlook due to the state of the global industrial economy.

 

Direct sales to international customers in China were further developed in the year.  Alumasc Precision works closely with its local manufacturing partners and, while the year under review continued to be a development year with limited sales, the current year will benefit from three projects for a global OEM company.

 

 

Prospects

 

Both the group as a whole and the Building Products division entered the new financial year with record order books of £53 million and £29 million respectively (30 June 2011: 43 million and 14 million).

 

Under a strengthened management team, the Building Products division continues to improve performance, despite the well published challenges in UK construction.  This is the result of a number of initiatives from expanding the product range to entering new markets and increasing the international presence of Alumasc Building Products.  There are several significant projects which will also help to underpin the results in the current year.

 

Continuing progress at Dyson Diecasting, coupled with the turnaround underway at Alumasc Precision Components should result in a much improved financial performance from the Engineering Products division in the current year.   

 

Overall, the Board expects Alumasc to have a much improved year in 2012/13.

 

 

 

Paul Hooper

Chief Executive

 

 

 

 

 

Financial Review 2011/12

 

Key Performance Indicators

The group's key performance indicators (KPI's) are summarised in the table below.

 

 


2011/12

2010/11




Safety performance rate

5.3

2.8

Year end order book (£m)

53.1

44.1

Group revenues (£m)

110.6

106.8

Operating margin (%)

2.3

5.3

Underlying PBT (£m)

1.6

4.3

Underlying earnings per share (pence)

3.0

8.3

Average trade working capital % sales

13.9

14.1

Net cash outflow (£m)

(2.5)

(1.4)

Shareholders' funds (£m)

18.9

32.0

Year end net debt (£m)

13.2

10.7

Capital invested (£m)

43.2

44.8

Average net borrowings (cleared funds) (£m)

16.8

14.2

Return on investment (post tax) (%)

4.0

8.8

Gearing (%)

70.0

33.6

EBITDA interest cover (times)

7.6

12.3

Net debt/EBITDA (times)

2.5

1.4

 

Underlying financial performance

 

Details of the group's trading performance are set out in the Chief Executive's Operating Review.

 

Group revenues from continuing operations grew by 3.6% to £110.6 million, due to higher Building Products divisional sales driven by increased sales of Construction Products into the infrastructure sector and higher roofing and walling sales, particularly in the last quarter of the year. This growth was achieved despite a further contraction in UK construction market activity during the year, as Alumasc companies made gains in certain of the group's chosen sustainable building product niches, whilst further growing export sales.

 

Revenues in the Engineering Products division were similar to the prior year, taking the year as a whole but there were some significant short-term spikes in demand during the first half of the year, particularly ahead of changes to certain diesel engine emission regulations becoming effective on 31 December 2011. Overall customer demand softened modestly later in the financial year as global economic growth rates slowed.

 

Gross margins in the Building Products division were held broadly stable at 32% despite downward pressure in a weak UK market. Gross margins in the Engineering Products division were significantly impacted by the various manufacturing and commercial issues at Alumasc Precision Components, described in more detail in the Chairman's Statement and the Chief Executive's Operating Review.

 

Group overheads were well controlled, increasing by just £0.2 million (1%) to £23.5 million in the year, despite the £0.7 million investment in international development and sales resources in the Building Products Division committed at the beginning of the financial year, due to other cost savings across the group and lower charges for bad debts.

As a result of the above, Building Products' divisional underlying operating profit improved from £3.9 million in the prior year to £4.4 million, but the Engineering Products division reported an underlying operating loss of £0.8m against a prior year profit of £3.0 million. After unallocated costs, group underlying operating profit was £2.6 million (2010/11: £5.7 million), with the difficulties at Alumasc Precision more than offsetting the advances made in the Building Products division.

 

The group's net financing costs decreased from £1.4 million (excluding re-financing costs) in 2010/11 to £1.0 million in 2011/12 mainly due to reduced financing charges on the group's pension deficit, reflecting the relatively low IAS19 valuation at the beginning of the financial year. Net interest costs on borrowings increased slightly due to the higher year-on-year average level of net debt.

 

Underlying profit before tax was £1.6 million (2010/11: £4.3 million) reflecting the lower operating profit, partly mitigated by the reduction in net financing costs described above. 

 

Non-recurring items and brand amortisation

 

Non-recurring restructuring costs for the year amounted to £0.9 million, and mainly arose in connection with the changes made to senior management at Alumasc Precision Components in the second half of the financial year, described in the Chief Executive's Operating Review.  In the prior year, the net non-recurring gain of £1.4 million related principally to an impairment charge reversal and a profit on the sale of surplus property.

 

Brand amortisation charges, relating to acquisitions made in prior years, were similar in 2011/12 to the previous year at £0.3 million.

 

Reported profit before tax

 

Reported profit before tax was £0.4 million (2010/11: £5.4 million) reflecting the lower level of underlying profit and the non-recurring costs in 2011/12 which contrasted with the non-recurring gains in 2010/11.

 

Reconciliation of underlying to reported profit before tax



Continuing Operations






2011/12

2010/11



£m

£m





Underlying profit before tax


1.6

4.3

   Brand amortisation


 (0.3)

(0.3)

   Restructuring costs


(0.9)

(0.3)

   Impairment charge reversal


-

1.2

   Property disposal gain


-

0.8

   Re-financing costs


-

(0.3)

Reported profit before tax


0.4

5.4

 

 

 

Tax

 

Whilst the UK statutory tax rate has been reducing over the last few years, the benefit of this in the group's underlying tax rate has been partly offset by the concurrent abolition of industrial buildings allowances (IBAs). In addition, the higher proportion of non tax deductable costs, including IBAs, relative to the group's profit for the year under review resulted in the group's overall underlying tax rate increasing from 30.3% last year to 31.6% in 2011/12. This position is expected to improve as the group's taxable profits recover.

 

After non-recurring items and the benefit arising from the recalculation of opening deferred tax balances at 1 July 2011 at the lower UK statutory tax rates, the group reported a small overall tax credit for the year.

 

Underlying and basic earnings per share

 

Underlying earnings per share were 3.0 pence and basic earnings per share were 1.2 pence, both reflecting the lower level of group profit after tax. The average number of shares in issue remained broadly unchanged over the year.

 

Cash flow and net debt

 

Summarised Cash Flow Statement





2010/11

2010/11



£m

£m





EBITDA*


5.4

8.1

Change in working capital


0.8

(1.1)

Operating cash flow


6.2

7.0





Capital expenditure


(1.9)

(1.2)

Pension deficit & scheme expenses funding


(2.4)

(2.9)

Interest


(0.9)

(0.6)

Tax


(0.1)

(0.4)

Dividends


(2.8)

(3.6)

Property disposal proceeds


-

1.2

Exceptional pension contributions


-

(1.0)

Restructuring and other one-off cash flows


(0.6)

(1.0)

Cash flow from discontinued operations


-

1.1





Increase in net debt


(2.5)

(1.4)


EBITDA: Underlying earnings before interest, tax, depreciation and amortisation

 

The group's overall net cash out flow for the year (including changes in drawn debt) was £2.5 million (2010/11: out flow of £1.4 million). Period end net debt increased as a consequence from £10.7 million to £13.2 million. The cash out flow was largely attributable to group operating profit being significantly lower than anticipated at the beginning of the year, and therefore temporarily insufficient to cover previously committed pension deficit funding payments and dividend payments.  The average level of net debt (on a cleared funds basis) increased to £16.8 million compared with £14.2 million in the prior year.

 

The group is now targeting a return back to positive cash flow for the current year through a combination of improved business performance, underpinned by record order books of over £50 million, continued tight control of working capital and capital expenditure, and the re-basing of the group's dividend described below.

Trade working capital efficiency continues to improve steadily and averaged 13.9% of sales over the last twelve months, compared with 14.1% in the prior year. Further efficiency gains in the Building Products division were partly offset by higher working capital requirements at Alumasc Precision Components whilst the various operational issues in that business are being resolved. The group's average trade working capital as a percentage of sales has reduced by around 4 percentage points, equivalent to a cash efficiency gain of over £4 million over the last three years.

 

Capital expenditure amounted to £1.9 million during the year, compared with depreciation and non-brand amortisation charges of £2.8 million. The principal capital investments were targeted at relieving specific capacity bottlenecks at Alumasc Precision Components, and also included a variety of routine asset replacement projects around the group. The group does not expect capital expenditure needs to exceed depreciation and non-brand amortisation charges for the foreseeable future.

 

Pensions

 

The group's pension deficit, measured under IAS19 conventions, increased from £2.9 million at the beginning of the financial year to £14.5 million at 30 June 2012, mostly explained by a pre-tax actuarial loss of £13.8 million during the year.  This mainly reflected low long term UK gilt rates used to discount expected future pension liabilities to present values, and a weaker investment performance than was assumed by the scheme actuary during a turbulent year for global capital markets.

 

The group currently makes annual deficit reduction contributions of £2.0 million and, in addition, reimburses scheme running expenses of around £0.5 million per annum, including the payment of the annual Pension Protection Fund levy.  This position will remain unchanged until the next formal triennial review by the scheme actuary in April 2013. It is unlikely the outcome of this review will be finalised during Alumasc's 2012/13 financial year and therefore no changes to funding arrangements are expected during the current financial year.

 

Capital structure, capital invested and shareholders' equity

 

The group defines its capital invested as the sum of shareholders' equity, bank debt and the pension deficit net of tax.

 

Capital invested decreased over the year from £44.8 million to £43.2 million, as capital expenditure was lower than the annual charge for depreciation and amortisation, and working capital also reduced during the year. In view of the lower operating profit, underlying post-tax return on average capital invested fell from 8.8% to 4.0% for the year.

 

Shareholders' equity decreased from £32.0 million to £18.9 million over the year, mainly due to the post-tax actuarial loss of £10.6 million, described above, and the payment of the prior year's final dividend, which exceeded profit after tax for the year.

 

Whilst the increased level of net debt and reduced level of shareholders' equity resulted in an increase in financial gearing from 34% to 70% over the year, the group continued to operate within loan covenants. The ratio of net debt to EBITDA, as defined in Alumasc's committed loan facility agreement, was 2.5 times compared to a covenant maximum of 3 times. EBITDA interest cover, as defined in the committed loan facility agreement, was 7.6 times compared with a covenant minimum of 4 times.

 

Going concern

 

Having taken into account business plans and the group's banking facilities, and having made appropriate enquiries, the Directors consider that the group has adequate financial resources to continue in operation for the foreseeable future.

 

The group's banking facilities comprise a £20 million revolving credit facility and a £5 million finance lease facility that expire in June 2016. In addition, the group has recently renewed overdraft facilities totalling £6 million for another year.

 

Dividends

 

In view of the much lower levels of profit reported this year and the consequential impact on the group cash flow and balance sheet, and also having regard to the likely profile of future earnings progression, the Board considered it necessary to reduce the group dividend. Accordingly, the Board proposes a final dividend of 1 pence per share, to be paid on 31 October 2012 to shareholders on the register on 5 October 2012. This will give a total dividend for the year of 2 pence per share (2010/11: 10 pence per share).

 

Impairment Review

 

The Board conducted an impairment review which covered all assets that contribute to the goodwill figure on the group balance sheet, together with any other assets where indicators of impairment existed. The conclusion of this review was that there were no impairments in the consolidated balance sheet although, in view of current and expected performance in the context of the more challenging wider economic environment, the headroom between the value in use and the relevant capital base of the group's cash generating units was lower than one year ago.

 

Internal control

 

The group made further improvements to internal control processes during the year. The number of remediation points outstanding from various audits has reduced, new business systems were implemented successfully in two operating companies during the year, and a project to implement a further new system, anticipated to go live in June 2013, has commenced. The processing of all group payrolls was centralised during the year, facilitating standardisation of controls in this area and additional cost efficiency.

 

Despite the progress outlined above, it was discovered during an internal audit in December that management processes and internal control systems at Alumasc Precision Components were not operating at an acceptable level, which in turn led to a significant write-down in the value of inventory at 31 December 2012. The control environment in this business has since been improved through changes to senior management, and internal financial controls have also been strengthened under the leadership of a new finance director. Work continues to be done to improve engineering and operational controls and disciplines.

 

 

 

Andrew Magson

Group Financial Director

 

 

Responsibility Statement

We confirm that to the best of our knowledge:

(a)  The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the group and the company; and

(b)  The Directors' Report includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal risks and uncertainties that the group faces.

 

 

 

Paul Hooper                                                   Andrew Magson
Chief Executive                                     Group Finance Director

 

 

The contents of this announcement, including the responsibility statement above, have been extracted from the annual report and accounts for the year ended 30 June 2012 which will be despatched to shareholders on or around 19 September 2012 and will be available at www.alumasc.co.uk. Accordingly the responsibility statement makes reference to the financial statements of the company and the group and to the relevant narratives appearing in that annual report and accounts rather than the contents of this announcement.

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year to 30 June 2012



2011/12


2010/11



Before

non-recurring items and brand amortisation

 

 

Non-recurring items and brand amortisation

 

 

 

 

 

Total


Before

non-recurring  items and brand amortisation

 

 

 

Non-recurring

 items and brand amortisation

 

 

 

 

 

Total

Continuing operations

Notes

£'000

£'000

£'000


£'000

£'000

£'000










Revenue


110,619

-

110,619


106,805

-

106,805

Cost of sales


(84,501)

-

(84,501)


(77,769)

-

  (77,769)

Cost of sales - impairment charge reversal

5

-

-

-


-

1,220

1,220

Gross profit


26,118

-

26,118


29,036

1,220

30,256










Net operating expenses before non-recurring items and brand amortisation


(23,540)

-

(23,540)


(23,357)

-

(23,357)

Brand amortisation

5

-

(299)

(299)


-

(320)

(320)

Profit on disposal of property

5

-

-

-


-

759

759

Restructuring costs

5

-

(866)

(866)


-

(241)

(241)

Net operating expenses


(23,540)

(1,165)

(24,705)


(23,357)

198

(23,159)










Operating profit

4

2,578

(1,165)

1,413


5,679

1,418

7,097










Finance income


4,402

-

4,402


3,879

-

3,879

Finance expenses

5

(5,425)

-

(5,425)


(5,286)

(307)

(5,593)

Profit before taxation


1,555

(1,165)

390


4,272

1,111

5,383










Tax income/(expense)

6

(491)

514

23


(1,294)

(257)

(1,551)










Profit for the year from continuing operations


1,064

(651)

413


2,978

854

3,832










Discontinued operations


















Loss after taxation for the year from discontinued operations


-

-

-


(187)

-

(187)










Profit for the year


1,064

(651)

413


2,791

854

3,645











CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued)
for the year to 30 June 2012

 



2011/12

2010/11


Notes

£'000

£'000

 

Profit for the year

 


413

         3,645

Other comprehensive income




Actuarial (loss)/gain on defined benefit pensions


(13,818)

5,590

Effective portion of changes in fair value of cash flow hedges


(7)

544

Exchange differences on retranslation of foreign operations


7

(16)

Tax on items taken directly to or transferred from equity

6

3,191

(1,712)



 

 

Other comprehensive (loss)/income for the year, net of tax


(10,627)

4,406





Total comprehensive (loss)/income for the year, net of tax


(10,214)

8,051









 

 

Earnings per share

 

 


Pence

Pence

Basic earnings per share








-  Continuing operations


1.2

10.7

-  Discontinued operations


-

(0.5)



1.2

10.2

Diluted earnings per share








-  Continuing operations


1.2

10.6

-  Discontinued operations


-

(0.5)



1.2

10.1

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2012







Notes

2012

2012

2011

2011

 



£'000

£'000

£'000

£'000

 

Assets






 

Non-current assets






 

Property, plant and equipment


13,826


14,605


 

Goodwill


16,888


16,888


 

Other intangible assets


2,976


3,556


 

Financial asset investments


17


17


 

Deferred tax assets

6

3,489


742


 




37,196


35,808

 







 

Current assets






 

Inventories


14,136


12,443


 

Biological assets


91


370


 

Trade and other receivables


26,451


23,848


 

Cash and cash equivalents


6,550


5,038


 

Income tax receivable


161


-


 

Derivative financial assets


82


98


 




47,471


41,797

 







 

Total assets



84,667


77,605

 







 

Liabilities






 

Non-current liabilities






 

Interest bearing loans and borrowings


(19,779)


(14,724)


 

Employee benefits payable


(14,539)


(2,853)


 

Provisions


(469)


(450)


 

Deferred tax liabilities

6

(1,694)


(2,012)


 




(36,481)


(20,039)

 

Current liabilities






 

Interest bearing loans and borrowings


-


(1,045)


 

Trade and other payables


(28,739)


(24,107)


 

Provisions


(516)


(143)


 

Income tax payable


-


(56)


 

Derivative financial liabilities


(3)


(250)


 




(29,258)


(25,601)

 







 

Total liabilities



(65,739)


(45,640)

 







 

Net assets



18,928


31,965

 







 

Equity






 

Called up share capital

9

4,517


4,517


 

Share premium

9

445


445


 

Capital reserve - own shares

9

(618)


(618)


 

Hedging reserve

9

(22)


44


 

Foreign currency reserve

9

36


29


 

Profit and loss account reserve


14,570


27,548


 







 







 

Total equity



18,928


31,965

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASHFLOWS

For the year ended 30 June 2012






 



2011/12

2010/11

 

 



£'000

£'000

 

 

Operating activities




 

 

Operating profit from continuing operations


1,413

7,097

 

 

Adjustments for:




 

 

Depreciation


2,444

2,074

 

 

Amortisation


652

677

 

 

Impairment reversal


-

(1,220)

 

 

Gain on disposal of property, plant and equipment


(19)

(774)

 

 

Increase in inventories


(1,693)

(1,629)

 

 

Decrease in biological assets


279

2

 

 

Increase in receivables


(2,599)

(3,807)

 

 

Increase in trade and other payables


4,789

4,080

 

 

Movement in provisions


392

41

 

 

Cash contributions to retirement benefit schemes


(2,449)

(3,928)

 

 

Share based payments


(60)

16

 

 

Cash generated from continuing operations


3,149

2,629

 

 





 

 

Loss before taxation from discontinued operations


-

(269)

 

 

Depreciation


-

89

 

 

Amortisation


-

10

 

 

Movement in working capital from discontinued operations


-

104

 

 

Cash generated from discontinued operations


-

(66)

 

 

Tax paid


(68)

(418)

 

 

Net cash inflow from operating activities


3,081

2,145

 

 





 

 

Investing activities




 

 

Purchase of property, plant and equipment


(1,877)

(931)

 

 

Payments to acquire intangible fixed assets


(72)

(305)

 

 

Proceeds from sales of property, plant and equipment


48

1,244

 

 

Acquisition of subsidiary undertaking


-

(50)

 

 

Acquisition of non-controlling interest


-

(49)

 

 

Proceeds from sale of business activity


-

1,173

 

 

Interest received


12

18

 

 

Net cash (outflow)/inflow from investing activities


(1,889)

1,100

 

 





 

 

Financing activities




 

 

Interest paid


(866)

(647)

 

 

Equity dividends paid


(2,763)

(3,580)

 

 

Draw down of amounts borrowed


5,000

15,000

 

 

Repayment of amounts borrowed


-

(15,000)

 

 

Loan and overdraft facility fees


-

(303)

 

 

Purchase of financial instrument


(7)

(94)

 

 

Purchase of own shares


-

(249)

 

 

Net cash inflow/(outflow) from financing activities


1,364

(4,873)

 

 





 

 

Net increase/(decrease)  in cash and cash equivalents

        

2,556

(1,628)

 

 





 

 

Net cash and cash equivalents brought forward


3,993

5,622

 

 

Effect of foreign exchange rate changes


1

(1)

 

 

Net cash and cash equivalents carried forward


6,550

3,993

 

 





 

 

Net cash and cash equivalents comprise:




 

 

Cash and cash equivalents


6,550

5,038

 

 

Bank overdrafts


-

(1,045)

 

 



6,550

3,993

 


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2012



Share

Share

Capital reserve -

 

 

Hedging

 

Foreign

currency

Profit

and loss account


Non-controlling

Total

 



capital

premium

own shares

reserve

reserve

reserve

Total

interest

equity

 



£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 












 

At 1 July 2010


4,517

445

(369)

(389)

45

23,494

27,743

33

27,776

 

Profit for the period


-

-

-

-

-

3,645

3,645

-

3,645

 

Exchange differences on retranslation of foreign operations


-

-

-

-

(16)

-

 

 

(16)

-

(16)

 

Net gain on cash flow hedges


-

-

-

544

-

-

544

-

544

 

Tax on derivative financial liability


-

-

-

(111)

-

-

 

(111)

-

(111)

 

Actuarial gain on defined benefit pensions, net of tax


-

-

-

-

-

3,989

 

3,989

-

3,989

 

Acquisition of own shares


-

-

(249)

-

-

-

(249)

-

(249)

 

Dividends


-

-

-

-

-

(3,580)

(3,580)

-

(3,580)

 

Acquisition of non-controlling interest


-

-

-

-

-

(16)

 

(16)

(33)

(49)

 

Share based payments


-

-

-

-

-

16

16

-

16

 

At 1 July 2011


4,517

445

(618)

44

29

27,548

31,965

-

31,965

 












 

Profit for the period


-

-

-

-

-

413

413

-

413

 

Exchange differences on retranslation of foreign operations


-

-

-

-

7

-

7

-

7

 

Net loss on cash flow hedges


-

-

-

(7)

-

-

(7)

-

(7)

 

Tax on derivative financial liability


-

-

-

(59)

-

-


-

 

(59)

 

(59)

 

Actuarial loss on defined benefit pensions, net of tax


-

-

-

-

-

(10,568)


-

 

(10,568)

 

(10,568)

 

Dividends


-

-

-

-

-

(2,763)

(2,763)

-

(2,763)

 

Share based payments


-

-

-

-

-

(60)

(60)

-

(60)

 

At 1 July 2012


4,517

445

(618)

(22)

36

14,570

18,928

-

18,928

 


1          basis of preparation

The annual results announcement for the year ended 30 June 2012 has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

 

The financial information included within this announcement does not constitute the company's statutory accounts for the years ended 30 June 2012 or 2011 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the registrar of companies, and those for 2012 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include 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 in respect of the accounts for 2011 or 2012.

 

Going concern

The group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Business Review.

 

The group has £26 million of banking facilities, of which £20 million is committed until June 2016.  In addition, the group has recently renewed overdraft facilities totalling £6 million for another year.  At 30 June 2012 the group's net indebtedness was £13.2 million (2011: £10.7 million). 

 

On the basis of the group's financing facilities, pension deficit recovery plan commitments and current financial plans and sensitivity analyses, the Board is satisfied that the group has adequate resources to continue in operational existence for the foreseeable future and accordingly continues to adopt the going concern basis in preparing the financial statements.

 

2         judgements and estimates

The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are the measurement and valuation of intangible assets and goodwill and the measurement and valuation of defined benefit pension obligations.  The measurement of intangible assets other than goodwill on a business combination involves estimation of future cash flows and the selection of a suitable discount rate.  The group determines whether goodwill is impaired on an annual basis and this requires an estimation of the value in use of the cash generating units to which the intangible assets are allocated.  This involves estimation of future cash flows and choosing a suitable discount rate. Measurement of defined benefit pension obligations requires estimation of future changes in inflation, as well as mortality rates, the expected return on assets and the selection of a suitable discount rate.

 

The group may from time to time become involved in legal action which could give rise to contingent assets or liabilities.  The group accounts for these under IAS 37 and will only accrue costs when it is probable that there will be a transfer of economic benefits based on independent legal advice and the Directors' judgement. 

Revenue recognised on construction contracts is determined by the assessment of completion stage of each contract.  The requirement for Directors' judgement is limited in most cases due to the involvement of quantity surveyors during the assessment process as detailed within the revenue recognition accounting policy.

 

 

3          principal risks and uncertainties

Alumasc's portfolio of niche businesses generates sales in a variety of building and construction, and industrial markets. This reduces the group's exposure to any one end-market segment or single third party. The group's major risks are:

 

UK, Eurozone and Global Economies

Alumasc's principal operations are based in the UK. The majority of the group's building product sales are in the UK, with the remainder mostly to customers in the USA, Middle East and Europe. Any significant change in economic conditions, laws and regulations in these locations could affect demand, trading performance and profit margins. Alumasc Precision supplies mainly global OEMs with the majority of its sales now made to end users based outside the UK. As such Alumasc Precision's demand and trading performance is more influenced by global economic conditions, and demand for off highway diesel engines used in the construction and mining sectors, in particular.

 

The group does not have any manufacturing operations based in the Eurozone countries and only approximately 10% of group sales and purchases respectively, were to/from these countries in 2011/12. Other than the impact on demand and general business confidence caused by the continuing uncertainties in the Eurozone, the probable impact on Alumasc of any countries exiting from the Euro is not expected to have a fundamental impact on the group.

 

With regard to pensions, we have had confirmation from our investment managers that there are no material Eurozone exposures in the investment portfolio.

 

Input cost inflation can generally be recovered from customers through selling prices rises, and ratchets are in place to achieve this with regard to changes in aluminium costs at Alumasc Precision. In circumstances where market demand is subdued and there is strong competition for work, such as in the current UK building products market, it is not always possible to recover all cost inflation from customers. The group seeks to offset as far as possible such pressure on margin through internal cost savings and efficiency measures.

 

People

The loss of key management and employees could impact operating performance through loss of know-how. These risks are mitigated as far as possible through succession planning for key executives, teamwork and ensuring that key individuals are appropriately motivated and incentivised. Any proposed appointments to, or departures from key positions are approved at Operating Company board meetings and exit interviews are increasingly held by group management with key senior employees who are proposing to leave or are leaving the business.

 

Customers

Certain of the group's businesses derive a significant proportion of their revenues from individual key customers. The management teams of these businesses and group management, where appropriate, maintain regular contact with all key customers to manage and develop these important business relationships. In general, the loss of any key customer could have a significant impact on the performance of an individual business within the group, but it is less likely to have as material an impact on the group as a whole. However, the Caterpillar Group is a major customer of both Alumasc Precision and The Alumasc Group as a whole, representing approximately 17% of group sales in the 2011/12 financial year. 

 

 

 

Innovation and competition

Alumasc encourages an entrepreneurial and innovative approach from its business and management teams as the group's performance is dependent on niche, differentiated products, systems and solutions. Insufficient innovation could result in loss of competitive advantage.

 

Product quality

The reputation of Alumasc products and brands could be impacted by significant product quality issues. The group's quality control procedures are designed to ensure that own-manufactured products and, where applicable, bought-in products perform to specification, provided they have been correctly installed. In circumstances where the group installs its own products, careful project management processes seek to ensure that any potential issues are pro-actively identified, managed and resolved on-site as far as possible. Residual risks are insured, where possible and economic to do so.

 

Supply chain

The loss or failure of key suppliers, or the prolonged loss of a major manufacturing site within Alumasc could impact ability to deliver to customer expectations. The increase over the last few years in Alumasc's raw materials, components or sub-assemblies that are being sourced from the Far East, whilst reducing costs, has introduced additional supply chain risks that are being carefully managed by senior personnel within each business.

 

Credit risk

Credit risk remains relatively high in the current economic environment, and this will continue to be the case as businesses recover from recession and have to finance the increased working capital needed to support recovery. The group has increased the level of credit insurance in the Building Products division to mitigate these risks in the current year, and any credit exposure in excess of £50k above insurable limits is approved at group level.  The group suffered a £0.5 million bad debt in its Facades business during the 2010/11 financial year, where one of our preferred installers was unable to finance an increasing level of business.  There are, and were, no uninsured credit risk exposures of anything approaching this size elsewhere in the Building Products division.  Uninsured credit risks in excess of £0.5 million are given by Alumasc Precision in the case of well funded, major global OEM customers with strong external credit ratings.  Credit risks continue to be monitored carefully in all group businesses, including at monthly board meetings.

 

Foreign exchange rate risk

The group is exposed to movements in foreign exchange rates, particularly in relation to purchases and sales made in Euros, US Dollars and Hong Kong Dollars.  These risks are mitigated wherever possible by internal hedging between businesses and then through the use of external forward foreign exchange contracts.  Such hedging can only protect the group against relatively short-term volatility in exchange rates and not against more structural changes to the relative strength of these currencies against Sterling.

 

Interest rate risk

The group has exposure to interest rate risk, arising principally on changes to sterling interest rates. In order to manage the risk to group profit that would arise from a significant upward rise in rates, the group has put in place interest rate caps with a total nominal value of £12.5 million, which would protect the group in the event of an increase in LIBOR to 5% or more.

 

Liquidity risk

The group renewed its £20 million committed banking facilities in June 2011. In addition the group has a £5 million committed finance leasing facility. These facilities expire in June 2016. In addition, the group has a further £6 million of overdraft facilities repayable on demand. The Board believes these facilities are sufficient to meet the group's funding requirements for the foreseeable future. 

 

Pensions

Alumasc has mitigated some of the risks associated with its two defined benefit pension schemes in recent years by closing the schemes to future accrual and working with the Pension Trustees to reduce the overall level of the funding deficit. Nonetheless, the group's pension obligations remain significant and the future levels of funding required will be affected by changes in demographic, capital market and regulatory factors over time, many of which are beyond the group's control. The group is currently putting into place a revised pension investment strategy designed to reduce overall risk and reduce the volatility of investment returns. These factors, and developments in the pensions industry more generally, are closely monitored by management and its advisors in order that the group can continue to improve the funding of its pension schemes in accordance with the recovery plans agreed with the Pension Trustees.

 

4         segmental analysis

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

The Chief Executive reviews internal management reports on a monthly basis, with performance being measured based on underlying segmental operating profit as disclosed below.  Performance is measured on this basis as management believes this information is the most relevant when evaluating the impact of strategic decisions.

Inter-segment transactions are entered into applying normal commercial terms that would be available to third parties.  Segment results, assets and liabilities include those items directly attributable to a segment.  Unallocated assets comprise cash and cash equivalents, deferred tax assets, income tax recoverable and corporate assets that cannot be allocated on a reasonable basis.  Unallocated liabilities comprise borrowings, employee benefit obligations, deferred tax liabilities, income tax payable and corporate liabilities that cannot be allocated on a reasonable basis to a reportable segment.

 

Analysis by reportable segment 2011/12




Revenue



External

 

Inter-segment

 

 

Total

Segmental Operating

Result


£'000

£'000

£'000

£'000






Solar Shading

16,751

-

16,751

247

Roofing & Walling

22,369

-

22,369

437

Energy Management

39,120

-

39,120

684






Construction Products

15,135

-

15,135

1,894

Rainwater, Drainage & Other

20,598

64

20,662

1,806

Water Management & Other

35,733

64

35,797

3,700


 

 

 

 

Building Products

74,853

64

74,917

4,384






Alumasc Precision

35,766

1,038

36,804

(770)

Engineering Products

35,766

1,038

36,804

(770)






Elimination / Unallocated costs

-

(1,102)

(1,102)

(1,036)






Total

110,619

-

110,619

2,578

 

 




 

 

 

 





£'000

Segmental operating result




2,578

Brand amortisation




(299)

Restructuring costs




(866)

Total operating profit




1,413






 




 

Capital expenditure




Segment Assets

 

 

Segment Liabilities

 

Property,

Plant &

Equipment

 

Other

Intangible

Assets

 

 

 

Depreciation

 

 

 

Amortisation


£'000

£'000

£'000

£'000

£'000

£'000








Solar Shading

18,235

(4,116)

28

1

84

170

Roofing & Walling

15,809

(8,278)

102

41

138

120

Energy Management

34,044

(12,394)

130

42

222

290








Construction Products

6,715

(3,012)

130

2

202

1

Rainwater, Drainage & Other

11,831

(4,341)

353

1

551

256

Water Management & Other

18,546

(7,353)

483

3

753

257


 

 

 

 

 

 

Building Products

52,590

(19,747)

613

45

975

547








Alumasc Precision

21,406

(9,261)

1,079

27

1,237

92

Engineering Products

21,406

(9,261)

1,079

27

1,237

92








Unallocated

10,671

(36,731)

2

-

232

13








Total

84,667

(65,739)

1,694

72

2,444

652








 

 

Analysis by reportable segment 2010/11

 


Revenue

Segmental


External

Inter-segment

 

Total

Operating

Result


£'000

£'000

£'000

£'000






Solar Shading

17,011

-

17,011

757

Roofing & Walling

19,869

-

19,869

(355)

Energy Management

36,880

-

36,880

402






Construction Products

12,965

-

12,965

1,547

Rainwater, Drainage & Other

21,309

65

21,374

1,965

Water Management & Other

34,274

65

34,339

3,512


 

 

 

 

Building Products

71,154

65

71,219

3,914






Alumasc Precision

35,651

1,093

36,744

2,978

Engineering Products

35,651

1,093

36,744

2,978






Elimination / Unallocated costs

-

(1,158)

(1,158)

(1,213)






Total

106,805

-

106,805

5,679

 

 

 

 

 





£'000






Segmental operating result




5,679

Brand amortisation




(320)

Profit on disposal of property




759

Restructuring costs




(241)

Impairment charge reversal




1,220






Total operating profit from continuing operations



7,097

 

 

 









Capital expenditure




Segment Assets

 

Segment Liabilities

Property,

Plant &

Equipment

Other

Intangible

Assets

 

 

Depreciation

 

 

Amortisation


£'000

£'000

£'000

£'000

£'000

£'000








Solar Shading

18,171

(3,901)

37

3

94

171

Roofing & Walling

11,634

(2,815)

155

84

220

234

Energy Management

29,805

(6,716)

192

87

314

405








Construction Products

6,382

(2,061)

94

1

203

5

Rainwater, Drainage & Other

12,462

(6,363)

266

63

407

170

Water Management & Other

18,844

(8,424)

360

64

610

175


 

 

 

 

 

 

Building Products

48,649

(15,140)

552

151

924

580








Alumasc Precision

22,287

(8,729)

651

84

1,006

82

Engineering Products

22,287

(8,729)

651

84

1,006

82








Unallocated

6,669

(21,771)

2

15

144

15

Discontinued operations

-

-

21

-

89

10








Total

77,605

(45,640)

1,226

250

2,163

687








 

Analysis by geographical segment


2011/12

2010/11


Sales to

external

customers

Segment

non-current

assets

Sales to

external

customers

Segment

non-current

assets


£'000

£'000

£'000

£'000






United Kingdom

87,298

33,664

85,230

35,065

Europe

8,743

-

7,800

-

North America

9,375

-

10,055

-

Middle East

1,863

-

2,524

-

Far East

1,958

43

647

1

Rest of World

1,382

-

549

-











Total (continuing)

110,619

33,707

106,805

35,066






 

Segment revenue by geographical segment represents revenue from external customers based upon the geographical location of the customer. The analyses of segment non-current assets are based upon location of the assets.

 

5          brand amortisation and non-recurring items


2011/12

2010/11


£'000

£'000




Brand amortisation

(299)

(320)

Restructuring costs

(866)

(241)

Impairment charge reversal

-

1,220

Profit on disposal of property

-

759

Re-financing costs

-

(307)


(1,165)

1,111

 

Restructuring costs relate to restructuring and redundancy costs in both years. The high cost in 2011/12 relates mainly to the management restructuring at Alumasc Precision Components described in the Business Review.  Of the total 2011/12 charge of £866,000, £330,000 remained accrued and un-spent at 30 June 2012.

 

The impairment charge reversal in 2010/11 relates to the strong recovery in trading and future prospects at Alumasc Precision Components.  

 

Profit on disposal of property relates to the sale of land during 2010/11 for net proceeds of £1.2 million.

 

Re-financing costs in 2010/11 relate to the renewal of the group's borrowing facilities.

 

 

6          TAX EXPENSE

(a.) Tax on profit on ordinary activities

Tax (credited)/charged in the statement of comprehensive income


2011/12

2010/11


£'000

£'000

Current tax:



UK corporation tax (credit)/charge - continuing operations

(177)

441

                                                 - discontinued operations

-

(82)

UK corporation tax

(177)

359

Overseas tax

37

-

Amounts (over)/under provided in previous years

(9)

150

Total current tax

(149)

509

 

 



Deferred tax:



Origination and reversal of temporary differences

291

1,078

Tax over provided in previous years

(4)

(43)

Rate change adjustment

(161)

(75)

Total deferred tax

126

960

Total tax (credit)/expense

(23)

1,469




 

 

 



The tax (credit)/charge in the statement of comprehensive income is disclosed as follows:






Tax expense on continuing activities

(23)

1,551

Tax credit on discontinued activities

-

(82)


(23)

1,469

 

 

 

Tax recognised in other comprehensive income



Deferred tax:



Actuarial (losses)/gains on pension schemes

(3,250)

1,601

Cash flow hedge

59

111

Tax (credited)/charged to other comprehensive income

(3,191)

1,712

 

 

Total tax (credit)/charge in the statement of comprehensive income

(3,214)

3,181

 

 

 

(b.) Reconciliation of the total tax charge

 

The total tax rate applicable to the tax expense shown in the statement of total comprehensive income of (5.9)% is lower than (2010/11: 28.7% was higher than) the standard rate of corporation tax in the UK of 25.5% (2010/11: 27.5%).  The differences are reconciled below:

 


2011/12

2010/11


£'000

£'000




Profit before tax from continuing operations

390

5,383

Loss before tax from discontinued operations

-

(269)

Accounting profit before taxation

390

5,114




Current tax at the UK standard rate of 25.5% (2010/11: 27.5%)

99

1,406

Expenses not deductible for tax purposes

52

244

Income not taxable

-

(213)

Rate change adjustment

(161)

(75)

Tax (over)/under provided in previous years - corporation tax

(9)

150

Tax over provided in previous years - deferred tax

(4)

(43)


(23)

1,469

 

(c.) Unrecognised tax losses

 

The group has agreed tax capital losses in the UK amounting to £21 million (2011: £21 million) that relate to prior years.  Under current legislation these losses are available for offset against future chargeable gains.  A deferred tax asset has not been recognised in respect of these losses, as they do not meet the criteria for recognition.

Revaluation gains on land and buildings amount to £1 million (2011: £1 million).  These may be offset against the capital losses detailed above, therefore net capital losses carried forward amount to £20 million (2011: £20 million).  The capital losses are able to be carried forward indefinitely.

(d.) Deferred tax

 

A reconciliation of the movement in deferred tax during the year is as follows:

 










 

 

Accelerated

capital

allowances

 

 

Short term

temporary

differences




 

Total

deferred

 

Pension

deferred


 

Brands

 

Losses

 

Hedging

tax liability

tax

asset


£'000

£'000

£'000

£'000

£'000

£'000

£'000









At 1 July 2010

1,113

28

863

-

(151)

1,853

(3,255)

Charged/(credited) to the statement of comprehensive income - current year

 

 

 

180

 

 

 

35

 

 

 

(124)

 

 

 

-

 

 

 

-

 

 

 

91

 

 

 

912

Charged/(credited) to the statement of comprehensive income - prior year

 

 

 

42

 

 

 

(85)

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(43)

 

 

 

-

Debited to equity

-

-

-

-

111

111

1,601









At 1 July 2011

1,335

(22)

739

-

(40)

2,012

(742)









(Credited)/charged to the statement of comprehensive income - current year

(249)

(9)

(115)

-

-

(373)

503

Charged/(credited) to the statement of comprehensive income - prior year

8

(12)

-

-

-

(4)

-

Debited/(credited) to equity

-

-

-

-

59

59

(3,250)









At 30 June 2012

1,094

(43)

624

-

19

1,694

(3,489)

 

 

Deferred tax assets and liabilities are presented as non-current in the consolidated statement of financial position. 

Deferred tax assets have been recognised where it is probable that they will be recovered.  Deferred tax assets of £4.8 million (2011: £5.2 million) have not been recognised in respect of net capital losses of £20 million (2011: £20 million).

 

(e.) Factors affecting the tax charge in future periods

The Chancellor announced on 21 March 2012 changes to reduce the main rate of UK corporation tax to 24 per cent from 1 April 2012 and to 22 per cent by 1 April 2014. These changes were not substantively enacted at the balance sheet date and therefore are not included in the figures above.

 

 

7          dividends


2011/12

2010/11


£'000

£'000




Interim dividend for 2012 of 1.0p paid on 10 April 2012      

357

-

Final dividend for 2011 of 6.75p paid on 31 October 2011

2,406

-

Interim dividend for 2011 of 3.25p paid on 8 April 2011      

-

1,164

Final dividend for 2010 of 6.75p paid on 29 October 2010

-

2,416


2,763

3,580




A final dividend of £357,000, 1.0p per equity share, has been proposed for the year ended 30 June 2012, payable on 31 October 2012.  In accordance with IFRS accounting requirements this dividend has not been accrued in these consolidated financial statements.

 

8          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:

 


2011/12

2010/11


£'000

£'000




Profit attributable to equity holders of the parent - continuing operations

413

3,832

Loss attributable to equity holders of the parent - discontinued operations

-

(187)

Net profit attributable to equity holders of the parent

413

3,645





000s

000s




Basic weighted average number of shares

35,648

35,780

Dilutive potential ordinary shares - employee share options

-

465


35,648

36,245

 

Calculation of underlying earnings per share from continuing operations:

 


2011/12

2010/11


£'000

£'000

Continuing operations:



Profit before taxation

390

5,383

Add back brand amortisation

299

320

Deduct profit on disposal of property

-

(759)

Add back restructuring costs

866

241

Add back re-financing costs

-

307

Deduct impairment charge reversal

-

(1,220)

Underlying profit before taxation

1,555

4,272




Tax at underlying group tax rate of 31.6% (2010/11: 30.3%)

(491)

(1,294)




Underlying earnings

1,064

2,978




Basic weighted average number of shares

35,648

35,780




Underlying earnings per share

3.0p

8.3p

 

9          movements in equity

Share capital and share premium

The balances classified as share capital and share premium are the proceeds of the nominal value and premium value respectively on issue of the company's equity share capital net of issue costs. 

Capital reserve - own shares
The capital reserve - own shares relates to 485,171 (2011: 485,171) ordinary own shares held by the company.  The market value of shares at 30 June 2012 was £337,194 (2011: £834,494).  These are held to help satisfy the exercise of awards under the company's Long Term Incentive Plans.  A Trust holds the shares in its name and shares are awarded to employees on request by the company.  The company bears the expenses of the Trust.

Hedging reserve
This reserve records the post-tax portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.

Foreign currency reserve
This foreign currency reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

10        Related party disclosure

The group's principal subsidiaries are listed below:

 

Principal subsidiaries

Principal activity

Country of incorporation

% of equity interest

 and votes held




2012

2011











Alumasc Precision Limited

Engineering products

England

100

100






Alumasc Exterior Building Products Limited

Building products

England

100

100






Alumasc Limited

Building products

England

100

100






Levolux Limited and Levolux AT Limited

Building products

England

100

100






Blackdown Horticultural Consultants Limited

Building products

England

100

100






Elkington China Limited

Building products

Hong Kong

100

100

 

Terms and conditions of transactions with related parties

Sales to and purchases from related parties are made at arms-length market prices.  Outstanding balances at the year end are unsecured and settlement occurs in cash.  There have been no guarantees provided or received for any related party receivables.

 

Transactions with other related parties

 

Key management personnel are determined as the Directors of The Alumasc Group plc.  There were no transactions with Directors during the year.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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