IMMEDIATE RELEASE

1 September 2016

THE ALUMASC GROUP PLC - FULL YEAR RESULTS ANNOUNCEMENT

Alumasc (ALU.L), the premium building products, systems and solutions group, announces results for the year ended 30 June 2016.

Full year financial highlights
Year to 30 June	2016	2015	% change
Continuing operations:
Order book at 30 June (£m)	26.6	24.0	+11%
Revenue (£m)	92.2	90.3	+2%
Underlying profit before tax (£m)*	8.3	7.7	+7%
Underlying earnings per share (pence)*	18.4	16.9	+9%
Dividends per share (pence)	6.5	6.0	+8%
Total group (including discontinued1 operations):
Profit before tax (£m)	7.7	4.8	+59%
Basic earnings per share (pence)	18.2	12.3	+48%
Net cash at 30 June (£m)	8.6	0.9

 

^* Underlying profits and earnings per share from continuing operations are stated prior to the deduction of brand amortisation of £0.3 million (2014/15: £0.3 million) and IAS 19 pension charges of £1.2 million (2014/15: £1.2 million).

¹ Discontinued operations comprise Dyson Diecastings in 2015/16; and Dyson Diecastings, Alumasc Precision Components and Pendock Profiles in 2014/15.

 

Key points

·      Alumasc completed its strategic re-focusing on Premium Building Products, Systems & Solutions with the £4m sale in June of its last remaining engineering business, Dyson Diecastings.

 

·      Quality of building products' earnings was strong across all business segments.  Revenues, excluding large projects of £1m or more, grew by 9% and operating cash generation exceeded operating profit.

 

·      The current order book is at record levels and has grown since the financial year end to over £30m (30 June 2015: £24.0m). This includes the increasing success of Levolux in North America and initial signs of recovery in the scheduling of larger projects which will benefit the latter part of the new financial year and beyond.

 

·      Solar Shading & Screening revenue up 8% to £17.4m and operating profit up 3% to £1m resulted from Levolux trading ahead of expectations with a closing order book of £18.9m.  Its growing presence in North America reflects the transformation over the past ten years into a business offering innovative and bespoke architectural, screening, balcony, solar shading and internal blind solutions.

 

·      Roofing & Walling performed strongly albeit with a marginally lower outturn for the year. Revenue was down 1% to £40.1m and operating profit down 11% to £4m reflecting the completion of the £12m Kitimat project in 2014/15 and government cuts to the Eco and Green Deal Schemes.  Strong trading momentum in roofing in the second half in both the new build and refurbishment markets is carrying through into the current year.  Following investment in new sales resources and products, walling is gaining traction in new build and beginning to develop new export markets in the Middle East.

 

·      Water Management revenue up 2% to £27.6m and operating profit up 7% to £3.5m was driven by a strong trading performance by Alumasc Water Management Solutions for most of the year, albeit pre-EU referendum uncertainties impacted "spot" orders in Q4. The Gatic engineered access covers business has recently won a number of significant projects, mainly for export markets.

 

·      Housebuilding & Ancillary Products revenue up 10% to £8.6m and operating profit up 25% to £1.4m reflects another record year for Timloc which continues to out-perform the UK house building products sector, adding new products and expanding geographic reach. Investment in sales and management resources and a new business system will support further growth and enhance Timloc's reputation for excellent customer service.  As part of growth plans, a lease on premises at Goole was signed in July 2016 and the new facility will be available for occupation in late 2017.

 

·      Alumasc's net cash inflow for the year was £7.7m and the group finished the year with £8.6m of net cash resources, which will be used to support continued organic growth and, should there be opportunities at the right price, complementary acquisitions.

 

Paul Hooper, Chief Executive, commented:

 

"This was Alumasc's fifth successive year of profit growth and our order books are at record levels.  We believe all our businesses have significant growth opportunities because of their strategic positioning in growing market niches and international potential."

 

Enquiries:

The Alumasc Group plc	01536 383844
Paul Hooper (Chief Executive) Andrew Magson (Finance Director)
Glenmill Partners Limited	07771 758517

Simon Bloomfield (sbloomfield@glenmillpartners.com)  

 

 

Strategic Report

Chairman's Statement

Developments

This year marks Alumasc's 30^th anniversary as a public company. For the past thirty years, our Annual Report, including my statement as Chairman, has covered a diverse group of small businesses, operating in several unrelated sectors. This year, following the sale of Dyson Diecastings, its last remaining engineering subsidiary, Alumasc's continuing business now operates within a single market sector.

This concentration of activity within building and construction is the outcome of a strategy to focus resource where our strengths lie and to exchange the historic resilience of diversity for the greater possibilities of building on a winning formula, while continually developing our skills and sharing best practice. This approach is discussed in greater detail in the Chief Executive's review that follows.

In order to counter the resultant risk of exposure to a single industry and its cycles, we endeavour to direct each business towards sectoral opportunities where demand is expected to outstrip the industry benchmark and to seek opportunities to introduce our products and services to new geographic markets judged to hold potential. This is not a new endeavour; however, it has required patience and investment. We believe that it has already delivered results during the difficult years that followed the financial crisis and, with greater focus, will yield greater rewards in future years.

Performance

Importantly, Alumasc has delivered another strong performance in the review year to 30 June 2016, with our continuing business progressing for the fifth consecutive year. The group's underlying profit before tax from continuing operations grew by 7%, from £7.7 million to £8.3 million, and statutory profit before tax by 59% to £7.7 million. Our balance sheet was already strong as a result of this improving performance and, following the sale of Dyson Diecastings in June, included net cash balances of £8.6 million at the year end.

The Board is recommending a final dividend of 3.8 pence per share (2015: 3.5 pence), to give a total of 6.5 pence for the year. This represents an increase of 8% over the previous year (6.0 pence) and is 2.8 times covered by basic earnings per share of 18.2 pence.

Future Development

Despite the transformation referred to above from diversity to greater focus, Alumasc remains a family of specialist businesses, each dedicated to satisfying specialist demands with specific, frequently bespoke, solutions. The more we succeed, by providing outstanding service to discriminating customers, the more we can expect to win market share and grow our revenues. Innovation is a vital contributor to this process and remains high on the agenda of all our businesses.

In the past, the diversity of our group may have provided a buffer against individual sectoral decline and cycles but limited opportunity for intra-group collaboration. The nuanced market focus of our continuing businesses still provides a degree of diversity within the sector but one where opportunities and best practice can frequently be shared.

These two points - innovation and evolving best practice - give our strategy a distinctly 'organic' flavour, which we view as a strength. The complementary strength of our balance sheet, and the operational focus on margin and cash generation, also provides us with the wherewithal to supplement organic growth by acquisition. We will be on the lookout for such opportunities, where they complement the market focus that has been achieved in recent years.

Prospects

Alumasc ended the year to June 2016 with positive momentum and with rising order books which have continued to grow since the year end to record levels, both positive indicators for the new financial year. A major contributor to the growth in order books is the success of Levolux in the United States, where patient groundwork has begun to yield tangible results. There are also signs of recovery in the scheduling of larger projects, following a quieter period during the past year, which will benefit the latter part of our new financial year and beyond.

More generally, it is still too close to the June referendum to predict with confidence any consequential change in prospects for the wider economy.

We assess the impact on our business of the fall in Sterling to be limited at current levels and our businesses have not detected any significant change in demand for their products and services.

At this moment, therefore, given the encouraging fundamentals outlined above, we continue to believe that Alumasc can outperform its underlying markets and that the group is well positioned to adapt to reality as necessary, with the expectation of achieving further progress both short and longer term.

John McCall
Chairman

 

 

Chief Executive's Strategic and Performance Overview

Strategic overview

Alumasc's strategic focus is to supply premium building products, systems and solutions with the objectives of:

1.     Building strong positions in specialist niche markets where specifiers and end customers recognise the value added by our products and services

 

2.     Growing group revenues on average at a faster rate than the UK construction market

 

3.     Generating consistently superior financial returns, underpinned by strong operating margins and returns on investment.

 

All Alumasc businesses operate in niche segments that benefit from growing demand for one or more of the following:

1.     The management of energy in the built environment

 

2.     The management of water in the built environment

 

3.     Bespoke solutions involving significant design input and technical expertise

 

4.     Solutions that improve the efficiency and quality of the construction and installation process.

 

Alumasc leverages this strong strategic positioning through:

·      The recruitment and development of talented people

 

·      Fostering an innovative and entrepreneurial culture

 

·      Dedicated management and sales focus for each niche market segment
 

·      Developing synergies within the group

 

·      The promotion of recognised and trusted brands
 

·      The development of innovative products

 

·      Expanding our geographical reach including internationally

 

·      Prioritised investment: both in human and capital resources to support further growth in the business.

 

 

The above is illustrated in more detail in the annual results presentation which can be found at www.alumasc.co.uk.

 

Overview of performance

Alumasc achieved its strategic ambition to become a focused supplier of niche building products at the end of the 2015/16 financial year, when the group sold its last remaining engineering products business, Dyson Diecastings.

 

 

Continuing operations

 

I am pleased to report Alumasc's fifth successive year of profit and earnings growth. The results for the year from continuing building products operations were the second best on record:

 

·      Group revenues increased by 2% to £92.2 million

 

·      Underlying operating profit increased by 2% to £8.5 million

 

·      We invested an incremental £1.2 million during the year mainly in additional sales resources to support the continued future growth in the business, the costs of which were absorbed within our operating profit for the year

 

·      Underlying profit before tax grew by 7% to £8.3 million, benefiting from the increase in operating profit and lower interest costs on borrowings due to lower average levels of net debt during the year

 

·      Underlying earnings per share grew by 9% to 18.4 pence.

 

The quality of the group's earnings in the 2015/16 financial year was high for a number of reasons:

 

·      The majority of our businesses improved their profit in the year, with profitability far more evenly balanced throughout the group than has been the case in prior years

 

·      The impact of large projects on group revenues and on group results was far less than it has been in recent years. We estimate that revenues from day to day business, excluding the impact of projects worth £1 million or more, increased by 9% in the year.  This was a far stronger performance than the headline figures suggest.

 

·      Conversion of profit into operating cash flow was strong, with operating cash flow of £11.2 million in excess of earnings before interest, tax, depreciation and amortisation ("EBITDA") of £9.7 million.

 

Discontinued operations

 

Profit before tax from discontinued operations was £0.9 million, mainly arising from the gain on sale of the Dyson Diecastings business, which had traded at just above break-even levels for the year prior to its sale.  

 

Statutory profit and earnings per share

 

Statutory profit before tax grew by 59% to £7.7 million, benefiting from the growth in underlying profit, the £0.9 million profit from the sale of Dyson Diecastings and non-repeat of operating losses from the engineering products business sold towards the end of the prior year.

 

Basic earnings per share of 18.2 pence were 48% ahead of the prior year's 12.3 pence per share.

 

Outlook

 

The group's positive momentum and rising order books, together with signs of recovery in the scheduling of larger construction projects referred to in the Chairman's Statement, are encouraging signs for this financial year.  The timing of the larger projects in the current order book suggests there could be a second half bias to this financial year's performance.

 

More broadly, we believe all our businesses have significant medium and longer term growth opportunities because of their strategic positioning in growing market niches and international potential.

 

As Alumasc's building products business approaches record ever levels of revenue and profit, it will require continued investment in human resources, together with investment in new capacity for Alumasc Water Management Solutions and Timloc, described further below, to fully realise this potential.

 

Dividends

 

The Board is recommending a final dividend of 3.8 pence per share (2014/15: 3.5 pence), taking the total dividend for the year to 6.5 pence (2014/15: 6.0 pence), an increase of 8%.

 

The dividend will be paid, subject to shareholder approval at the AGM to be held on 27 October 2016, on 1 November to shareholders on the register on 7 October.

 

 

Operational review

 

Health & safety

 

Alumasc's priority is to provide a safe place for our employees to work. The group further improved its safety performance in the year and recorded its second best safety performance rate on record.

 

Solar shading and screening

 

Revenue: £17.4 million (2014/15: £16.0 million), up 8%

Underlying operating profit: £1.0 million (2014/15: £0.9 million), up 3%

Underlying operating margin: 5.5% (2014/15: 5.8%)

 

Levolux's trading performance was ahead of expectations set at the beginning of the year, reporting higher revenues and profits than in the prior year. This was despite there being only one project of above £1 million revenue being completed in its entirety during the financial year.

 

More importantly, Levolux had an excellent year in broadening the market reach of the business including exports to North America, and also new products in the UK. This was reflected in closing order books at 30 June 2016 of £18.9 million, a substantial increase of 21% on the position at the beginning of the financial year.

 

Around a third of Levolux's 30 June 2016 order book is for export sales to North America and we expect this to be reflected in the sales mix later in the 2016/17 financial year. This is testament to the significant business development effort of recent years where Levolux has now established strong positions for the provision of premium and unique shading and screening solutions in a number of key regions in North America. Levolux plans to build on this success by adding two further vice presidents of sales in North America in the current financial year.

 

When Alumasc acquired Levolux in 2007 it was principally a UK solar shading and internal blinds business with the potential to expand its product range both in the UK and internationally. Ten years later it has been transformed into a business with a strong presence in both the UK and North America and that now provides:

·      Bespoke architectural solutions for architects and building owners encompassing innovative external façade and internal features

·      Innovative screening solutions for otherwise architecturally uninteresting buildings such as power plants and car parks

·      Bespoke balcony solutions, including off-site construction options, to prestige residential developments

·      Unique solar shading solutions that, where specified, can include electronic automation and photovoltaics, enabling architects and building owners to manage and reduce energy use in buildings

·      Bespoke internal blind solutions to reduce glare and improve the comfort of building occupants.

 

 

Roofing & Walling

 

Revenue: £40.1 million (2014/15: £40.6 million), 1% down

Underlying operating profit: £4.0 million (2014/15: £4.5 million), 11% down

Underlying operating margin: 9.9% (2014/15: 11.0%)

 

This business segment performed strongly and remained the most profitable in the group albeit with a marginally lower outturn for the year due to:

 

·      Lower revenues and profits from the large £12 million Kitimat smelter refurbishment project, which was already substantially complete in the 2014/15 year, with only the final account settled in the 2015/16 financial year

·      Lower activity levels in England and Wales for exterior wall insulation following government funding cuts to the Eco and Green Deal schemes for social housing refurbishment work.

 

 

Our roofing business started the year more slowly than expected with delays caused by market-wide shortages of installation labour. However it recovered to have a much stronger second half of the year, with the core business reporting its best performance on record for the year as a whole and strong trading momentum in both new build and refurbishment markets carrying through into the new financial year.

 

Further significant investment was made in high quality technical sales resources during the year, and the larger sales team is broadening the geographic reach of the business within the UK and is attracting higher levels of specifications for our products and solutions.

 

Alumasc Roofing is benefiting from the much wider product range introduced over the last few years, including the integration of the Blackdown green roofing and Roof-Pro roofing services businesses into the core waterproofing business. This has been combined with a comprehensive service offer including the Alumasc Promise. This enables us to offer specifiers, main contractors and building owners high quality solutions that provide longevity and lower the life cycle costs of the roof, assist in the management of energy and water and help provide a safe roof environment.

 

Our walling business had a transitional year as we invested in new sales resources and new products to build our positions in new build markets to offset the cuts to funded refurbishment work in England and Wales. The new build business began to gain traction towards the end of the financial year, with encouraging initial sales of the recently introduced Alumasc Base Coat Render and the Alumasc Ventilated System. The latter offers off-site construction options. We have also had interest from new export markets in the Middle East and initial sales were made in summer 2016. The exterior wall insulation refurbishment business in Scotland remains very strong, supported by ongoing funding under the Scottish government's HEEPS and forthcoming SEEPS schemes.

 

Water management

 

Revenue: £27.6 million (2014/15: £27.0 million), up 2%

Operating profit: £3.5 million (2014/15: £3.3 million), up 7%

Operating margin: 12.7% (2014/15: 12.1%)

 

The Alumasc Water Management Solutions ("AWMS") brand launched a year ago, which brought together in a holistic way our approach to the market for the Alumasc Rainwater, Harmer building drainage and Gatic civil drainage product ranges, was well received by customers and helped to drive a strong performance throughout most of the financial year. The new Gatic Filcoten and Harmer SML drainage products introduced a year ago, together with the new generation Gatic Slotdrain range introduced during the year each bedded in well.

 

The business was impacted by slowing UK economic growth rates towards the end of the financial year, including uncertainty ahead of the UK's Referendum on membership of the European Union, where some investment decisions in the UK relating to new infrastructure and industrial projects were delayed affecting order intake and sales for Gatic Slotdrain in particular. We also began to see upward pressure on galvanised steel costs towards the end of the financial year as part of an apparent over-correction to recent global over supply, and this is expected to impact Gatic Slotdrain margins in at least the first part of the new financial year.

 

AWMS further developed its strategy to provide a comprehensive water management within the built environment offer to the marketplace, including the 'Rain to Drain' concept, and is actively working with specifiers and industry bodies to help evolve our business to meet growing demand in this area.

 

It remains the intention to relocate the AWMS business to a new facility in the Kettering area at capital cost of circa £10 million in the next two to three years, as this business approaches physical capacity.

 

The Gatic engineered access covers business had a solid year, but unusually and for no other reason than timing, did not benefit from any large £1 million or more revenue projects in 2015/16 and therefore was unable to match the prior year's financial performance. Encouragingly, there are now a number of large projects both in the order book and in the pipeline beyond that, mainly for export markets. 

 

House building products and ancillaries

 

Revenue: £8.6 million (2014/15: £7.8 million), up 10%

Operating profit: £1.4 million (2014/15: £1.1 million), up 25%

Operating margin:  16.6% (2014/15: 14.6%)

 

Timloc Building Products goes from strength to strength, reporting another record year and continuing to out-perform a buoyant UK house building products sector through the addition of new products to its range and expansion of it its geographic reach within the UK. This business has close to trebled its operating profit since acquisition by Alumasc in 2004.

 

The first products in the new 'Above the Roofline' range were successfully launched in the second half of the year and the remainder of the products in this range will be rolled out in the coming months.

 

Investment has been made in additional sales and management resources during the year and a new business system was successfully launched in October. These provide the firm foundations needed to further grow the business and enhance its reputation for excellent customer service.

 

Timloc leveraged revenue growth with further purchasing, manufacturing and warehousing efficiencies in the year, supported by investment in new plant and equipment, allowing the business to earn improved operating margins. A lease on a new expanded facility was signed in July 2016 to support plans to further grow the business. The new facility is planned to be available for occupation in late 2017.

 

Paul Hooper

Chief Executive

 

 

 

Financial Review

 

Financial KPIs

The group's financial KPIs are summarised in the table below, together with comments on their year on year evolution.  Most 2015/16 KPIs show positive progress compared with 2014/15.

Financial KPIs: Continuing Operations	2015/16	2014/15	Comment/explanation
Year end group order book (£m)	26.6	24.0	Strong order books driven mainly by Levolux's international expansion and some recovery in the scheduling of larger projects
Group revenues (£m)	92.2	90.3	Continued growth in building products sales
Underlying operating margin %	9.2	9.2	Strong margins, after increased costs of investment in people in 2015/16
Underlying profit before tax (£m)	8.3	7.7	Growth in Building Products operating profit driven by higher revenues, and lower interest costs on borrowings
Underlying earnings per share (pence)	18.4	16.9	Growth in underlying profit before tax at a  lower underlying group tax rate
Average trade working capital % sales*	11.3	11.6	The reduction in this ratio is a positive development and reflects further working capital efficiency
Net cash (£m)	8.6	0.9	Improved cash conversion of profit.  Sales proceeds from Dyson Diecastings divestment
Pension deficit (IAS 19) (£m)	22.7	20.9	The deficit increased due to actuarial losses on the revaluation of pension liabilities to present values, reflecting lower UK bond yields
Year-end shareholders' funds (£m)	16.6	15.9	Increased due to retained profits after tax, net of pension actuarial gains/losses
Return on investment (post-tax) (%)	24.3	22.8	Strong operating margins from less capital intensive continuing building product operations

*excluding the exceptionally large Kitimat contract that is now complete

Taxation

 

The group's underlying tax rate reduced from 22.0% in 2014/15 to 20.8% in 2015/16, broadly in line with the reduction in the UK statutory rate. The group's overall tax rate increased from 9.2% in 2014/15 to 15.6% in 2015/16 mainly due to the year on year reduction in non-taxable profits from business and related property disposals.

 

 

Cash flow and year end cash position

 

The group's cash flow performance for the year is summarised in the table below. This was another strong year for cash generation in Alumasc, with:

 

·     Net operating cash flow from continuing activities of £11.2 million (2014/15 £9.3 million), benefiting from EBITDA of £9.7 million and a strong working capital performance. Rolling average trade working capital as a percentage of sales for the year improved to 11.3% from 11.6% a year ago, and some £1.8 million of cash was received in excess of profit recognised during the year on larger construction contracts reflecting the timing of milestone payments under those contracts

 

·     Relatively modest capital investment of £1.1 million, broadly similar to the depreciation and amortisation charge for the year and the capital spend in the prior year. Investments were made principally in replacement plant and machinery, additional machinery to expand capacity at Timloc, and in new business systems at Levolux and Timloc

 

·      Cash contributions to legacy defined benefit pension schemes were £2.9 million, unchanged on the prior year

 

·     The net cash inflow for the year from continuing operations was £3.2 million, prior to the business disposal proceeds and trading cash flows of £4.5 million from Dyson Diecastings in the year

 

·     A total cash inflow for the year of £7.7 million, including the Dyson Diecastings cash flows.

 

Alumasc's net cash resources at 30 June 2016 were therefore £8.6 million, an increase of £7.7 million on the 30 June 2015 net cash position of £0.9 million. In the last five years Alumasc has generated £19.3m of net cash, transforming a net debt position of £10.7 million at 30 June 2011 into a net cash position of £8.6 million at 30 June 2016.

 

Summarised Cash Flow Statement
			2015/16	2014/15
			£m	£m
Continuing operations:
EBITDA*			9.7	9.6
Underlying change in working capital			(0.3)	0.2
Short term changes in working capital on large construction contracts			1.8	(0.5)
Operating cash flow from continuing operations			11.2	9.3
Capital expenditure			(1.1)	(1.1)
Pension deficit & scheme expenses funding			(2.9)	(2.9)
Interest			(0.2)	(0.4)
Tax			(1.0)	(0.9)
Dividends			(2.2)	(1.9)
Share schemes and other			(0.6)	(0.1)
Net cash flow from continuing operations			3.2	2.0
Operating and investing cash flows from discontinued operations			-	0.4
Net sales proceeds from sale of businesses			4.5	6.2
Increase in net cash			7.7	8.6

 

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

 

 

Reconciliation of underlying profit before tax to profit for the year
		2015/16	2014/15
		£m	£m
Underlying profit before tax from continuing operations		8.3	7.7
IAS19 pension costs		(1.2)	(1.1)
Brand amortisation		(0.3)	(0.3)
Profit before tax from continuing operations		6.8	6.3
Discontinued operations:
Dyson Diecastings		0.9	0.7
Alumasc Precision Components		-	(3.0)
Pendock Profiles		-	0.8
Profit before tax		7.7	4.8
Tax expense		(1.2)	(0.4)
Profit for the year		6.5	4.4

 

Pensions

 

The Pension Trustees are in the process of finalising the triennial valuation of Alumasc's legacy defined benefit pension liabilities as at 31 March 2016. The draft valuation shows a deficit of £33 million, which equates to a funding level of 73%. The deficit is unchanged on the position three years ago, with the impact in the intervening period of falling gilt yields that are used to value pension liabilities offset by lower long term inflation expectations, mortality experience, transfers out of the scheme and investment performance.

 

The impact of the 2016 triennial valuation on recovery plan payments to be made by the company is still under discussion with the Pension Trustees. In view of the improved profitability of the group in the period since the 2013 actuarial review it is likely that company contributions will increase, albeit by a relatively modest amount.

 

The valuation of Alumasc's pensions deficit for accounting purposes, using IAS 19 valuation conventions, which are less stringent than those used in the formal triennial review, resulted in an increase in the deficit to £22.7 million at 30 June 2016, compared with £20.9 million at 30 June 2015. The increase is largely due to a reduction in the corporate bond yield used to value gross pension liabilities, particularly in the final quarter of the 2015/16 financial year, including the initial impact on bond yields of the UK referendum decision on 23 June 2016.

 

Balance sheet and capital structure

 

The group's net assets and shareholders' funds increased from £15.9 million at the beginning of the financial year to £16.6 million at 30 June 2016 as retained profits for the year were partially offset by pension scheme actuarial losses.

 

The group defines its capital invested as the sum of shareholders' funds, plus the pension deficit (net of the related deferred tax asset), less net cash resources. On this basis capital invested reduced from £31.8 million at the end of the prior year to £26.5 million at 30 June 2016, largely reflecting the sale of Dyson Diecastings for net proceeds of £4.0 million at the year end.

 

Our strategy to focus the group on building products activities has benefited both the group's operating margin and returns on investment over recent years as lower margin and higher capital intensity engineering products businesses have been sold whilst the ongoing building products business, which generates higher operating margins at lower capital intensity, has expanded.

 

Post tax return on investment from continuing operations was 24.3% in the 2015/16 financial year, substantially above the group's weighted average cost of capital.

 

Alumasc has a strong balance sheet. This will be used (together with the bank facilities described below as needed) to finance the anticipated further organic growth of the group and complementary acquisitions should the right opportunities arise at the right price. 

 

 

Banking facilities

 

Alumasc's banking facilities comprise:

·      An unsecured committed five year revolving credit facility of £12.5 million, expiring in August 2020

·      The ability to extend this facility to £30 million, subject to further credit approval by relationship banks

·      Overdraft facilities, repayable on demand, of £2 million.

 

Going concern and viability

 

In view of the current and anticipated trading position of the group, its strong balance sheet including substantial cash resources and the unutilised committed banking facilities described above, and based on information available to it as at the date of this report, the Board does not foresee issues with regard to going concern status of the group or its viability during the three year period for which it prepares financial plans.

 

Business risk, internal control and systems

 

The group continues to improve its risk management and control processes. Risk management is embedded in the way we work across the group and, in addition to the formal annual review process, it is considered wherever appropriate in monthly Board meetings at both operating business and group levels. Internal audits carried out by group finance concentrate on compliance with internal financial controls across Alumasc, and are increasingly focused on higher risk and judgmental areas.

 

Two new business systems were implemented during the year at Timloc and Levolux and substantial enhancements to the AWMS system are planned in 2017. At the end of the 2016/17 financial year, almost all of the Alumasc group will be supported by Microsoft Dynamics business systems.

 

Andrew Magson

Group Finance Director

 

 

Responsibility Statement

We confirm that to the best of our knowledge:

·      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 or loss of the company and the undertakings included in the consolidation taken as a whole; and

·      the strategic report includes a fair review of the development and performance of the business and the position of the group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

 

We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group's position and performance, business model and strategy.

On behalf of the Board

 

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 2016 which will be despatched to shareholders on or around 23 September 2016 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 ended 30 June 2016
			2015/16					2014/15 (re-stated)
Continuing operations:	Notes		£'000				£'000
Revenue	4		92,233				90,295
Cost of sales			(61,434)				(60,741)
Gross profit			30,799				29,554
Net operating expenses			(23,101)				(21,963)
Operating profit	4		7,698				7,591
Finance income			-				5
Finance expenses	5		(939)				(1,308)
Profit before taxation	5		6,759				6,288
Tax expense	7		(1,581)				(1,483)
Profit for the period			5,178				4,805
Discontinued operations:
Profit/(loss) after taxation for the period from discontinued operations	6		1,306				(429)
Profit for the period			6,484				4,376
Other comprehensive income
Items that will not be recycled to profit or loss:
Actuarial loss on defined benefit pensions			(3,412)				(4,726)
Tax on actuarial loss on defined benefit pensions	7		240				945
			(3,172)				(3,781)
Items that are or may be recycled subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges			(22)				(179)
Exchange differences on retranslation of foreign operations			1				17
Tax on cash flow hedge	7		(1)				43
			(22)				(119)
Other comprehensive loss for the period, net of tax			(3,194)				(3,900)
Total comprehensive profit for the period, net of tax			3,290				476
Earnings per share			Pence				Pence
Basic earnings per share
-  Continuing operations			14.5				13.5
-  Discontinued operations			3.7				(1.2)
	9		18.2				12.3
Diluted earnings per share
-  Continuing operations			14.3				13.3
-  Discontinued operations			3.6				(1.2)
	9		17.9				12.1

 

A reconciliation of the statutory results to underlying results is provided in note 5 and of underlying to basic earnings per share in note 9

 

 

consolidated statement of financial position

At 30 June 2016

	Notes	2016	2016	2015	2015
		£'000	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		5,250		7,473
Goodwill		16,488		16,488
Other intangible assets		2,642		2,831
Financial asset investments		17		17
Deferred tax assets	7	4,080		4,187
			28,477		30,996
Current assets
Inventories		10,238		10,667
Trade and other receivables		19,759		20,317
Cash and cash equivalents		10,540		5,914
			40,537		36,898
Total assets			69,014		67,894
Liabilities
Non-current liabilities
Interest bearing loans and borrowings		(1,908)		-
Employee benefits payable		(22,668)		(20,935)
Provisions		(1,064)		(1,224)
Deferred tax liabilities	7	(508)		(390)
			(26,148)		(22,549)
Current liabilities
Interest bearing loans and borrowings		-		(5,000)
Trade and other payables		(25,351)		(23,338)
Provisions		(478)		(402)
Corporation tax payable		(188)		(429)
Derivative financial liabilities		(269)		(247)
			(26,286)		(29,416)
Total liabilities			(52,434)		(51,965)
Net assets			16,580		15,929
Equity
Called up share capital		4,517		4,517
Share premium	10	445		445
Capital reserve - own shares	10	(931)		(618)
Hedging reserve	10	(221)		(198)
Foreign currency reserve	10	50		49
Profit and loss account reserve		12,720		11,734
Total equity			16,580		15,929

 

 

 

G P Hooper                           A Magson
Director                                  Director 

 

 

1 September 2016

Company number 1767387

 

 

 

 

consolidated STATEMENT of cash flows

For the year ended 30 June 2016

 

		2015/16	2014/15
		£'000	(re-stated) £'000
Operating activities
Operating profit		7,698	7,591
Adjustments for:
Depreciation		931	905
Amortisation		364	332
Gain on disposal of property, plant and equipment		(11)	(14)
Increase in inventories		(400)	(1,120)
Increase in receivables		(804)	(1,963)
Increase in trade and other payables		2,958	2,510
(Decrease)/increase in provisions		(84)	358
Cash contributions to retirement benefit schemes		(2,500)	(2,500)
Share based payments		181	300
Cash generated by operating activities of continuing operations		8,333	6,399
Operating profit/(loss) from discontinued operations		27	(896)
Depreciation and amortisation		141	1,050
Movement in working capital from discontinued operations		15	526
Cash generated by operating activities of discontinued operations		183	680
Tax paid		(980)	(907)
Net cash inflow from operating activities		7,536	6,172
Investing activities
Purchase of property, plant and equipment - continuing operations		(869)	(888)
Purchase of property, plant and equipment - discontinued operations		(148)	(226)
Payments to acquire intangible fixed assets		(255)	(322)
Proceeds from sales of plant and equipment		21	60
Proceeds from sale of business activities		4,474	6,168
Interest received		-	5
Net cash inflow from investing activities		3,223	4,797
Financing activities
Interest paid		(221)	(408)
Equity dividends paid		(2,208)	(1,889)
Repayment of amounts borrowed		(3,000)	(5,000)
Refinancing costs		(119)	-
Purchase of own shares (net)		(612)	-
Net cash outflow from financing activities		(6,160)	(7,297)
Net increase in cash and cash equivalents		4,599	3,672
Net cash and cash equivalents brought forward		5,914	2,224
Effect of foreign exchange rate changes		27	18
Net cash and cash equivalents carried forward		10,540	5,914