IMMEDIATE RELEASE

5 September 2019

THE ALUMASC GROUP PLC

FULL YEAR RESULTS ANNOUNCEMENT

RESILIENT PERFORMANCE IN CHALLENGING MARKETS

Alumasc (ALU.L), the premium building products, systems and solutions Group, announces results for the year ended 30 June 2019.

Paul Hooper, Chief Executive, said:

"During the year our Roofing and Water Management and Housebuilding Products businesses delivered solid performances. We took prudent action to restructure and refocus Levolux, to provide greater cross-selling opportunities with shared operational and administrative resources within the recently formed Alumasc Building Envelope division.

We remain cautious about the current economic climate in relation to the new build construction markets,but have taken the right mitigating actions and believe that our strong market positions, innovative products and experience will stand us well for the year ahead."

Financial Review:

·       Group revenues up 4% to £90.1m (2018: £87.0m)

·       Underlying profit before tax* £5.6m (2018: £6.0m) reflecting the previously reported performance from Levolux

·       Basic earnings per share of 10.1 pence (2018: 12.0 pence)

·       Maintained total dividend for year of 7.35 pence (2018: 7.35 pence) reflecting the Board's confidence in the future and positive impact of the recent restructuring actions

·       Net debt of £5.1m (2018: £4.8m)

·       Core businesses which represent 80% of Group revenues: Roofing & Water Management and Housebuilding Products, performing strongly with YoY growth and margin improvement. 

 

·       Pro-active management action to address Levolux's challenging markets:

o   Restructuring of Levolux and its amalgamation into the new Building Envelope division, enables cross selling opportunities and shared operational and administrative resources;

o   Investment in local technical sales in North America, to expand and enhance its current revenue streams of circa £4m p.a.

 

·       Implementation of a cost-efficient operating structure:

o   On track to deliver additional annualised £2m cost savings in FY 2019/20

o   On target to deliver year end 2019/20 streamlined business with six operational sites.

 

 

·       Merger of pension schemes and simplified legal structure saving over £100k p.a. in pension scheme running costs and company administrative costs.

 

·       Focused investment in Housebuilding Products and Water Management divisions

o   £1m invested in Timloc on new machinery and automation; and £0.6m in new Gatic Slotdrain manufacturing plant and machinery

o   £1m investment commitment in the Water Management division for tooling held at strategic suppliers in Far East.

 

 

·       Recent acquisition and divestments have delivered a pro forma pre-tax return on investment of 28%.

Outlook:

o   Against a backdrop of current economic and new build construction sector conditions, the Board has taken swift action to restructure Levolux, whilst investing and supporting the strongly performing Roofing & Water Management and Housebuilding Products divisions.
 

o   The Board continues to believe that Alumasc's strong strategic and market positions, which underpin the Group's past track record, will ensure that the Group is well positioned to make progress in the current financial year and beyond.

* A reconciliation of underlying to statutory profit before tax is provided in note 5.

Enquiries:

The Alumasc Group plc:
Paul Hooper (Chief Executive)	Tel:  01536 383821
Andrew Magson (Group Finance Director)	Tel:  01536 383844
finnCap Ltd (Nomad):
Julian Blunt	Tel: 020 7220 0500
Peel Hunt (Broker):
Mike Bell	Tel: 020 7418 8831
Ed Allsopp	Tel: 020 7418 8831
Camarco:
Ginny Pulbrook	Tel: 020 3757 4992
Tom Huddart	Tel: 020 3757 4991
	Email: alumasc@camarco.co.uk

Notes to Editors:

Alumasc is a UK-based supplier of premium building products, systems and solutions. Almost 80% of Group sales are driven by building regulations and specifications (architects and structural engineers) because of the performance characteristics offered.

The Group has three business segments with strong positions and brands in their individual markets: Roofing & Water Management; Architectural Screening, Solar Shading & Balconies; and Housebuilding Products.

 

 

Strategic Report

Chairman's Statement

Summary

In the year under review, our Roofing, Water Management and Housebuilding products businesses, representing 80% of Group revenues, performed well, growing revenues and profits, and delivered their strategic objective of outperforming the industry benchmark.

 

This was against the backdrop of growing political and economic uncertainty, which had a negative impact on business generally, and commercial construction in particular. Our business most exposed to this sector - Levolux - experienced numerous project delays as a consequence, and incurred losses as a result.

 

Swift action has been taken to mitigate these and a plan to restructure the business was announced in June 2019. Levolux continues to offer great potential in the UK and international markets and is one of Alumasc's strongest brands.

 

In light of the resilient performance by the majority of our business, our plans for development in the short and longer term and the strength of our balance sheet, the Board is recommending an unchanged final dividend of 4.4p per share which, if approved, gives an unchanged total dividend of 7.35p per share for the full year.

 

The Year Under Review

In the full year, Group revenues increased by 4% to £90.1 million, while underlying profit before tax fell by 7% to £5.6 million.

 

Alumasc again achieved its strategic objective of growing revenues faster than the UK construction market, with our Roofing & Water Management and Housebuilding products divisions, together representing 80% of the Group, significantly outperforming. This growth did not translate into increased overall profit for the year due to the operating losses incurred at Levolux, reflecting the decline in UK commercial construction activity and project delays during the period. A significant strategic refocussing and restructuring of Levolux was announced in June, aimed at returning the business to sustainable profit as soon as possible. Details are in the Chief Executive's review.

 

Other operational highlights of the year included:

 

·      The Wade drainage business acquired in January 2018 was strongly earnings enhancing in its first full year in the Group, with surplus space at its freehold property utilised to enable us to save property rental costs elsewhere.

·      Capital investment of £2.4 million was made during the year, some £0.7 million in excess of the depreciation charge, reflecting our confidence in the growth potential of Timloc, our housebuilding products business, and our Water Management business in particular. These investments meet our key investment criteria of increasing manufacturing capacity while improving efficiency and reducing cost.

·      We continued to benefit from our innovation and new product development programmes. New product launches included Timloc's InvisiWeep, a virtually invisible wall weep, and the Adapt-Air system, which provides an integrated wall ventilation solution; and Gatic's launch of new generation access cover and slotdrain products.

·      The factors which underlie Timloc's reputation for excellent customer service are being implemented elsewhere in the Group.

 

The Group had modest net debt of £5.1 million at 30 June 2019, with committed banking facilities of £20 million. The Group's legacy pension liabilities had reduced to £13.0 million at 30 June 2019, the lowest for some time.

 

Our previously announced plans to continue to drive efficiency and reduce fixed costs across the Group, planned to benefit the 2019/20 financial year by £2 million, are on track to be delivered.

 

Strategic Developments

Following the acquisition of Wade, a business complementary to our Water Management Division, during the previous financial year, the Board took the decision to sell our Facades business in October 2018 to a purchaser providing a stronger strategic fit. The freehold manufacturing and warehousing facilities at St Helens were retained and are central to our plans for site rationalisation.

 

This move streamlined Alumasc's portfolio into three new operating divisions effective from 1^st July 2019: Building Envelope, Water Management and Housebuilding Products. This in turn enables the operational team to focus on the significant cross selling opportunities that exist across Alumasc's strong client base while exploiting operational efficiencies.

 

Timloc's activities were successfully consolidated for the first full year onto its new site at Howden, East Yorkshire and, as highlighted above, significant investment was made in manufacturing facilities in support of its service-led housebuilding product range.

 

Following the acquisition of Wade, related manufacturing activities have been transferred to its freehold site from leasehold properties elsewhere, accompanied by service enhancing investment.

 

In addition to the commercial gains being targeted from the more integrated selling approach, the rationalisation of property usage is a significant contributor to the Group's previously announced plans to reduce total fixed costs by £2 million in the new financial year, without compromising capacity or service.

 

By the end of 2019/20, we will have achieved our objective of reducing the number of operational sites from ten to six, saving some £0.6 million of leased property costs in the process.

 

Board Succession

Richard Saville, who served as a Director of The Alumasc Group for 17 years, many as Chairman of The Audit Committee, retired during the year. My colleagues and I wish to express our sincere thanks to Richard for his support and wisdom.

 

Two Non-executive appointments were made during the year: Stephen Beechey, an executive director of The Wates Group, and Vijay Thakrar, whose career included partnerships at Deloitte and Ernst & Young, will bring valuable new perspectives to our Board and I welcome them on your behalf.

 

I am delighted to announce that Gilbert Jackson and Michael Leaf, Divisional Managing Directors of our Roofing and Housebuilding Products divisions respectively, have today accepted the invitation of the Board to become Directors of The Alumasc Group. We believe that these appointments will help to accelerate the delivery of the exciting plans that exist for their businesses and will benefit our deliberations on further group development.

 

Corporate Actions

During the year, the Board decided to relist Alumasc's shares on the AIM market, providing a more suitable base for the development of the business and a broader spectrum of investor interest. This was achieved on 25 June 2019.

 

Earlier in the year, the Company's two legacy pension schemes were merged, saving duplication and cost, and enabling the desirable restructuring of operations to take place.

 

In addition to the physical rearrangements referred to above, a simplification of the Group's corporate structure is under way, reducing administration and aligning legal structure with our commercial organisation.

 

Prospects

Given the mixed forecasts for UK construction while economic and political uncertainty prevails, the Board has taken mitigating steps both in the shorter term and to ensure that Alumasc will be in a strong position to exploit future market recovery.

 

In these circumstances, we stay close and listen to our customers and, where we have identified opportunities to add greater value, we are revising our product ranges and investing to reinforce excellent service as our key differentiator.

 

 

 

John McCall
Chairman

 

Chief Executive's Review

Financial Highlights and Overview

 

	2018/19	2017/18	% change
Group performance:
Revenue (£m) *	90.1	87.0	+4%
Underlying profit before tax (£m) *	5.6	6.0	-7%
Statutory profit before tax (£m)	3.9	5.4	-27%
Underlying earnings per share (pence) *	12.4	13.4	-7%
Basic earnings per share (pence)	10.1	12.0	-16%
Dividends per share (pence)	7.35	7.35	-
Note - Roofing & Water Management and Housebuilding Products segments:
Revenue (£m)	71.3	65.1	+10%
Underlying operating profit (£m)	7.7	6.6	+16%

* Revenue and profit from continuing operations, excluding the revenues and profits of Alumasc Facades prior to its disposal on 31 October 2018 and its classification as a discontinued operation. A reconciliation of underlying to statutory profit before tax is provided in note 5 and earnings per share in note 10.

 

 

In recent years, the Alumasc management team's strategy has been to re-position the Group to become a dedicated supplier of premium building products to the UK construction industry and to seek opportunities to grow internationally.

 

Review of financial performance:

Alumasc's performance for the year was resilient against the background of a flat overall UK construction market which was impacted by the uncertain economic and political environment. The impact of this environment was reflected in a 7% reduction in activity in the UK commercial new build construction sector, which is an important end use market for the Group.

 

Despite this, Alumasc achieved its strategic objective of growing Group revenues faster than the UK construction market. Revenue growth was 4%. Adjusting for selling price inflation, sales volume growth was circa 2%, representing an outperformance of circa 2% against a broadly flat UK construction market.

 

This revenue growth did not translate into an overall improvement in profit due to operating losses incurred in our Architectural Screening, Solar Shading & Balconies division, Levolux. This division, which represents approximately 20% of Group revenues, impacted the Group's underlying profit before tax negatively by 32% and is the sole reason why the Group's overall underlying profit before tax was 7% lower than the prior year.

 

Following a strategic review, a significant restructuring of this business was announced in June 2019. Further detail is set out in the Strategic Development section below.

 

Significant progress was made in the Group's core Roofing & Water Management and Housebuilding Products divisions, which represent circa 80% of Group revenues. In these divisions revenue growth of 10% was considerably ahead of the UK construction market, with underlying operating profit growth of 16% exceeding revenue growth mainly due to the effect of operational gearing. Excluding the full year benefit of the successful acquisition of Wade International in January 2018, like-for-like revenues in these divisions were ahead by 5% with underlying profits up 7%.

 

 

Strategy and performance against strategic objectives

 

Alumasc's strategy is to:

 

1.     Grow revenues on average faster than UK construction market growth by building specialised positions in growth markets

 

In 2018/19 the Group continued its track record over recent years of growing revenues ahead of the UK construction market on average.

 

 

2.     Augment UK revenue growth through the development of selected export markets

 

Due to the timing of larger projects and project delays, export revenues which were circa 10% of overall Group revenues reduced by 25% against the prior year. However, market intelligence supports our view that there is meaningful growth potential in Levolux's North American markets and for Alumasc Water Management in the Middle and Far East. Prudent investment therefore continues to be made in local and export sales resources to realise this sales potential.

 

 

3.     Grow profit at a faster rate than revenue by improving operating margins

 

Overall the Group's underlying operating margins reduced from 7.2% to 6.5% in the year reflecting the operating losses incurred at Levolux. In the remaining 80% of the Group operating margins improved from 10.1% to 10.7%. The Group has, in recent months, announced cost saving plans of approximately £2m which should, other things equal, benefit operating margins in 2019/20 by around 2 percentage points.

 

Accelerating strategic development

 

Management has increased the pace at which it is executing its priorities for strategic development. These are as follows:

 

1.     Levolux business improvement plan

 

The overriding strategic priority that emerged in the second half year was the necessity to return Levolux to sustainable profit as soon as possible. Following a change of management and a strategic review, the Board announced in June 2019 that the revised strategy involves a re-focus of the business to those areas where it can clearly differentiate and add most value to customers and shareholders, including developing the more profitable areas of the business, simplifying operational delivery and reducing risk. The key elements are to:

 

·      incorporate Levolux solar shading, screening and balconies as major constituents in a new "Alumasc Building Envelope" division providing integrated solutions for developers and specifiers seeking high quality roofing and walling systems. A new, collaborative divisional sales approach will increase Levolux's existing market reach and leverage existing strong customer relationships.

 

·      focus on design and supply activities, as is the case in the rest of the Alumasc Group. In-house installation will only be offered where this service is particularly valuable to customers and Levolux. The expectation over time is that this will improve margin mix and enhance profit margins.

 

·      invest in local technical sales resources to accelerate growth in the profitable Levolux business in North America. Current revenues in this market are circa £3 million pa.

 

·      undertake a significant restructuring of the existing Levolux operational and overhead cost base, with fixed cost savings of £1 million expected in the Group's 2019/20 financial year, and further significant annualised savings in 2020/21. This will include the relocation of the business from Levolux's current two leasehold sites to Alumasc's freehold facility in St Helens. One-off restructuring costs of £2.5 million were booked in the 2018/19 financial year in connection with the above.

 

Alumasc continues to believe that Levolux is a business with great future potential and is one of the Group's strongest brands.

 

2.     Develop further opportunities for specification cross selling, including the development of a "building envelope" division

 

In light of the strategic review of Levolux described above, we believe there is a further beneficial significant opportunity for the Group to increase sales by offering an integrated "Building Envelope" of exterior building products facilitating the integration of walling, roofing, balconies, solar shading and integrated aluminium detailing which not only provides a full external envelope solution but also mitigates both client's and contractor's risks by ensuring that the horizontal and vertical planes are detailed to remove tolerance and interfacing detail issues.

 

The wider well known Alumasc system brands will be brought together to provide a single source solution whilst working with clients, their agents and installers to design out construction risk along with a combined strength to provide cost savings through the avoidance of post construct legacy issues and providing certainty through build cost engineering to planned models.

 

The Group's management structure and specification sales teams have been re-aligned to approach the market in this way. The Group's divisional structure and segmentation of results will change in 2019/20 reports to reflect this and Alumasc's three operating divisions in future will comprise Building Envelope; Water Management; and Housebuilding Products.

 

3.     Implementation of a more cost-efficient operating structure

 

Following the restructuring of Gatic described in our interim report and in the operational review section below, and the restructuring of Levolux described above, by the end of the 2019/20 financial year we will have achieved our previously announced objective of reducing the number of operational sites in the Group from ten to six. In doing so we will have saved circa £0.6 million per year in leased property costs through better utilisation of the Group's freehold properties.

 

Further, the Group has simplified both its internal legal and pensions structure. The Group's two legacy defined benefit pension schemes were merged in March 2019, which reduced the Group's pension deficit by £0.3 million and will save over £100k pa in pension scheme running costs. The pension scheme merger, in turn, enabled the combination of three of the Group's four active trading subsidiaries into one in June 2019.

 

Finally, as previously announced, the Group successfully completed the re-listing of its shares on the Alternative Investment Market "AIM" market in June 2019.  

 

4.     Prioritising and focusing investment to drive profitable growth

 

Alumasc continues to invest to exploit the significant growth potential of our businesses.

 

Capital investment is focused on those of our businesses with greatest manufacturing activity: Timloc, our Housebuilding Products business, and our Water Management business. Over the last two years capital investment has exceeded depreciation by £2.7 million reflecting the Board's confidence in future growth potential, and the plan is to invest in excess of depreciation again in the 2019/20 financial year. Of the Group's 2018/19 capital spend of £2.4 million, some £2.1 million was focused on these businesses, with £1 million spent at Timloc on new machinery and automation to improve efficiency and reduce cost; and £0.6 million in new Gatic Slotdrain manufacturing plant and machinery following the successful relocation of manufacturing to Wade's freehold premises. Investment of over £1 million has been committed in the Water Management division to renew tooling held at strategic suppliers in the Far East to enable reduced manufacturing cost, improved efficiency, better product quality and to assist our supply partners in reducing carbon emissions. The benefit of this investment is evident in the continued strong performance of these businesses, both in terms of revenue growth and margin improvement, and we continue to assess further projects with attractive payback characteristics.

 

Revenue investment in new people is focused on expanding our sales reach both in the newly formed Building Envelope division in the UK and in growing Levolux and Water Management divisional export sales. 

 

5.     Improving the Group's quality of earnings and operating margins through the proactive management of our portfolio of businesses

 

Although the Group did not make any further acquisitions in the year under review, in the last two years through the acquisition of the Wade drainage business and divestment of the Scaffolding Products and Alumasc Facades businesses, the Group has acquired net incremental operating profits of £0.7 million for a net purchase consideration of £2.5 million. This represents a pro forma pre-tax return on investment of 28%. Whilst we continue to seek to grow the Group through bolt-on acquisitions we have no plans to make further divestments.

 

Performance overview

 

(a)   Continuing Operations

 

Revenue analysis

An analysis of the Group's year on year revenue growth from continuing operations is set out below:

 

% change 2018/19 versus 2017/18	Total
Roofing & Water Management	+10%
Housebuilding Products	+9%
Sub-total	+10%
Architectural Screening, Solar Shading & Balconies	-15%
Total Group (headline)	+4%
Note:
Roofing & Water Management like-for-like *	+5%
Group like-for-like *	-

 

* Like-for-like information is adjusted for the full year impact in 2018/19 of the acquisition of Wade in January 2018. UK like-for-like revenues excluding Wade grew by 4%

 

Revenue

 

The table above illustrates that across the Group, except for the Architectural Screening, Shading and Balconies division (Levolux), Alumasc achieved revenue growth rates in excess of the UK construction market despite the downturn in new build commercial construction activity. This outperformance can be attributed to the Group's strategy of investing in businesses with strong market positions in specialised growth markets, including products and systems that manage the scarce resources of water and energy in the built environment.

 

The revenue reduction at Levolux reflects its strong alignment with the commercial new build market sector where UK output reduced by 7% over the period, exacerbated by project delays. These were associated with ongoing economic and political uncertainties and restricted credit availability across the building contracting sector in the UK. Levolux is the only business in Alumasc that largely installs its own products and therefore has this degree of exposure to building contracting. This model is now being changed, following the recent strategic review of the business, to retain Levolux's differentiated offering whilst reducing margin risk. 

 

Gross margins

Gross margins reduced from 30.9% in 2017/18 to 29.8% in 2018/19 due to lower margin realisation at Levolux, reflecting lower recovery of fixed costs due to lower than expected revenues in part due to project delays; a higher proportion of lower margin balcony and balustrading work in the period; lower margins in the Gatic brand in the first half year; and higher annualised property costs at Timloc following its relocation to a larger factory in December 2017. Gatic's margins recovered in the second half following successful selling price increases.

 

Net operating expenses

Net operating expenses were well controlled during the year and amounted to 23.3% of revenues compared with 23.8% in the prior year. As the cost saving actions described in this report bear fruit, we expect this ratio to decrease further in the 2019/20 financial year.

 

Underlying operating profit

Underlying operating profit was £5.9 million compared with £6.2 million in the previous year. The reduction was entirely attributable to Levolux, where the operating losses incurred more than offset profitable growth in the rest of the Group.

 

Bank interest

Bank interest costs of £0.3 million were a little higher than in the previous year (£0.2 million) due to modestly higher levels of average net debt during the year following the debt-funded acquisition of Wade for £8.0 million in January 2018, which was not fully offset by the disposal of Alumasc Facades for £4.5 million in October 2018.

 

Underlying profit before tax

Underlying profit before tax was £5.6 million (2017/18: £6.0 million), reflecting the reduced underlying operating profit and higher bank interest charge.

 

Non-underlying, non-recurring items

Non-underlying and non-recurring items (relating to continuing operations) amounted to a £4.6 million net cost in the period compared with a £0.9 million net cost in the prior year. In 2018/19, the larger items in this category were restructuring and relocation costs of £3.0 million, mainly associated with the cost reduction programmes at Levolux and Gatic; net one off pension scheme charges of £0.8 million largely relating to the UK High Court decision in October in respect of guaranteed minimum pensions equalisation; and £0.2 million in connection with the re-listing of Alumasc's shares on the AIM market. Further details are given in the Financial Review.

  

(b)   Discontinued Operations and profit (after tax) for the year

The net after tax gain from discontinued operations, reflecting the trading profit of the Alumasc Facades business prior to its disposal in October 2018 and the gain realised on the disposal transaction itself, was £2.9 million. The post-tax operating profit generated by Alumasc Facades in the prior year was £0.4 million.

 

The Group's resulting overall statutory profit (after tax) for the year was £3.6 million (2017/18: £4.3 million).

 

Operational review

 

(a)   Roofing & Water Management

 

Revenue: £59.9 million (2017/18: £54.6 million)

Underlying operating profit*: £5.9 million (2017/18: £4.9 million)

Underlying operating margin*: 9.9% (2017/18: 9.0%)

Operating profit: £5.3 million (2017/18: £4.6 million)

 

* Prior to restructuring costs of £0.5 million in 2018/19, brand amortisation charges of £0.1 million in both years and Wade acquisition costs of £0.2 million in 2017/18.

 

Performance in this division benefited from the full year effect of the successful Wade acquisition in January 2018; growth in revenues in the Gatic brand driven by a number of larger projects in the UK infrastructure sector during the year; and the successful launch in the latter part of the prior year of new generation Access Cover and Slotdrain products. Wade was strongly earnings enhancing in its first full year in the Group.

 

The margin pressures in the Gatic brand experienced in the first half year were addressed by selling price increases in November 2018, which led to a full recovery of margin in the second half year.

 

Production of Gatic Slotdrain transferred successfully from leased premises in Dover to Wade's freehold premises in Halstead, Essex in June 2019. This is expected to yield circa £0.6 million of cost savings in 2019/20.

 

Elsewhere in the division, both Alumasc Roofing and Alumasc Water Management Solutions contributed solid performances, each matching prior year revenues. Alumasc Roofing worked hard to successfully evolve its mix of revenues towards refurbishment work from new build where commercial demand was lower in the 2018/19 financial year, reflecting market conditions.

 

As stated at the interim stage, a review of capacity at Alumasc Water Management Solutions concluded that with relatively modest capital spend at existing facilities there is no immediate need to relocate to a new site, saving significant capital cost relative to earlier plans.

 

During the year divisional sales teams were consolidated to promote more effectively our "Rain to Drain" strategy, where Alumasc offers solutions to manage and control the flow of water through buildings from the roof to the ground thereby alleviating pressure on public drainage systems and reducing risks of flash flooding from increasingly intense rainfall events. Action is also being taken to simplify product ranges across the division to reduce complexity and increase focus on the most profitable lines whilst exiting areas not making an adequate contribution.

 

The one-off costs of moving to a simplified divisional structure from the relocation of Slotdrain production and moving to a shared overhead structure at Wade and Gatic is the principal reason why divisional statutory operating profit was lower than underlying operating profit for the year.

 

(b)   Architectural Screening, Solar Shading & Balconies

 

Revenue: £18.8 million (2017/18: £22.0 million)

Underlying operating (loss) / profit*: £(1.1) million (2017/18: £0.8 million)

Underlying operating margin*: (5.9)% (2017/18: 3.6%)

Operating (loss) / profit: £(3.7) million (2017/18: £0.6 million)

 

* Prior to restructuring costs of £2.5 million in 2018/19 and brand amortisation charges of £0.2 million in both years

 

Following the reduction in revenues and the significant operating losses incurred in the Levolux business during the year, a major restructuring programme was announced in June 2019 to recover profitability in this business as described in the strategic development section above.

 

Levolux's challenging year stemmed from a combination of:

 

·      lower commercial new build demand impacting UK architectural screening and solar shading project revenues;

·      project delays, both prior to and after receipt of sales orders, that we believe reflects the impact of the uncertain economic and political environment on customer investment decisions, exacerbated by the ongoing lack of credit in the UK building contracting industry;

·      increasing competition for architectural screening and solar shading in the UK; and

·      margin realisation issues in our embryonic balconies business that impacted the first half year in particular.

 

In future, Levolux will focus increasingly on design and supply work and only install where the customer recognises the value that we add from this activity and our risks can be better managed. We see significant opportunity for growth in architectural screening and solar shading in the USA, particularly California, and we intend to invest further in local sales resources to help realise this potential. We also see significant growth potential in balconies and balustrading, driven by increasing demand for apartments in the private rented sector. However, we need to do further work to prove we can execute this work at acceptable profit margins and a number of options are under evaluation to resolve this.

 

We believe that future demand for Levolux products more generally and conversion rates from customer enquiries to orders will both be enhanced by the business becoming part of the Building Envelope division, benefiting from the integrated specification sales strategy described above and the larger combined technical sales team.

 

One-off restructuring costs are the main reason why the statutory operating loss for this division was higher than the underlying operating loss.

 

(c)   Housebuilding Products

 

Revenue: £11.4 million (2017/18: £10.5 million)

Operating profit: £1.7 million (2017/18: £1.7 million)

Operating margin: 15.2% (2017/18: 15.8%)

 

 

Timloc continues to go from strength to strength and delivered operating profit of £1.7 million, similar to the prior year, despite absorbing £0.3 million of incremental annualised property costs following the successful re-location to its new purpose built, higher capacity factory in December 2017. The payback from investment in the new factory is running ahead of initial expectations.

 

Once again, Timloc's revenue growth rate of 9% comfortably exceeded UK housebuilding market growth as management expanded the product range and grew market share.

 

Timloc's strong service ethos of guaranteed next working day delivery and low carriage paid order values again proved to be highly attractive to merchant and distributor customers, and this was effectively communicated by the "Trust Timloc to deliver next working day" marketing and social media campaign.

 

New product development, which has always been an important element of Timloc's success, included the launch of InvisiWeep, a virtually invisible wall weep, and the Adapt-Air system which provides an integrated solution for through wall ventilation. Further new product launches are planned in 2019/20 and some currently bought-in products will be manufactured in-house to further enhance margins. 

 

Alumasc invested over £1 million in new injection moulding machines and automation during the year and the successful execution of these capital projects by Timloc's management team will yield cost savings in the 2019/20 financial year.

 

Outlook

In light of the current economic and construction sector backdrop (including Brexit uncertainties), the Board is taking a cautious view of revenue development in the 2019/20 financial year.

 

Notwithstanding the challenging market conditions, the actions taken to restructure those parts of the Group (particularly Levolux) that did not perform to expectation in the year under review should yield cost savings of circa £2 million in the 2019/20 financial year.

 

The Board believes Alumasc's strong strategic and market positions, which underpin our established track record over many years of outperforming the UK construction market, together with:

 

·           the formation of the Building Envelope division to drive specification cross-selling;

·           the major restructuring of the Levolux business;

·           focused investments in new products and manufacturing capability;

·           selective investments in sales resources to grow the business both in the UK and internationally; and

·           lower fixed costs and actions taken to deliver a more cost-effective operating structure across the Group

 

makes Alumasc well positioned to make progress in the current financial year and beyond.

 

 

 

 

Paul Hooper

Chief Executive

 

 

 

 

Financial Review

Reconciliation of underlying to statutory profit before tax

Underlying profit before tax for the 2018/19 financial year of £5.6 million exceeded statutory profit before tax of £3.9 million for the reasons shown in the table below:

 

	2018/19 £m	2017/18 £m
Underlying profit before tax	5.6	6.0
Brand amortisation	(0.2)	(0.2)
Net IAS 19 defined benefit pension scheme costs	(1.2)	(0.5)
Restructuring & relocation costs	(3.0)	(0.3)
AIM listing / prior year acquisition costs	(0.2)	(0.2)
Net gain from business disposals (pre-tax)	2.9	0.2
Gain on disposal of available-for-sale assets	-	0.4
Statutory profit before tax	3.9	5.4

 

The reconciling items were:

 

·      Amortisation of acquired brands of £0.2 million (2017/18: £0.2 million). This is a non-cash charge determined by management judgment in applying accounting standards. It does not affect the economic value of the Group.

 

·      Net IAS 19 defined benefit pension scheme costs of £1.2 million (2017/18: £0.5 million) are also non-cash charges. These relate to the Group's legacy defined benefit pension scheme, which has been closed to future accrual for almost ten years. The value of the charge is determined by actuarial assessment. In the 2018/19 financial year, the charge to the income statement was higher than usual, due to a one-off £1.1 million increase in liabilities following a UK High Court decision in October 2018 applicable to UK defined benefit pension schemes generally and relating to guaranteed minimum pension equalisation between men and women. This was partly offset by a one-off actuarial gain of £0.3 million arising from the merger of the Group's pension schemes during the year. The balance of the 2018/19 charge, and all the prior year's charge, represents the non-cash notional financing cost of the Group's pension deficit due to the time value of money.

 

·      One-off restructuring and relocation costs of £3.0 million incurred in 2018/19 will enable Alumasc to reduce fixed costs by circa £2 million p.a. in the current 2019/20 financial year, as described in the Chief Executive's review. These savings will accrue mainly in the Gatic brand within the Roofing & Water Management division and at Levolux which forms our Architectural Screening, Solar Shading & Balconies division. The costs comprise redundancy costs; the costs of relocating Gatic Slotdrain production from Dover to Wade's freehold factory in Essex; the costs of relocating certain Levolux functions and operations from two leased sites to our freehold factory and offices at St. Helens; and associated write downs in the value of certain plant and machinery in the premises being vacated. The cost in the prior year related to the relocation of Timloc, our Housebuilding Products business, to a new, purpose built, leased site in East Yorkshire.

 

·      AIM listing costs of £0.2 million in 2018/19 represent one-off professional fees incurred in connection with the re-listing of Alumasc's shares from the Main Market of the UK Stock Exchange to the Alternative Investment Market ("AIM") in June 2019. The acquisition costs of £0.2 million in the prior year related to professional fees incurred in connection with the acquisition of the Wade specialist drainage business.

 

·      The net gain from business disposals comprises the gain on sale of the Alumasc Facades business on 31 October 2018, together with its operating profit from the beginning of the 2018/19 financial year to the date of disposal. The prior year comparator represents its operating profit for that financial year and the loss on sale of the Scaffolding Products business in July 2017.

 

·      The one-off gain of £0.4 million on realisation of an available-for-sale asset in the prior year related to the disposal of the Group's legacy 20% trade investment in Amorim Isolamentos, a Portuguese cork producer. 

Taxation

The Group's underlying effective tax rate was 20.4% (2017/18: 20.2%), slightly above the UK statutory rate of tax of 19% applicable to the Group's financial year due to certain costs that are disallowable for tax purposes. We expect the Group's underlying tax rate to be circa 20% in the 2019/20 financial year.

 

The Group's effective tax rate on statutory profit before tax was 7.4% (2017/18: 19.7%). Reconciliations from the actual to statutory rates of tax are provided in note 8 to the financial statements. The reconciling items chiefly relate to the tax treatment of the one-off items in the Group's income statement described above.

 

Earnings per share

Underlying earnings per share for the year was 12.4 pence (2017/18: 13.4 pence). This reduction is consistent with the lower underlying profit before tax for the year for the reasons described in the Chief Executive's review.

 

Basic earnings per share of 10.1 pence (2017/18: 12.0 pence) reflected the reduction in underlying profit before tax for the year and the higher level of net one-off costs in 2018/19 relative to 2017/18 described above.

 

Dividends

The Board has decided to recommend to shareholders an unchanged final dividend of 4.4 pence per share (2017/18: 4.4 pence), applicable to members on the share register on 27 September and to be paid on 31 October. This takes the total dividend for the year to 7.35 pence, again unchanged on the prior year.

 

Alumasc has a progressive dividend policy that seeks to grow the dividend broadly in line with underlying earnings growth, having regard to the extent to which dividend payments are covered by underlying earnings, after taking into account pension scheme funding commitments.

 

Investment in growth, cash flow and net debt

Summarised Cash Flow Statement
				2018/19 £m	2017/18 £m
EBITDA *				7.4	7.6
Change in working capital				(1.2)	(1.6)
Operating cash flow				6.2	6.0
Capital expenditure				(2.4)	(3.3)
Interest				(0.2)	(0.2)
Tax				(0.6)	(0.7)
Pension deficit funding				(3.2)	(3.2)
Dividend payments				(2.6)	(2.6)
Sub total				(2.8)	(4.0)
Wade acquisition consideration				-	(8.0)
Facades / SCP business disposal proceeds/other				2.5	1.1
Net cash flow				(0.3)	(10.9)
Net debt at the year end				5.1	4.8
* EBITDA: Underlying operating profit from continuing operations before interest, tax, depreciation and amortisation

 

The Group recorded a small net cash outflow for the year of £0.3 million. This included capital investment of £2.4 million which was some £0.7 million in excess of the depreciation charge for the year. This investment was made principally in the Group's Housebuilding Products and Water Management businesses to enable future growth and support margin improvement through greater automation and efficiency. 

 

At 30 June 2019 the Group continued to have a modest level of net debt of £5.1 million (30 June 2018: £4.8 million).

 

Our twelve month rolling average ratio of trade working capital as a percentage of revenue from continuing operations improved from 14.6% in 2017/18 to 14.1% in 2018/19 due to continuous improvement initiatives. The increase of £1.2 million in working capital balances relating to continuing operations at 30 June 2019 compared with a year earlier reflected an increase in contract assets at Levolux following the implementation of IFRS15; and the higher levels of inventories put in place to manage potential Brexit risks. The latter in turn also led to a lower level of payables at the 2019 financial year end compared with a year ago.

Statement of financial position and return on investment

The Group's net assets and shareholders' funds increased from £24.4 million at the beginning of the financial year to £25.4 million at 30 June 2019, reflecting the net actuarial gain on the pension deficit described below, together with retained profit after tax and dividend payments for the year.

 

The Group defines its capital invested as the sum of shareholders' funds, together with the pension deficit (net of tax) and net debt. On this basis, capital invested was broadly unchanged at £41.3 million at 30 June 2019 compared with £41.8 million at the beginning of the financial year. This is explained by a modest increase in the value of property, plant and equipment reflecting the investments made in the business during the year described above, offset by lower combined trade and other working capital requirements at the year end, including provisions for committed restructuring costs at Levolux. Average levels of capital invested were higher in 2018/19 than in the prior year due to the relative value and timing of the acquisition of Wade in the prior year and the divestment of Alumasc Facades in 2018/19.

 

The combination of the lower underlying profit in the year and higher average levels of capital invested led to a reduction in underlying post-tax return on investment from 14.5% in the prior year to 11.4% in 2018/19. This is still well ahead of our estimated weighted average cost of capital.

 

Pensions

In March 2019 the Group merged its two former defined benefit pension schemes. This will simplify and reduce the ongoing costs of scheme administration by over £100k p.a. It also enabled a simplification of the Group's legal structure and a reduction in the number of the Group's active trading subsidiaries, yielding further administrative savings.

 

The valuation of Alumasc's defined benefit pension scheme deficit for accounting purposes at 30 June 2019 using IAS 19 valuation conventions was £13.0 million (30 June 2018: £15.1 million).

 

The year on year improvement reflected the benefit of pension deficit recovery payments made by the Group during the year of £2.7 million together with more favourable mortality assumptions and benefits from the merger of the Group's two pension schemes during the year. These benefits were partly offset by less favourable market valuation assumptions, including the rate at which future liabilities are discounted to present values using bond yields and the long term inflation rate; together with the £1.1 million increase in liabilities described above relating to the UK High Court decision on guaranteed minimum pension equalisation.

 

The formal triennial actuarial valuation of the merged Alumasc Group Pension Scheme at 31 March 2019 and its related deficit funding plan is currently being negotiated with the Pension Trustees. This valuation uses more prudent assumptions than those required by accounting standards in calculating the deficit recognised in the Group's statement of consolidated financial position. Early indications are that the triennial value of the scheme's deficit has reduced from circa £33 million in 2016 to the low/mid £20 million range in 2019. This suggests, other things equal, the Group is on track to repay the deficit during the remaining eight years of the existing funding plan.

 

Banking facilities

Alumasc's banking facilities were renewed as a matter of routine during the year and comprise:

 

·      An unsecured committed three-year revolving credit facility of £20 million, expiring in March 2022

·      Overdraft facilities, repayable on demand, of £4 million.

 

Going concern

 

After due enquiry and based on the information available at the date of this report, the Board believes that Alumasc will remain a going concern on the basis of the assumptions and relevant time horizons set out in the going concern assessment in note 1 to the financial statements.

 

 

Introduction of new accounting standards

 

The Group implemented IFRSs 9 and 15 during the financial year. In summary:

 

·      IFRS 9, Financial Instruments, did not have a material impact to the Group's financial statements

·      IFRS 15, Revenue Recognition, led to an on average earlier recognition of revenue and profit over time on construction contracts, as explained and disclosed in note 13.

 

The Group will implement IFRS 16, Leases, with effect from 1 July 2019. The Group will bring onto its statement of consolidated financial position leased property assets valued at £5 million, with a corresponding liability to pay future lease rentals. The Group's pro forma EBITDA will increase by circa £0.6 million, operating profit will increase by £0.1 million and profit before tax will reduce by circa £0.1 million, other things equal, for the 2019/20 financial year. This is because notional financing costs calculated under the accounting standard will be higher than currently reported as the Group's more material leases are closer to inception than expiry.

 

 

Andrew Magson

Group Finance Director

 

 

 

On behalf of the Board

 

Paul Hooper                                                          Andrew Magson

Chief Executive                                                     Group Finance Director

The contents of this announcement have been extracted from the annual report and accounts for the year ended 30 June 2019 which will be despatched to shareholders on or around 20 September 2019 and will be available at www.alumasc.co.uk.

                Principal risks and uncertainties

Risks and uncertainties	Mitigating actions taken
Economic, construction market and Brexit risks   Comment  Alumasc is a UK-based group of businesses. 90% of Group sales are made to the construction sector in the UK. This market can be cyclical in nature. There is relatively high economic and political uncertainty at the current time, including surrounding the outcome of the Brexit negotiations.	·      Strategic positioning in markets/sectors anticipated to grow faster than the UK construction market.   ·      Selected development of export sales opportunities, especially for Levolux (particularly in North America) and Alumasc Water Management (particularly in Europe, the Middle East and Far East).   ·      Revenues are derived from a variety of end use construction markets.   ·      Development of added value systems and solutions that are either required by legislation, building regulation and/or specified by architects and engineers (currently almost 80% of Group revenues).   ·      Continuous development and introduction of innovative products, systems, solutions and services that are market leading and differentiated against the completion.   ·      The Group has exposure to currency risk, particularly the Euro and US Dollar. These exposures are for the most part hedged, with hedging percentages increased in 2019 to manage potential FX volatility associated with Brexit.   ·      Brexit developments being monitored closely, strong relationships monitored and regular dialogue with key European customers and suppliers. Contingency planning for key residual risk areas, including increased inventory holdings of materials/products imported from the EU.
Strategic people risks   Comment  Including recruitment, retention, succession, people development. Risk of loss of skills, ability to innovate and improve without attracting and retaining the right people. The UK recruitment market is tight with some skills shortages.	·      Market competitive remuneration/incentive arrangements.   ·      Employee numbers and changes monitored in monthly subsidiary Board meetings.   ·      Key, high performing and high potential employees identified, monitored, coached and developed.   ·      Training and development programmes.   ·      Increasing focus of Board and Executive Committee in managing this area, supported by Human Resource professionals.
Product/service differentiation relative to competition not developed or maintained   Comment  Innovation and an entrepreneurial spirit is encouraged in all Group companies. Over 16% of Group revenues relate to products launched in the last three years.	·      Alumasc operates a devolved operating model with local management primarily responsible for developing a deep knowledge of our specialist markets and identifying opportunities and emerging market trends.   ·      Innovation best practice days held annually at group level and more regularly in each business.   ·      Annual group strategy meetings encourage innovation and "blue sky" thinking.   ·      New product introduction/development KPI used to monitor progress.   ·      Regular monitoring of the market for potentially new and/or disruptive technologies.

 

              

 

Execution risk - strategic development risks and change projects   Comment  There are execution risks around a number of current strategic change projects, including the Levolux and Gatic Slotdrain restructuring, export development, business simplification projects, forthcoming factory moves and various ERP and CRM system implementations.	·      Close Group Board involvement in the Levolux and Gatic restructuring and in export development strategy.   ·      Key strategic change projects are managed by Operating Unit Boards and Steering Committees, supported by independent specialist consultants where necessary, for example IT and property.   ·      Key milestone plans, project risk reviews and detailed project plans updated and monitored regularly.   ·      Use of proven reliable software solutions and avoidance of bespoking wherever possible, with careful documentation and challenge of legacy business processes prior to implementation of new systems.   ·      Pre-implementation system testing, training and communication, with go-live delayed if implementation risk is judged to be too high.
Loss of key customers.   Comment Generally the Group has a good track record of customer retention and has a diversified customer base.	·      Develop and maintain strong customer relationships.   ·      Product, system and service differentiation.   ·      Project tracking and enquiry/quote conversion rate KPI.   ·      Increasing use of, and investment in, customer relationship management (CRM) software.   ·      Organisational and cultural flexibility to adapt to changing and emerging customer needs.
Legacy defined pension obligations   Comment Alumasc's pension obligations are material relative to its market capitalisation and shareholders' funds.	·      Continue to grow the business so the relative affordability of pension deficit contributions is improved over time. The pension deficit reduced during 2018/19.   ·      Maintain constructive relationship with Pension Trustees.   ·      Meet agreed pension funding commitments.   ·      Regular review at group Board level.   ·      Use of specialist advisors.   ·      Investment performance and risk/return balance overseen by an Investment Committee.   ·      Monitor and seek opportunities to reduce gross pension liabilities.  Use of derivatives to partly hedge inflation and interest rate risk.
Supply chain risks Comment Whilst the Group does not have undue concentration on any single or small group of suppliers, certain Alumasc businesses do have key strategic suppliers, some of whom are located in the Far East. International supply chain risks are increasing through increased tariffs/duties, Brexit risks in Europe and potential closure of foundries in China for environmental reasons.	·      Annual strategic reviews, including supplier concentration, quality, reliability and sustainability.   ·      Regular key supplier visits, good relationships maintained including quality control reviews and training.   ·      Regular supplier quality, value for money and risk reviews.   ·      Avoidance of strategic dependence on single sources of supply.   ·      Contingency plans to manage Brexit and China sourcing risks.   ·      Tooling investment programme to support the efficiency of supply chain partners in China, including their management of environmental risks.

 

 

 

 

 

Business continuity risks Comment The Group has not previously experienced any significant loss of operational capability causing business continuity issues.   Cyber security risks are increasing globally.	·      Business continuity plans in place, or being evolved where we are relocating operations, at each business. Work is ongoing to refine these plans and, where possible, test them.   ·      IT disaster recovery plans are in place, with close to real time back up arrangements.   ·      Awareness training and management briefings held on cyber security risks and actions taken on preventative measures.   ·      Regular reviews of cyber security, including external penetration testing.   ·      Energy supply and contingency arrangements reviewed periodically.   ·      Critical plant and equipment is identified, with associated breakdown/recovery plans, including assessment of engineering spares held on site.   ·      Business interruption insurance to cover residual risks.
Product warranty/recall risks   Comment The Group does not have a history of significant warranty claims or product recall.	·      Robust internal quality systems, compliance with relevant legislation, building regulations and industry standards (e.g. ISO, BBA etc), and product testing, as appropriate.   ·      Group insurance programme to cover larger potential risks.   ·      Back to back warranties obtained from suppliers where possible.   ·      Specific local risk management procedures in group brands that also install (as well as supply) building products (i.e. Levolux and Blackdown).
Health and safety risks   Comment The Group has a strong overall track record of health & safety performance, with the number of lost time accidents significantly reduced over recent years.	·      Health and safety is the number one priority of management and the first Board agenda item.   ·      Health and safety KPI's measured, reported and reviewed monthly including the Performance Rate Index.   ·      Risk assessments are carried out and safe systems of work documented and communicated.   ·      All safety incidents and significant near misses reported at Board level monthly. Appropriate remedial action taken.   ·      Group health and safety best practice days are held twice a year, chaired by the Chief Executive.   ·      Annual audits of health and safety in all group businesses by independent consultants.   ·      Specific focus on improving safety of higher risk operations, with external consultancy support as needed.
Credit risk   Comment The Group has good recent record in managing credit risks.	·      Most credit risks are insured, including all contracting credit risk.   ·      Large export contracts are backed by letters of credit, performance bonds, guarantees or similar.   ·      Any risks taken above insured limits are subject to strict delegated authority limits.   ·      Credit checks when accepting new customers/new work.   ·      The Group employs experienced credit controllers and aged debt reports are reviewed in monthly Board meetings.

 

 

 

 

Consolidated STATEMENT of comprehensive income

For the year ended 30 June 2019

 

		Year to 30 June 2019			Year to 30 June 2018 (restated)*
		Underlying	Non-underlying	Total	Underlying	Non-underlying	Total
Continuing operations:	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	4	90,104	-	90,104	87,048	-	87,048
Cost of sales		(63,255)	-	(63,255)	(60,101)	-	(60,101)
Gross profit		26,849	-	26,849	26,947	-	26,947
Net operating expenses
Net operating expenses before non-underlying items		(20,984)	-	(20,984)	(20,723)	-	(20,723)
IAS 19 past service pension cost & settlement gain	5	-	(787)	(787)	-	-	-
Other non-underlying items	5	-	(3,439)	(3,439)	-	(588)	(588)
Net operating expenses		(20,984)	(4,226)	(25,210)	(20,723)	(588)	(21,311)
Operating profit	4, 5	5,865	(4,226)	1,639	6,224	(588)	5,636
Finance expenses		(281)	(373)	(654)	(212)	(494)	(706)
Profit before taxation		5,584	(4,599)	985	6,012	(1,082)	4,930
Tax expense	8	(1,139)	883	(256)	(1,214)	247	(967)
Profit for the period from continuing operations		4,445	(3,716)	729	4,798	(835)	3,963
Discontinued operations:
Profit after taxation for the period from discontinued operations	6	-	2,912	2,912	-	354	354
Profit for the period		4,445	(804)	3,641	4,798	(481)	4,317
Other comprehensive income:
Items that will not be recycled to profit or loss:
Actuarial gain on defined benefit pensions, net of tax				123			2,280
Items that are or may be recycled subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges, net of tax				263			(220)
Exchange differences on retranslation of foreign operations				4			2
				267			(218)
Other comprehensive gain for the period, net of tax				390			2,062
Total comprehensive profit for the period, net of tax				4,031			6,379
Earnings per share				Pence			Pence
Basic earnings per share
-  Continuing operations				2.0			11.0
-  Discontinued operations				8.1			1.0
	10			10.1			12.0
Diluted earnings per share
-  Continuing operations				2.0			10.9
-  Discontinued operations				8.1			1.0
	10			10.1			11.9
Alternative Performance Measures:
Underlying earnings per share (pence)				12.4			13.4

 

\* The results for the year to 30 June 2018 have been re-presented to show the Facades business as a discontinued operation. See note 6 for details.

 

Reconciliations of underlying to statutory profit and earnings per share are provided in notes 5 and 10 respectively.

 

 

consolidated statement of financial position

At 30 June 2019

 

	Notes	2019	2019	2018	2018
		£'000	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		11,693		10,661
Goodwill	7	18,705		18,705
Other intangible assets		3,416		3,913
Deferred tax assets	8	2,202		2,574
			36,016		35,853
Current assets
Inventories		10,488		10,440
Trade and other receivables		21,384		23,755
Corporation tax receivable		283		-
Cash and cash equivalents		2,762		4,656
			34,917		38,851
Total assets			70,933		74,704
Liabilities
Non-current liabilities
Interest bearing loans and borrowings		(7,857)		(9,468)
Employee benefits payable		(12,951)		(15,140)
Provisions		(1,272)		(1,525)
Deferred tax liabilities	8	(954)		(905)
			(23,034)		(27,038)
Current liabilities
Trade and other payables		(20,111)		(22,413)
Provisions		(2,333)		(100)
Corporation tax payable		-		(405)
Derivative financial liabilities		(10)		(327)
			(22,454)		(23,245)
Total liabilities			(45,488)		(50,283)
Net assets			25,445		24,421
Equity
Called up share capital		4,517		4,517
Share premium	11	445		445
Capital reserve - own shares	11	(416)		(241)
Hedging reserve	11	(8)		(271)
Foreign currency reserve	11	90		86
Profit and loss account reserve		20,817		19,885
Total equity			25,445		24,421

 

 

 

 

Paul Hooper                          Andrew Magson
Director                                  Director 

 

5 September 2019

Company number 1767387

 

 

consolidated STATEMENT of cash flows

For the year ended 30 June 2019

 

		Year to	Year to
		30 June	30 June
		2019	2018
	Notes	£'000	£'000
Operating activities
Operating profit		1,639	5,636
Adjustments for:
Depreciation		1,335	1,081
Amortisation		514	434
Gain on disposal of property, plant and equipment		(17)	(18)
Loss on disposal of business assets		-	218
Gain on disposal of available-for-sale assets		-	(426)
IAS 19 past service pension cost	5	1,111	-
IAS 19 settlement gain on merger of pension schemes	5	(324)	-
(Increase)/decrease in inventories		(1,722)	580
Increase in receivables		(48)	(1,110)
Increase/(decrease) in trade and other payables		1,229	(1,444)
Movement in provisions		1,637	242
Cash contributions to retirement benefit schemes		(3,202)	(3,203)
Share based payments		(65)	160
Cash generated by operating activities of continuing operations		2,087	2,150
Operating profit from discontinued operation		163	444
Depreciation and amortisation		60	123
Movement in working capital from discontinued operation		(396)	(316)
Cash generated by operating activities of discontinued operation	6	(173)	251
Tax paid		(634)	(679)
Net cash inflow from operating activities		1,280	1,722
Investing activities
Purchase of property, plant and equipment - continuing operations		(2,296)	(2,967)
Purchase of property, plant and equipment - discontinued operations	6	(15)	(75)
Payments to acquire intangible fixed assets		(115)	(229)
Proceeds from sales of property, plant and equipment		116	26
Acquisition of subsidiary undertaking, prior to payment for cash acquired		-	(7,807)
Net proceeds from sale of business activity	6	3,886	767
Proceeds from sale of available-for-sale assets		-	443
Net cash inflow/(outflow) from investing activities		1,576	(9,842)
Financing activities
Interest paid		(232)	(185)
Equity dividends paid		(2,628)	(2,594)
(Repayment)/draw down of amounts borrowed		(1,500)	6,500
Refinancing costs		(156)	-
Purchase of own shares		(238)	-
Exercise of share based incentives		-	39
Net cash (outflow)/inflow from financing activities		(4,754)	3,760
Net decrease in cash and cash equivalents		(1,898)	(4,360)
Net cash and cash equivalents brought forward		4,656	9,014
Net decrease in cash and cash equivalents		(1,898)	(4,360)
Effect of foreign exchange rate changes		4	2
Net cash and cash equivalents carried forward		2,762	4,656