TIDMALU
RNS Number : 6193I
Alumasc Group PLC
01 September 2016
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 (GBPm) 26.6 24.0 +11%
Revenue (GBPm) 92.2 90.3 +2%
Underlying profit before tax
(GBPm)* 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 discontinued(1)
operations):
Profit before tax (GBPm) 7.7 4.8 +59%
Basic earnings per share (pence) 18.2 12.3 +48%
Net cash at 30 June (GBPm) 8.6 0.9
---------------------------------------- ---- ---- --------
(*) Underlying profits and earnings per share from continuing
operations are stated prior to the deduction of brand amortisation
of GBP0.3 million (2014/15: GBP0.3 million) and IAS 19 pension
charges of GBP1.2 million (2014/15: GBP1.2 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 GBP4m 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 GBP1m 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 GBP30m (30 June 2015:
GBP24.0m). 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 GBP17.4m and
operating profit up 3% to GBP1m resulted from Levolux trading ahead
of expectations with a closing order book of GBP18.9m. 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
GBP40.1m and operating profit down 11% to GBP4m reflecting the
completion of the GBP12m 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 GBP27.6m and operating
profit up 7% to GBP3.5m 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
GBP8.6m and operating profit up 25% to GBP1.4m 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 GBP7.7m and the
group finished the year with GBP8.6m 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
GBP7.7 million to GBP8.3 million, and statutory profit before tax
by 59% to GBP7.7 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 GBP8.6
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 GBP92.2 million
-- Underlying operating profit increased by 2% to GBP8.5 million
-- We invested an incremental GBP1.2 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 GBP8.3 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 GBP1 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 GBP11.2 million in excess of earnings
before interest, tax, depreciation and amortisation ("EBITDA") of
GBP9.7 million.
Discontinued operations
Profit before tax from discontinued operations was GBP0.9
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 GBP7.7 million,
benefiting from the growth in underlying profit, the GBP0.9 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: GBP17.4 million (2014/15: GBP16.0 million), up 8%
Underlying operating profit: GBP1.0 million (2014/15: GBP0.9
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 GBP1 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 GBP18.9 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: GBP40.1 million (2014/15: GBP40.6 million), 1% down
Underlying operating profit: GBP4.0 million (2014/15: GBP4.5
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 GBP12 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: GBP27.6 million (2014/15: GBP27.0 million), up 2%
Operating profit: GBP3.5 million (2014/15: GBP3.3 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 GBP10
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 GBP1 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: GBP8.6 million (2014/15: GBP7.8 million), up 10%
Operating profit: GBP1.4 million (2014/15: GBP1.1 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: 2015/16 2014/15 Comment/explanation
Continuing Operations
------------------------ -------- -------- ------------------------------
Strong order books
driven mainly by Levolux's
international expansion
and some recovery in
Year end group the scheduling of larger
order book (GBPm) 26.6 24.0 projects
------------------------ -------- -------- ------------------------------
Group revenues Continued growth in
(GBPm) 92.2 90.3 building products sales
------------------------ -------- -------- ------------------------------
Strong margins, after
increased costs of
Underlying operating investment in people
margin % 9.2 9.2 in 2015/16
------------------------ -------- -------- ------------------------------
Growth in Building
Products operating
profit driven by higher
Underlying profit revenues, and lower
before tax (GBPm) 8.3 7.7 interest costs on borrowings
------------------------ -------- -------- ------------------------------
Growth in underlying
profit before tax at
Underlying earnings a lower underlying
per share (pence) 18.4 16.9 group tax rate
------------------------ -------- -------- ------------------------------
The reduction in this
ratio is a positive
development and reflects
Average trade working further working capital
capital % sales* 11.3 11.6 efficiency
------------------------ -------- -------- ------------------------------
Improved cash conversion
of profit. Sales proceeds
from Dyson Diecastings
Net cash (GBPm) 8.6 0.9 divestment
------------------------ -------- -------- ------------------------------
The deficit increased
due to actuarial losses
on the revaluation
of pension liabilities
to present values,
Pension deficit reflecting lower UK
(IAS 19) (GBPm) 22.7 20.9 bond yields
------------------------ -------- -------- ------------------------------
Increased due to retained
profits after tax,
Year-end shareholders' net of pension actuarial
funds (GBPm) 16.6 15.9 gains/losses
------------------------ -------- -------- ------------------------------
Strong operating margins
from less capital intensive
Return on investment continuing building
(post-tax) (%) 24.3 22.8 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 GBP11.2
million (2014/15 GBP9.3 million), benefiting from EBITDA of GBP9.7
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 GBP1.8 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 GBP1.1 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 GBP2.9 million, unchanged on the prior year
-- The net cash inflow for the year from continuing operations
was GBP3.2 million, prior to the business disposal proceeds and
trading cash flows of GBP4.5 million from Dyson Diecastings in the
year
-- A total cash inflow for the year of GBP7.7 million, including
the Dyson Diecastings cash flows.
Alumasc's net cash resources at 30 June 2016 were therefore
GBP8.6 million, an increase of GBP7.7 million on the 30 June 2015
net cash position of GBP0.9 million. In the last five years Alumasc
has generated GBP19.3m of net cash, transforming a net debt
position of GBP10.7 million at 30 June 2011 into a net cash
position of GBP8.6 million at 30 June 2016.
Summarised Cash Flow Statement
2015/16 2014/15
GBPm GBPm
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
GBPm GBPm
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 GBP33 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 GBP22.7 million at 30 June 2016,
compared with GBP20.9 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
GBP15.9 million at the beginning of the financial year to GBP16.6
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 GBP31.8 million at the end of the prior year
to GBP26.5 million at 30 June 2016, largely reflecting the sale of
Dyson Diecastings for net proceeds of GBP4.0 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
GBP12.5 million, expiring in August 2020
-- The ability to extend this facility to GBP30 million, subject
to further credit approval by relationship banks
-- Overdraft facilities, repayable on demand, of GBP2 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 GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'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
(re-stated)
GBP'000 GBP'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
======= ===========
consolidated STATEMENT of changes in equity
For the year ended 30 June 2016
Notes Capital Hedging Foreign Profit Total equity
reserve reserve currency and loss
Share - reserve account
Share capital premium own shares reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2014 4,517 445 (618) (62) 32 12,728 17,042
Profit for the
period - - - - - 4,376 4,376
Exchange
differences
on retranslation
of foreign
operations - - - - 17 - 17
Net loss on cash
flow hedges - - - (179) - - (179)
Tax on derivative
financial
liability - - - 43 - - 43
Actuarial loss
on defined
benefit
pensions, net of
tax - - - - - (3,781) (3,781)
Dividends 8 - - - - - (1,889) (1,889)
Share based
payments - - - - - 300 300
At 1 July 2015 4,517 445 (618) (198) 49 11,734 15,929
Profit for the
period - - - - - 6,484 6,484
Exchange
differences
on retranslation
of foreign
operations - - - - 1 - 1
Net loss on cash
flow hedges - - - (22) - - (22)
Tax on derivative
financial
liability - - - (1) - - (1)
Actuarial loss
on defined
benefit
pensions, net of
tax - - - - - (3,172) (3,172)
Dividends 8 - - - - - (2,208) (2,208)
Share based
payments - - - - - 181 181
Acquisition of
own shares (net) - - (313) - - - (313)
Exercise of share
based incentives - - - - - (299) (299)
------------- -------- ----------- -------- --------- --------- ------------
At 30 June 2016 4,517 445 (931) (221) 50 12,720 16,580
------------- -------- ----------- -------- --------- --------- ------------
1 basis of preparation
The Alumasc Group plc is incorporated and domiciled in England
and Wales. The company's ordinary shares are traded on the London
Stock Exchange.
The group's financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS),
as adopted by the European Union as they apply to the financial
statements of the group for the year ended 30 June 2016, and the
Companies Act 2006.
The financial information set out in this announcement does not
constitute the group's statutory information for the years ended 30
June 2016 or 2015, but is derived from the group's 2016 statutory
financial statements. The group's consolidated financial
information has been prepared in accordance with accounting
policies consistent with those adopted for the year ended 30 June
2016. Statutory accounts for 2015 have been delivered to the
registrar of companies and those for 2016 will be delivered
following the group's Annual General Meeting. The auditor has
reported on these accounts, their reports were unqualified and did
not contain statements under the Companies Act 2006, s498(2) or
(3).
Prior year figures have been restated, where applicable, due to
the presentation in 2015/16 of Dyson Diecastings as a discontinued
operation. This business was sold on 30 June 2016.
Going concern
The group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Strategic Report above. The financial position
of the group, its cashflows and liquidity position are set out in
the above financial statements.
The group has committed borrowing facilities of GBP12.5 million
which expire in August 2020. In addition, the group has recently
renewed overdraft facilities totalling GBP2 million for another
year. At 30 June 2016 the group's net cash resources were GBP8.6
million (2015: GBP0.9 million).
On the basis of the group's financing facilities and current
operating and financial plans and sensitivity analyses, the Board
is satisfied that the group has adequate resources to continue in
operational existence for the foreseeable future and accordingly
continues to adopt the going concern basis in preparing the
financial statements.
2 judgments and estimates
The key sources of estimation uncertainty that have a
significant risk of causing material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are the measurement and valuation of defined benefit pension
obligations and the recognition of revenues and profit on
construction contracts.
Measurement of defined benefit pension obligations requires
estimation of future changes in inflation, mortality rates and the
selection of a suitable discount rate.
Revenue recognised on construction contracts is determined by
the assessment of the stage of completion of each contract. The
requirement for Directors' judgment is limited in most cases due to
the involvement of quantity surveyors during the assessment
process.
3 Principal risks and uncertainties
Risks and uncertainties Mitigating actions taken
------------------------------- ----------------------------------------------
Economic, construction -- Strategic positioning in markets/sectors
market and foreign anticipated to grow faster than
exchange risks the UK construction market with
Comment potential for growth through
Alumasc is a UK-based the cycle.
group of businesses -- Develop international sales
with the majority (particularly in North America,
of group sales made the Middle East and Far East).
to the construction -- Increasing sales to the more
sector in the UK, resilient building refurbishment
which can be cyclical (relative to new build) markets.
in nature. -- Increasing mix of UK sales
towards the stronger London &
South East regional markets.
-- Development of added value
systems and solutions that are
either required by building regulation
and/or specified by architects
and engineers.
-- Develop and retain strong
The UK's 'Brexit' management teams.
vote adds to economic -- Ensure Alumasc products are
uncertainty at the market leading and differentiated
current time. against the competition to improve
specification and to protect
margin.
-- Management has developed contingency
plans to mitigate risks arising
from Brexit uncertainty, including
the further development of international
markets in view of the recent
depreciation of Sterling.
-- The group has some exposure
to currency risk, particularly
the Euro, following Sterling's
recent devaluation. This is being
mitigated by purchasing efficiencies,
some selling price increases
and currency hedging.
------------------------------- ----------------------------------------------
-- Market competitive remuneration
Loss of key employees and incentive arrangements.
Comment -- Changes in numbers of people
Generally, staff employed monitored in monthly
turnover is low. subsidiary board meetings.
-- Key and high potential employees
identified and monitored on a
local and group basis.
-- Focused training and development
programmes for high potential
and key people.
-- Exit interviews held for senior
people who leave the business,
with learning points shared.
------------------------------- ----------------------------------------------
-- Devolved operating model with
Product/service both group and local management
differentiation responsible for identifying opportunities
relative to competition and emerging niche market trends.
not developed or -- Group-wide innovation best
maintained practice days are held annually.
-- Innovation and new product
Comment development workshops held regularly
Innovation and an in most group companies.
entrepreneurial -- Annual group strategic planning
spirit is encouraged meetings encourage innovation
in all group companies. and "blue sky" thinking, with
Some 20% of sales group resources allocated and
are earned from prioritised as appropriate to
products launched support approved ideas.
in the last three
years.
------------------------------- ----------------------------------------------
-- Develop and maintain strong
Risk of loss of relationships through regular
customers. contact and seeking always to
provide superior products, systems,
Comment solutions and service.
Generally good track -- Good project tracking and
record of customer enquiry/quote conversion rate
retention. The group tracking.
has a diversified -- Increasing use of, and investment
customer base with in, customer relationship management
the largest customer (CRM) software.
representing only -- Organisational and cultural
circa 2% of group flexibility to adapt to changing
revenues. and emerging customer needs.
------------------------------- ----------------------------------------------
-- Continue to grow the business
Pension obligations so the relative affordability
of pension contributions is improved
Comment over time.
Alumasc's pension -- Maintain a good, constructive
obligations are and open relationship with Pension
material relative Trustees.
to its market capitalisation -- Meet agreed pension funding
and net asset value. commitments.
-- Pension scheme management
is a regular group board agenda
item.
-- Use of specialist advisors
on actuarial, investment and
advisory matters.
-- Monitor and seek market opportunities
to reduce gross pension liabilities,
through, for example, transfers
or partial buy outs.
------------------------------- ----------------------------------------------
-- Robust internal quality systems,
Product warranty/recall compliance with relevant industry
risks standards (eg ISO, BBA etc) and
close co-operation with customers
Comment in their design and specification
The group has a of the group's products.
good track record -- Group insurance programme
with regard to the to cover larger potential risks
management of these and exposures, where available.
risks and does not -- Back to back warranties from
have a history of suppliers, where appropriate.
significant claims. -- Seek to manage contractual
liabilities to ensure potential
consequential losses are minimised
and proportionate, and overall
liabilities are capped, where
possible.
-- Specific local risk management
procedures in group brands that
also install (as well as supply)
building products (i.e. Levolux
and Blackdown).
-- Internal audits of quality
and supply chain and design procedures
targeted at higher risk areas,
particularly Solar Shading and
Roofing.
------------------------------- ----------------------------------------------
-- Annual reviews of supplier
Reliance on key concentration as part of strategic
suppliers planning/formal business risk
review process, with alternative
Comment suppliers sought and developed
Whilst the group where practicable.
does not have undue -- Regular key supplier visits,
concentration on good relationships maintained
any single or small and quality control checks/training
group of suppliers, carried out.
certain Alumasc -- Regular reviews as to whether
businesses do have work should be brought back to
key strategic suppliers, the UK (or elsewhere) as economic
some of whom are conditions evolve, including
located in the Far the impact of foreign exchange
East. rate movements.
------------------------------- ----------------------------------------------
-- Business continuity plans
Business continuity prepared at each business, having
risks regard to the specific risk factors.
-- Advice is being taken from
Comment insurers on continuous improvement
The group has not of these plans.
previously experienced -- IT disaster recovery plans
any significant are in place, with close to real
loss of operational time back up arrangements using
capability causing either off-site servers or cloud
business continuity technology.
issues. Whilst the -- Cyber security reviews carried
likelihood of a out at a group level and in all
catastrophic loss operating companies during the
is low, the impact year.
if it were to happen -- Reviews of energy supply and
could be high. Particular contingency arrangements reviewed
areas of focus this during the year, with back up
year with regard supplies in place as needed.
to risk mitigation -- Critical plant and equipment
have been cyber is identified, with associated
security and resilience breakdown/recovery plans, including
of energy supplies. assessment of engineering spares
held on site.
------------------------------- ----------------------------------------------
-- Key strategic change projects
Strategic development are governed by Steering Committees
risks and change sponsored by the managing director
projects of the business, with group executive
director involvement, supported
Comment by independent specialist consultants
There are execution where necessary (for example
risks around a number IT and property).
of current strategic -- Project risk reviews conducted
change projects, and updated regularly.
including new product -- Project plans established
launches, the relocation and monitored monthly.
of Timloc to a new -- Project boards established.
property in 2017 The project manager reports to
and various ERP the Steering Committee.
and CRM systems -- Use of proven, reliable software
implementations. solutions and avoidance of bespoking
wherever possible.
-- Careful documentation and
challenge of legacy business
processes prior to implementation
of new systems.
-- Pre-implementation testing,
training and communication, with
go-live delayed if implementation
risk is judged to be too high.
------------------------------- ----------------------------------------------
-- Health and safety is the number
Health and safety one priority of management and
risks the first agenda item on all
subsidiary and group board agendas.
Comment -- Risk assessments are carried
The group has a out and safe systems of work
strong overall track documented and communicated.
record of health -- All safety incidents and significant
& safety performance, near misses reported to board
with the number level monthly. Appropriate remedial
of lost time accidents action taken.
significantly reduced -- Group health and safety best
over the last 10 practice days are held twice
years. a year, chaired by the Chief
Executive.
-- Annual audit of health and
safety in all group businesses
by independent consultants.
-- Specific focus on improving
health and safety in higher risk
operations.
------------------------------- ----------------------------------------------
-- Most credit risks are insured.
Credit risk -- Large export contracts are
backed by letters of credit,
Comment performance bonds, guarantees
The group has a or similar.
generally good record -- Any risks taken above insured
in managing credit limits in the Building Products
risks. Risks can division are subject to strict
be higher amongst delegated authority limit sign
smaller building offs, including group executives'
contractor customers, sign off for uninsured risks
who are often installers above GBP50k.
of the group's products. -- Credit checks when accepting
new customers/prior to accepting
new work.
-- The group employs experienced
credit controllers, and aged
debt reports are reviewed in
monthly Board meetings.
------------------------------- ----------------------------------------------
4 segmental analysis - continuing operations
In accordance with IFRS 8 "Operating Segments", the segmental
analysis below follows the group's internal management reporting
structure.
The Chief Executive reviews internal management reports on a
monthly basis, with performance being measured based on segmental
operating result as disclosed below. Performance is measured on
this basis as management believes this information is the most
relevant when evaluating the impact of strategic decisions.
Inter-segment transactions are entered into applying normal
commercial terms that would be available to third parties. Segment
results, assets and liabilities include those items directly
attributable to a segment. Unallocated assets comprise cash and
cash equivalents, deferred tax assets, income tax recoverable and
corporate assets that cannot be allocated on a reasonable basis to
a reportable segment. Unallocated liabilities comprise borrowings,
employee benefit obligations, deferred tax liabilities, income tax
payable and corporate liabilities that cannot be allocated on a
reasonable basis to a reportable segment.
Since the publication of Alumasc's 2015 Report and Accounts the
group's operating segments have been revised to reflect changes to
internal management responsibilities and the reports reviewed by
the Chief Executive. The principal changes are the combination of
our former Construction Products and Rainwater and Drainage
businesses into the new Water Management segment to reflect the
formation of the Alumasc Water Management Solutions brand in July
2015, and the separate analysis of our Housebuilding &
Ancillary Products business this year. The segmental analysis of
comparative data for the period ended 30 June 2015 has been
re-presented to show Dyson Diecastings as a discontinued operation
where necessary.
Analysis by reportable segment Revenue
2015/16
-------- --------------
Inter-segment Total Segmental
Operating
External Result
GBP'000 GBP'000 GBP'000 GBP'000
Solar Shading & Screening 17,359 - 17,359 954
Roofing & Walling 40,045 6 40,051 3,959
Water Management 26,269 1,299 27,568 3,489
Housebuilding & Ancillary
Products 8,560 10 8,570 1,420
Sub-total 92,233 1,315 93,548 9,822
Elimination / Unallocated
costs - (1,315) (1,315) (1,346)
Total 92,233 - 92,233 8,476
======== ============== ======= ==========
GBP'000
Segmental operating result 8,476
Brand amortisation (268)
IAS 19 pension scheme administration
costs (510)
Total operating profit from
continuing operations 7,698
=======
Capital expenditure
-------------------------
Segment Property, Other Depreciation Amortisation
Segment Liabilities Plant & Intangible
Assets Equipment Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Solar Shading & Screening 19,266 (7,178) 80 57 70 214
Roofing & Walling 16,281 (10,185) 71 - 146 104
Water Management 11,439 (5,256) 212 34 422 17
Housebuilding & Ancillary
Products 6,350 (2,390) 488 91 213 27
Sub-total 53,336 (25,009) 851 182 851 362
Unallocated & Discontinued 15,678 (27,425) 88 - 219 4
Total 69,014 (52,434) 939 182 1,070 366
======= ============= =========== ============ ============= =============
Analysis by reportable segment Revenue
2014/15 (re-stated)
-------- --------------
Inter-segment Total Segmental
Operating
External Result
GBP'000 GBP'000 GBP'000 GBP'000
Solar Shading & Screening 16,007 - 16,007 929
Roofing & Walling 40,577 8 40,585 4,461
Water Management 25,935 1,109 27,044 3,272
Housebuilding & Ancillary
Products 7,776 - 7,776 1,137
-------- -------------- ------- ----------
Sub-total 90,295 1,117 91,412 9,799
Elimination / Unallocated
costs - (1,117) (1,117) (1,485)
Total 90,295 - 90,295 8,314
======== ============== ======= ==========
GBP'000
Segmental operating result 8,314
Brand amortisation (268)
IAS 19 pension scheme administration
costs (455)
Total operating profit from
continuing operations 7,591
=============
Capital expenditure
---------------------------------
Segment Property, Other Depreciation Amortisation
Segment Liabilities Plant & Intangible
Assets Equipment Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Solar Shading &
Screening 18,171 (4,708) 127 267 46 168
Roofing & Walling 16,759 (9,420) 84 5 139 111
Water Management 11,522 (4,913) 475 18 438 21
Housebuilding &
Ancillary Products 5,497 (2,192) 203 127 191 11
------- ------------- ------------------- ------------ ------------- -------------
Sub-total 51,949 (21,233) 889 417 814 311
Unallocated &
Discontinued 15,945 (30,732) 275 5 1,134 28
Total 67,894 (51,965) 1,164 422 1,948 339
======= ============= =================== ============ ============= =============
Analysis by geographical segment 2015/16
United North Middle Far Rest
of
Kingdom Europe America East East World Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Sales to external
customers 84,217 3,262 1,860 337 1,593 964 92,233
Segment non-current
assets 24,397 - - - - - 24,397
Analysis by geographical segment 2014/15 (re-stated)
United North Middle Far Rest
of
Kingdom Europe America East East World Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Sales to external
customers 81,527 2,576 2,004 2,134 1,432 622 90,295
Segment non-current
assets 26,808 - - - 1 - 26,809
Segment revenue by geographical segment represents revenue from
external customers based upon the geographical location of the
customer. The analyses of segment non-current assets are based upon
location of the assets.
5 UNDERLYING to Statutory profit reconciliation
2015/16 2014/15 (re-stated)
Operating Profit before Operating Profit
profit tax profit before
tax
GBP'000 GBP'000 GBP'000 GBP'000
Underlying profit 8,476 8,261 8,314 7,722
Less: Brand amortisation (268) (268) (268) (268)
Less: IAS 19 pension scheme
administration costs (510) (510) (455) (455)
Less: IAS 19 net pension
scheme finance costs - (724) - (711)
Statutory profit from continuing
operations 7,698 6,759 7,591 6,288
Discontinued operations 27 928 (896) (1,466)
Total statutory profit 7,725 7,687 6,695 4,822
========= ============= =========== ========
Underlying profits are stated prior to brand amortisation and
IAS 19 pension scheme finance costs, as these are non-trading and
non-cash items, and prior to IAS 19 pension scheme administration
costs, as this is a non-trading expense.
6 DISCONTINUED OPERATIONS
Discontinued operations in 2015/16 relate to the sale of the
trade and assets of the Dyson Diecastings business on 30 June 2016.
Discontinued operations in 2014/15 relate to the sale of the trade
and assets of Pendock Profiles in September 2014 and the sale of
the trade and assets of Alumasc Precision Components in June 2015.
Further details are provided in the Strategic Report above. The
results of discontinued operations included in the consolidated
statement of comprehensive income are as follows:
Dyson Diecastings
GBP'000
Year ended 30 June 2016
Revenue 6,556
Cost of sales (5,897)
-----------------
Gross profit 659
Net operating expenses (632)
-----------------
Operating profit 27
Non-cash gain on disposal
of discontinued operations 1,401
Costs of disposal of discontinued
operations (500)
-----------------
Profit before taxation 928
Tax credit 378
Profit after taxation 1,306
=================
Alumasc Pendock
Precision Profiles
Dyson Diecastings Components
Period to Period Period Total
30 June 2015 to 26 to 30 GBP'000
GBP'000 June 2015 September
GBP'000 2014
GBP'000
Year ended 30 June 2015
(re-stated)
Revenue 7,787 16,672 785 25,244
Cost of sales (6,528) (17,140) (530) (24,198)
----------------- ----------- ---------- ---------
Gross profit/(loss) 1,259 (468) 255 1,046
Net operating expenses (551) (1,191) (200) (1,942)
----------------- ----------- ---------- ---------
Operating profit/(loss) 708 (1,659) 55 (896)
Non-cash (loss)/gain on
disposal of discontinued
operations - (300) 862 562
Costs of disposal of discontinued
operations - (1,040) (92) (1,132)
----------------- ----------- ---------- ---------
Profit/(loss) before taxation 708 (2,999) 825 (1,466)
Tax (charge)/credit (156) 1,205 (12) 1,037
Profit/(loss) after taxation 552 (1,794) 813 (429)
================= =========== ========== =========
The net cash flows attributable to discontinued operations are
as follows:
Dyson Diecastings
GBP'000
Year ended 30 June 2016
Operating cash flows 183
Investing cash flows - proceeds
from sale of business 4,474
Investing cash flows - purchase
of property, plant and equipment (148)
Net cash inflow 4,509
=================
Alumasc Pendock Total
Precision Profiles
Dyson Diecastings Components
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 30 June 2015 (re-stated)
Operating cash flows 874 (134) (60) 680
Investing cash flows- proceeds
from sale of businesses - 4,760 1,408 6,168
Investing cash flows - purchase
of property, plant and equipment (45) (136) (45) (226)
Net cash inflow 829 4,490 1,303 6,622
================= =========== ========== =======
Details of the sale of the trade and assets of discontinued
operations are as follows:
Year ended 30 June 2016 Dyson Diecastings
GBP'000
Sales proceeds 4,500
Assets disposed of:
Land and buildings 1,643
Plant and equipment 454
Working capital 1,002
Gain on disposal 1,401
Costs of disposal (500)
Net gain on disposal 901
=================
Alumasc Pendock Profiles Total
Precision
Year ended 30 June 2015 Components
GBP'000 GBP'000 GBP'000
Sales proceeds 5,800 1,500 7,300
Assets disposed of:
Land and buildings 1,043 - 1,043
Plant and equipment 2,631 78 2,709
Working capital 2,426 560 2,986
(Loss)/gain on disposal (300) 862 562
Costs of disposal (1,040) (92) (1,132)
Net (loss)/gain on disposal (1,340) 770 (570)
=========== ================= =======
Included within the Alumasc Precision Components costs of
disposal of GBP1,040,000 are consequential intra-group
restructuring costs of GBP171,000 and insurance run-off premium
costs of GBP270,000.
7 TAX EXPENSE
(a.) Tax on profit on ordinary activities
Tax charged in the statement of comprehensive income
2015/16 2014/15
(re-stated)
GBP'000 GBP'000
Current tax:
UK corporation tax - continuing operations 1,433 922
- discontinued operations (697) (81)
Overseas tax 5 11
Amounts (over)/under provided in previous
years (2) 39
Total current tax 739 891
======= ============
Deferred tax:
Origination and reversal of temporary
differences:
- continuing operations 247 543
- discontinued operations 319 (956)
Amounts over provided in previous years (48) (56)
Rate change adjustment (54) 24
------- ------------
Total deferred tax 464 (445)
Total tax expense 1,203 446
======= ============
Tax charge on continuing operations 1,581 1,483
Tax credit on discontinued operations (378) (1,037)
Total tax expense 1,203 446
===== =======
Tax recognised in other comprehensive
income
Deferred tax:
Actuarial losses on pension schemes (240) (945)
Cash flow hedge 1 (43)
Tax credited to other comprehensive
income (239) (988)
===== =====
Total tax charge/(credit) in the statement
of comprehensive income 964 (542)
===== =====
(b.) Reconciliation of the total tax charge
The total tax rate applicable to the tax expense shown in the
statement of total comprehensive income of 15.6% is lower than
(2014/15: 9.2% was lower than) the standard rate of corporation tax
in the UK of 20% (2014/15: 20.75%). The differences are reconciled
below:
2015/16 2014/15
(re-stated)
GBP'000 GBP'000
Profit before tax from continuing operations 6,759 6,288
Profit/(loss) before tax from discontinued
operations 928 (1,466)
------- ------------
Accounting profit before tax 7,687 4,822
Current tax at the UK standard rate
of 20.00% (2014/15: 20.75%) 1,537 1,001
Expenses not deductible for tax purposes 139 212
Chargeable gains/use of capital losses (369) (774)
Rate change adjustment (54) 24
Tax (over)/under provided in previous
years - current tax (2) 39
Tax over provided in previous years
- deferred tax (48) (56)
1,203 446
======= ============
The group's total tax charge in 2015/16 of GBP1,203,000
(2014/15: GBP446,000) benefited from the impact of business
disposals where capital gains on sale of assets were shielded by
indexation allowances and capital losses brought forward.
(c.) Unrecognised tax losses
The group has agreed tax capital losses in the UK amounting to
GBP20 million (2015: GBP20 million) that relate to prior years.
Under current legislation these losses are available for offset
against future chargeable gains. The capital losses are able to be
carried forward indefinitely. Revaluation gains on land and
buildings amount to GBP1 million (2015: GBP1 million). These have
been offset against the capital losses detailed above. A deferred
tax asset has not been recognised in respect of the net capital
losses carried forward of GBP19 million (2015: GBP19 million) as
they do not meet the criteria for recognition.
(d.) Deferred tax
A reconciliation of the movement in deferred tax during the year
is as follows:
Accelerated Short Total Pension
capital term deferred deferred
allowances temporary
differences
Brands Hedging tax tax
liability asset
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2014 724 (10) 512 (6) 1,220 (3,584)
(Credited)/charged
to the statement
of comprehensive
income - current
year (649) (28) (54) - (731) 342
Credited to the
statement of
comprehensive
income - prior
year (56) - - - (56) -
Credited to equity - - - (43) (43) (945)
At 30 June 2015 19 (38) 458 (49) 390 (4,187)
Charged/(credited)
to the statement
of comprehensive
income - current
year 267 (8) (94) - 165 347
(Credited)/charged
to the statement
of comprehensive
income - prior
year (53) 5 - - (48) -
Charged/(credited)
to equity - - - 1 1 (240)
At 30 June 2016 233 (41) 364 (48) 508 (4,080)
=========== ============ ======= ======== ========== ==========
Deferred tax assets and liabilities are presented as non-current
in the consolidated statement of financial position.
Deferred tax assets have been recognised where it is probable
that they will be recovered. Deferred tax assets of GBP3.4 million
(2015: GBP3.8 million) have not been recognised in respect of net
capital losses of GBP19 million (2015: GBP19 million).
(e.) Factors affecting the tax charge in future periods
In the Budget on 16 March 2016, the UK Government announced its
intention to further reduce the main rate of UK corporation tax to
17% with effect from 1 April 2020. Existing temporary differences
on which deferred tax has been provided may therefore unwind in
future periods at this reduced rate. This rate change was not
substantively enacted at the balance sheet date. Deferred tax
assets and liabilities have been calculated based on the rate of
18% substantively enacted at the balance sheet date.
8 dividends
2015/16 2014/15
GBP'000 GBP'000
Interim dividend for 2016 of 2.7p
paid on 7 April 2016 960 -
Final dividend for 2015 of 3.5p paid
on 28 October 2015 1,248 -
Interim dividend for 2015 of 2.5p
paid on 7 April 2015 - 891
Final dividend for 2014 of 2.8p paid
on 5 November 2014 - 998
2,208 1,889
======= =======
A final dividend of 3.8 pence per equity share, at a cash cost
of GBP1,349,000, has been proposed for the year ended 30 June 2016,
payable on 1 November 2016. In accordance with IFRS accounting
requirements this dividend has not been accrued in the above
consolidated financial statements.
9 earnings per share
Basic earnings per share is calculated by dividing the net
profit for the period attributable to ordinary equity shareholders
of the parent by the weighted average number of ordinary shares in
issue during the period. Diluted earnings per share is calculated
by dividing the net profit attributable to ordinary equity
shareholders of the parent by the weighted average number of
ordinary shares in issue during the period, after allowing for the
exercise of outstanding share options. The following sets out the
income and share data used in the basic and diluted earnings per
share calculations:
2015/16 2014/15
(re-stated)
GBP'000 GBP'000
Profit attributable to equity holders
of the parent - continuing operations 5,178 4,805
Profit/(loss) attributable to equity
holders of the parent - discontinued
operations 1,306 (429)
Net profit attributable to equity
holders of the parent 6,484 4,376
======== ============
000s 000s
Weighted average number of shares 35,618 35,648
Dilutive potential ordinary shares
- employee share options 520 567
36,138 36,215
======== ============
Calculation of underlying earnings per share from continuing
operations:
2015/16 2014/15
(re-stated)
GBP'000 GBP'000
Reported profit before taxation from
continuing operations 6,759 6,288
Add: brand amortisation 268 268
Add: IAS 19 pension scheme administration
costs 510 455
Add: IAS 19 net pension scheme finance
costs 724 711
Underlying profit before taxation
from continuing operations 8,261 7,722
Tax at underlying group tax rate
of 20.8% (2014/15: 22.0%) (1,718) (1,699)
-------- ------------
Underlying earnings from continuing
operations 6,543 6,023
-------- ------------
Weighted average number of shares 35,618 35,648
Underlying earnings per share from
continuing operations 18.4p 16.9p
======== ============
10 movements in equity
Share capital and share premium
The balances classified as share capital and share premium are
the proceeds of the nominal value and premium value respectively on
issue of the company's equity share capital net of issue costs.
Capital reserve - own shares
The capital reserve - own shares relates to 622,528 (2015:
485,171) ordinary own shares held by the company. The market value
of shares at 30 June 2016 was GBP756,372 (2015: GBP802,958). These
are held to help satisfy the exercise of awards under the company's
Long Term Incentive Plans. A Trust holds the shares in its name and
shares are awarded to employees on request by the company. The
company bears the expenses of the Trust.
Hedging reserve
This reserve records the post-tax portion of the gain or loss on
a hedging instrument in a cash flow hedge that is determined to be
an effective hedge.
Foreign currency reserve
This foreign currency reserve is used to record exchange
differences arising from the translation of the financial
statements of foreign subsidiaries.
11 Related party disclosure
The group's principal subsidiaries are listed below:
Principal Country % of equity interest
Principal subsidiaries activity of incorporation and votes held
2016 2015
Alumasc Exterior
Building Products
Limited Building products England 100 100
Alumasc Limited Building products England 100 100
Levolux Limited Building products England 100 100
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made at
arms-length market prices. Outstanding balances at the year end are
unsecured and settlement occurs in cash. There have been no
guarantees provided or received for any related party
receivables.
Transactions with other related parties
Key management personnel are determined as the Directors of The
Alumasc Group plc.
Five Year Summary
2015/16 2014/15 2013/14 2012/13 2011/12
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income Statement Summary
Continuing operations:
Revenue 92,233 90,295 80,301 85,291 71,094
Underlying operating
profit 8,476 8,314 6,645 7,133 3,234
Net interest cost on
borrowings (215) (592) (521) (767) (706)
Underlying profit before
tax 8,261 7,722 6,124 6,366 2,528
Brand amortisation (268) (268) (268) (273) (299)
IAS 19 pension scheme
costs (1,234) (1,166) (900) (1,396) (317)
Non-recurring costs - - - (1,315) (273)
Profit before taxation 6,759 6,288 4,956 3,382 1,639
Taxation (1,581) (1,483) (1,016) (1,025) (372)
Profit for the year from
continuing operations 5,178 4,805 3,940 2,357 1,267
Discontinued operations
- Profit/(loss) after
tax 1,306 (429) 101 (471) (854)
Profit for the year 6,484 4,376 4,041 1,886 413
-------------------------------- ---------- -------------- -------------- -------------- --------------
Continuing operations:
Order book at 30 June 26,569 24,014 19,737 21,116 28,524
Return on sales 9.2% 9.2% 8.3% 8.4% 4.5%
Underlying tax rate 20.8% 22.0% 24.2% 25.7% 31.6%
Underlying earnings per
share 18.4 16.9 13.0 13.3 4.9
Basic earnings per share 14.5 13.5 11.1 6.6 3.6
Dividends per share (pence) 6.5 6.0 5.0 4.5 2.0
Basic earnings per share
(total group) 18.2 12.3 11.3 5.3 1.2
Balance Sheet Summary
at 30 June
Shareholders' funds 16,580 15,929 17,042 22,443 18,928
Net (cash)/debt (8,632) (914) 7,666 7,687 13,229
Pension deficit (net
of associated deferred
tax asset) 18,588 16,748 14,338 7,748 11,050
Discontinued operations - (2,969) (11,037) (12,169) (13,219)
Capital Invested - continuing
operations 26,536 28,794 28,009 25,709 29,988
---------------------------------------- ---------- ------------ ----------- ----------- -----------
Ratios:
Underlying return on (note
capital invested (post-tax) a) 24.3% 22.8% 18.8% 19.0% 7.4%
(note
Gearing b) - - 45.0% 34.3% 70.0%
(note
EBITDA interest cover c) 44.2 17.3 17.2 12.0 7.6
(note
Net debt/EBITDA d) n/a 0.1 1.0 1.0 2.5
Notes
a) Underlying operating profit after tax from continuing
operations calculated using the underlying tax rate,
as a percentage of average capital invested
b) Net borrowing as a percentage of shareholders'
funds
c) EBITDA divided by net interest cost on borrowings
d) Net debt plus contingent liabilities divided
by underlying EBITDA
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PBMFTMBJJBTF
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September 01, 2016 02:00 ET (06:00 GMT)
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