TIDMALU
RNS Number : 7807P
Alumasc Group PLC
05 September 2017
IMMEDIATE RELEASE 5 September 2017
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
2017.
Financial highlights
Year to 30 June 2017 2016 % change
--------------------------------------- ----- ---- --------
Revenue (GBPm) 104.8 92.2 +14%
Underlying profit before tax (GBPm)(1) 9.0 8.3 +9%
Underlying earnings per share (pence)
(1) 20.1 18.4 +9%
Statutory profit before tax (GBPm)
(2) 8.1 6.8 +20%
Basic earnings per share (pence) (2) 18.3 14.5 +26%
Dividends per share (pence) 7.15 6.5 +10%
Net cash at 30 June (GBPm) 6.1 8.6
--------------------------------------- ----- ---- --------
(1) Underlying results are stated prior to brand amortisation
charges of GBP0.3m (2015/16: GBP0.3m) and IAS 19 pension costs of
GBP0.6m (2015/16: GBP1.2m)
(2) Excludes GBP0.9m pre-tax gain on sale of discontinued
engineering operations in 2015/16
Key points
-- First year for Alumasc as focused building products group.
-- Record building products' revenues.
-- The group's sixth year of earnings growth.
-- A clear strategy for continued growth.
-- Group revenues up 14% to GBP104.8m reflects strong export
sales growth, together with continued growth in the UK.
-- Operating margins: Operating margins in H2 recovered to prior
full year levels of 9.2% after absorbing over GBP1m of additional
material costs during the year, mainly arising from the
depreciation of Sterling.
-- Investment in people: GBP1.6m was invested during the year in
new people, mainly in UK and international sales resources, to
support growth over the medium term.
-- Solar Shading & Architectural Screening achieved 41%
revenue growth to GBP24.4m, with underlying operating profit
doubling to GBP2m after GBP0.7m investment in people. Growing
demand for Levolux solutions was reflected in GBP7.9m North
American export sales, including a $5m project completed during the
year, and the initial contribution from the embryonic balcony and
balustrading business in the UK. Strong demand continues in the
core UK solar shading and architectural screening market.
-- Roofing & Walling revenue rose 4% to GBP41.5m with
underlying operating profit down 18% to GBP3.3m, mainly reflecting
a challenging year for Alumasc Facades in the public sector
refurbishment market. Following management action, cost savings of
GBP0.3m will be realised in 2017/18. Alumasc Roofing had another
record year. The non-core GBP4.2m revenue/operating break-even
Scaffolding Products business was sold on 31 July 2017 for
GBP1.0m.
-- Water Management revenue was up 11% to GBP30.5m with
operating profit up 4% to GBP3.6m. Reduced margins reflected a
c.70% steel price rise impacting Gatic which could not be fully
recovered through selling price increases. Gatic had record export
sales. Alumasc Water Management Solutions had a solid year, driven
mainly by UK sales growth, with "rain to drain" solutions, being
developed in conjunction with Gatic and Alumasc Roofing, gaining
traction.
-- Housebuilding & Ancillary Products increased revenue by
12% to GBP9.6m and operating profit by 11% to GBP1.6m, reflecting
Timloc's continued success based on excellent customer service, new
products, including its "Above the Roofline" range, and expanding
UK market coverage. Timloc invested GBP0.3m in additional sales and
operational resources during the year and its new purpose-built
factory at Goole will be commissioned early in 2018.
Paul Hooper, Chief Executive, commented:
"Our order books and the level of specifications and enquiries
in the pre-order pipeline remain strong across the group.
Therefore, the Board believes Alumasc can continue to grow
like-for-like revenues in its 2017/18 financial year.
We are targeting an improvement in financial year-on-year
operating margins, assisted by new products and systems, the
annualised impact of selling price rises, the divestment of SCP and
further operational gearing.
The Board is conscious of the wider economic and political
uncertainties at the current time. Nonetheless, in view of the
strategic positioning of our building products businesses in
specialised growth markets and the significant further
opportunities for international development at Levolux and Gatic,
the Board believes Alumasc can continue to perform well in 2017/18
and beyond."
Enquiries:
The Alumasc Group plc 01536 383844
Paul Hooper (Chief Executive)
Andrew Magson (Finance Director)
Glenmill Partners Limited 07771 758517
Simon Bloomfield
Strategic Report
Chairman's Statement
Summary
Against a background of major political events and accompanying
near-term uncertainty, it is encouraging that our principal market
- UK construction - continued to grow during the past year and that
we succeeded in growing our business considerably in excess of our
principal market.
Group Earnings advanced for the sixth year, with underlying
profit before tax increasing from GBP8.3 million to GBP9.0 million
(+9%) in the 2016/17 financial year. Statutory profit before tax
from continuing operations advanced from GBP6.8 million to GBP8.1
million (+20%). Revenues were 14% ahead in total, reflecting a
doubling of export sales and further growth in the UK.
The combination of weaker Sterling and a recovery in certain
commodity prices raised costs for many of our products, with a
consequential impact on margins, particularly for work already in
the pipeline. While able to respond to these cost increases to
various degrees, particularly with regard to future work, there was
an inevitable squeeze on margins in the earlier part of the
year.
While we remain alert to further changes in the external
environment, we believe that the inherent strength of our brands
and products, when coupled with other management initiatives, will
enable us to grow operating margins over time, as evidenced by some
recovery in the second half year.
Our balance sheet remains strong, with net cash balances of
GBP6.1 million at the year end.
The Board is recommending a final dividend of 4.3 pence per
share (2016: 3.8 pence), making a total for the year of 7.15 pence
per share (2016: 6.5 pence), an increase of 10%.
Progress against Strategy
The year under review represents the first in Alumasc's seventy
year history when its operations have been focused on the single
market sector of building products. Our strategy is to build
specialised positions in building products markets where specifiers
and customers recognise the value added by our premium products and
systems.
Through continuous market, product and brand development, we aim
to grow revenues faster than the markets in which we operate and to
grow profits at a faster rate than revenues, thereby generating
superior financial returns to our shareholders.
We have made significant progress since the dark days of
recession which followed the financial crisis of 2008/09. During
this period of 7 years, a pattern can be seen of revenue growth
above industry background and of profit growth in excess of revenue
growth. The drivers behind this are discussed in detail in the
Strategic Report which follows this statement and, following some
head winds during the past year, our challenge is to repeat the
patterns over the coming 7 years.
Talented people are fundamental to both past and future success
and, throughout this period, our businesses have made and continue
to make significant investment in talent as the foundation for the
future. I wish to express the Board's gratitude, on your behalf, to
all our employees for their dedication and contribution towards our
progress. The patient development of our teams and markets gives
your Board confidence in our ability to progress further in the
years ahead.
In parallel with the above, and in support of the growth being
achieved in our business, we are investing to raise operational
capacity and efficiency. A new factory for Timloc, to complete
later this year, to be followed by new facilities for Alumasc Water
Management Solutions, are prime examples of this.
Corporate Events
Following its review of strategy during the year, The Board
concluded that our Scaffolding Products business no longer fitted
the group's future plans. Accordingly, the business, which had
revenues of GBP4.2 million and traded at break-even in the 2016/17
financial year, was sold for GBP1.0 million on 31 July 2017.
Prospects
Independent forecasts for construction activity in the coming
year indicate further modest growth. Once again, therefore, our
task is to grow our business ahead of its principal market against
this background through continued product and market
development.
Our investment over a number of years in people and product
innovation is being rewarded by the continued strength of our order
books and activity still at the enquiry and specification
stage.
Given these two factors, it is the Board's belief that further
progress should be achieved in the new financial year and
beyond.
John McCall
Chairman
Chief Executive's Strategic and Performance Overview
Strategy
Alumasc's strategy is to build strong specialised positions in
premium building product markets, where specifiers and customers
recognise the value added by our products, systems and solutions.
Our objectives are to:
1. Grow UK revenues on average at a faster rate than the overall UK construction market
2. Augment UK revenue growth through the development of selected export markets
3. Grow profit at a faster rate than revenue, by improving
operating margins through innovation, new product development,
increasing sales of systems and solutions and operational
gearing
4. Generate consistently superior financial returns to
shareholders, underpinned by growing operating margins and strong
returns on investment.
Alumasc's chosen businesses have strong strategic positions in
specialised market segments capable of growing faster than the
overall construction market. Each of our businesses is well
positioned to benefit from one or more of the following long-term
market growth drivers, which are closely aligned with the
requirements of specifying architects and engineers and supported
by building regulations:
1. Reducing energy use in the built environment
2. Managing and controlling the flow of water and reducing water use in the built environment
3. The provision of bespoke architectural systems and solutions,
typically involving significant design input and technical
expertise
4. Providing systems and solutions that improve the efficiency,
quality and cost effectiveness of the construction process for both
installers and customers.
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 market segment,
to provide agility as markets evolve and to deliver superior
customer service
-- Building strong customer relationships and the continuous
development of well established routes to market
-- Developing synergies within the group, both through cross-selling and cost reduction
-- The promotion and development of recognised and trusted brands
-- The design and development of innovative products
-- An ongoing programme of prioritised investment in both human
and capital resources to support further growth in the business
over the medium to longer term.
Organic growth will be supplemented by complementary
acquisitions should the right opportunities arise at the right
price.
Overview of performance
2016/17 was Alumasc's first year as a focused building products
business. This business generated record revenues, enabling Alumasc
to deliver its sixth year of earnings growth.
Overview of underlying
and statutory profit 2016/17 2015/16
GBPm Underlying Non-underlying Statutory Underlying Non-underlying Statutory
Revenue 104.8 - 104.8 92.2 - 92.2
Operating Profit
(1) 9.1 (0.3) 8.9 8.5 (0.8) 7.7
Profit before tax
(2) 9.0 (0.9) 8.1 8.3 (1.5) 6.8
----------- --------------- ---------- ----------- --------------- ----------
(1) Non-underlying costs included in operating profit comprise
brand amortisation of GBP0.3 million (2015/16: GBP0.3 million) and
pension administration costs of GBP0.5 million in 2015/16 (see note
5 to the financial statements below).
(2) Non-underlying costs included in profit before tax include
the costs charged to operating profit (see note 1 above) and IAS 19
pension scheme finance costs of GBP0.6 million (2015/16: GBP0.7
million) (see note 5 to the financial statements below).
-- Group revenues increased by 14% to GBP104.8 million (2015/16: GBP92.2 million).
-- UK revenues grew by 4%. This compared with UK construction market growth of 1.8%.
-- Export sales increased to GBP17.4 million, representing 17%
of group sales (2015/16: GBP8.0 million and 9%, respectively). This
reflected increasing North American market penetration by Levolux,
record Gatic export sales and a higher than usual concentration of
large projects.
-- Underlying operating profit increased by 8% to GBP9.1 million
(2015/16: GBP8.5 million), with results from three of our four
business segments ahead of the prior year, led by particularly
strong growth at Levolux, our solar shading and architectural
screening business. Further detail is given in the operational
review below.
-- The growth in underlying operating profit was achieved after
absorbing over GBP1 million of additional materials costs, for the
most part arising from the depreciation of Sterling over the last
year. This impacted operating margins, which reduced from 9.2% last
year to 8.7% this year. Margins recovered, as expected, back to
9.2% in the second half of the financial year as we began to offset
increased costs through selling price increases and operational
efficiencies. Further details are given in the financial review
below.
-- We invested an incremental GBP1.6 million in new people
during the year, in both sales and operational resources to support
the continued growth in the business in 2016/17 and beyond. The
costs of this were all charged to operating profit during the
year.
-- Underlying profit before tax grew by 9% to GBP9.0 million
(2015/16: GBP8.3 million), benefiting both from the increase in
operating profit and lower net financing costs.
-- Underlying earnings per share grew by 9% to 20.1 pence
(2015/16: 18.4 pence), in line with the growth in underlying profit
before tax.
-- Statutory profit before tax from continuing operations rose
by 20% to GBP8.1 million (2015/16: GBP6.8 million), benefiting from
higher underlying profits and lower IAS 19 pension costs.
-- Basic earnings per share were 1% ahead of the prior year at
18.3 pence (2015/16: 18.2 pence), with the better results from
continuing operations largely offset by the non-recurring prior
year post-tax gain arising from the sale of discontinued
engineering operations.
Operational review
Health & safety
Alumasc's priority is to provide a safe place for our employees
to work. Within a broader trend of a significant improvement in
health & safety performance across the group over recent years,
11 lost time incidents were recorded across the group in 2016/17,
resulting in the group's third best overall safety performance.
Solar shading and architectural screening
Revenue: GBP24.4 million (2015/16: GBP17.4 million), up 41%
Underlying operating profit: GBP2.0 million (2015/16: GBP1.0
million), up 100%
Underlying operating margin: 8.2% (2015/16: 5.5%)
Post-tax return on investment: 10.8% (2015/16: 6.3%)
Levolux performed very strongly during the year, benefiting
from:
-- A significant growth in North American export sales to GBP7.9
million, including a large $5 million contract to screen a power
station in the USA. Levolux's reputation and brand recognition is
growing amongst specifying architects and building contractors,
assisted by better sales coverage across the continent following
recent investment;
-- the first significant contribution from the embryonic balcony
and balustrading business in the UK, with healthy demand from
developers of prestige residential apartments; and
-- continuing strong demand for solar shading and architectural
screening solutions in the core UK market.
We estimate the size of the potential markets that Levolux is
now serving, including the relatively new North American and
balconies lines of business, to be approximately GBP250 million,
over four times the size of Levolux's original UK solar shading
market. Therefore, the Board believes that the opportunities for
Levolux's future development are significant.
We invested GBP0.7 million in new people to support Levolux's
continuing growth during the year, including two vice presidents of
sales to double our representation in North America, and additional
resources to manage and support the growth of the business more
generally including designers, estimators, project managers,
operational and supply chain resources.
Levolux is a low capital intensity business, with a relatively
small fabrication and warehousing facility in Gloucester. Most of
the manufacturing and logistics activity is outsourced to a broad
supply chain based mainly in the UK and Europe. This provides us
with access to a wide range of materials and system components,
together with significant operational flexibility and capacity.
We install our bespoke architectural solar shading and balcony
solutions in the UK, and supply to approved installers in North
America.
Levolux's order books remain strong at GBP18.4 million at 30
June 2017. The pre-order specification and quotation pipeline
across all lines of business is at record levels. However, in view
of the completion in June 2017 of the large $5 million power
station project in the USA, we believe Levolux's overall revenue
and export sales growth rates in the 2016/17 financial year were
above trend. Therefore we expect 2017/18 revenues to be broadly
similar to the year under review, as continued growth in the
underlying business is mitigated by normalisation of the influence
of larger projects.
The order book for projects we expect to be on site in the next
(2018/19) financial year is already over GBP3 million. This is very
promising, as it gives us a record level of order visibility at
this stage of the year for the following financial year.
In view of the above, 2017/18 should provide us the opportunity
to consolidate and benefit fully from improvements in operational
and supply chain performance already being delivered by our
strengthened operational team following the recent investment. We
expect this, and the benefit of more favourable hedged exchange
rates from US Dollar income to assist us in further growing
operating margins.
Roofing & Walling
Revenue: GBP41.5 million (2015/16: GBP40.1 million), up 4%
Underlying operating profit: GBP3.3 million (2015/16: GBP4.0
million), down 18%
Underlying operating margin: 7.9% (2015/16: 9.9%)
Post-tax return on investment: 36% (2015/16: 47%)
The headline divisional numbers mask another year of record
revenues and profits for Alumasc Roofing, despite currency-led cost
pressures on imported materials which impacted margins more
significantly in this business than elsewhere in the group.
Alumasc Roofing is a specification sales-led business that has
continued to gain market share in the UK. This has been through
continued investment in the development of an increasingly wide
range of high-performing flat roofing solutions that meet client
needs in both new build and refurbishment markets. This is combined
with a strong service offering and The Alumasc Promise, aimed at
lowering the overall life cycle cost of the roof for clients,
delivered together with Alumasc trained, but independent,
registered contractors.
2016/17 was a particularly strong year for new build sales, with
a number of significant projects completed successfully,
particularly in London and the South-East. We continue to work on a
number of high-profile buildings and projects in the Battersea area
of London and in London Docklands. Blackdown Greenroofs and
Roof-Pro's roofing support systems played an important part in the
overall success and growth of the roofing business during the
year.
Some GBP0.4 million was invested in new people in 2016/17,
mainly additional technical sales resources to support the
medium-term growth potential of Alumasc Roofing. We expect further
growth from this business in 2017/18, albeit the further recent
depreciation of Sterling means there is likely to be continued
pressure on operating margins.
Alumasc Facades had a challenging year. This business
principally supplies exterior wall insulation ("EWI") systems,
mainly to the public sector refurbishment market. These systems
reduce energy use, thereby lowering CO(2) emissions in hard to heat
older properties. Alumasc manufactures mineral renders in-house and
buys in other system components, including insulation, from
reputable suppliers.
The business has a strong presence in Scotland where government
funding continues to be available, albeit now at reduced levels.
However, the significant reduction in government funding in England
and Wales following the end of the Green Deal programme in 2015
combined with substantial cuts to the Eco programme have led to
industry over-capacity, pressure on margins and a significant
reduction in our revenue and profit. Therefore, in July 2017 we
reduced overhead costs in this business by GBP0.3 million per
annum.
Alumasc does not supply cladding systems of the type that we
understand were used on the Grenfell Tower in London. Alumasc's EWI
systems typically comprise an insulation layer and a fire retardant
mineral render that is fixed to the original external wall of the
building.
Of the smaller businesses in the division:
-- Scaffold & Construction Products ("SCP") had a difficult
year, impacted by a combination of strong price competition and the
increased cost of imported materials. This business sold a
relatively commoditised product range and had the lowest margins in
the group. It achieved a break-even performance for the year from
revenues of GBP4.2 million. The Board took the decision that SCP
was no longer sufficiently aligned with group strategy, and
therefore we sold this business for book value of GBP1.0 million on
31 July 2017. A GBP0.2 million cost was incurred on sale, taken in
the 2017/18 financial year, relating to early exit from a warehouse
contract.
-- Rainclear had its fourth full consecutive year of record
revenues and profits following its acquisition in 2012/13. This
business has continued to expand its product range within its
specialist niche of metal rainwater systems. Rainclear also manages
the group's small but relatively high growth e-commerce activities,
and has now taken over the running of Building Products Online,
formerly managed by SCP.
Water Management
Revenue: GBP30.5 million (2015/16: GBP27.6 million), up 11%
Operating profit: GBP3.6 million (2015/16: GBP3.5 million), up
4%
Operating margin: 11.9% (2015/16: 12.7%)
Post-tax return on investment: 43% (2015/16: 47%)
Alumasc's Water Management division experienced strong revenue
growth led by record export sales of Gatic systems arising from a
number of relatively large projects in Europe, the Middle East and
the Far East. The bias toward export sales impacted margin mix in
the year and this was exacerbated by a circa 70% increase in steel
costs as global prices recovered, which could not be fully offset
by selling price increases and internal efficiencies.
Alumasc Water Management Solutions ("AWMS") had a record year,
albeit experiencing more modest revenue growth mainly driven by
sales to UK domestic markets. AWMS manufactures approximately half
its output in-house and margins on these products benefited from
operational efficiencies. However, this was largely offset by
currency led import cost inflation on materials sourced from both
the Euro-zone and the Far East.
New drainage products introduced in the prior year continued to
gain traction, including the new generation Gatic Slotdrain range,
Gatic Filcoten and the Harmer SML below ground range.
In co-operation with Gatic and Alumasc Roofing, AWMS further
developed its range of comprehensive "Rain to Drain" solutions to
manage, attenuate and conserve water in the built environment, and
continues actively to work with specifiers, industry bodies and
regulators to meet growing demand in this area.
Alumasc sees great potential to develop the Gatic business,
including internationally, and is increasing the level of
investment in UK and export sales resources together with new
operational leadership in 2017/18 to accelerate both revenue growth
and margin improvement.
In late August 2017 the EU announced it was imposing a 33% duty
on certain iron castings imported from China. This will impact
Gatic's UK access covers business. The additional cost will be
recovered through selling price increases and internal
efficiencies, where possible.
It remains the intention to relocate AWMS to a new facility in
the Kettering area in the next two to three years as this business
approaches physical capacity. A number of options are under
consideration and evaluation, including greenfield and existing
industrial sites. Pending the move, the business will incur GBP0.3
million of additional property lease costs at its existing site
effective from July 2017. The shorter term strategic focus for AWMS
is to improve margin through internal operational efficiencies.
Capital investment in new machinery, tooling and technology is
planned to support this.
House building and ancillary products
Revenue: GBP9.6 million (2015/16: GBP8.6 million), up 12%
Operating profit: GBP1.6 million (2015/16: GBP1.4 million), up
11%
Operating margin: 16.5% (2015/16: 16.6%)
Post-tax return on investment: 25% (2015/16: 28%)
Timloc's revenue growth continued to significantly out-perform
the expanding UK market for new houses through:
-- further consolidating the reputation of the business for
excellent customer service, including on time in full next day
delivery;
-- the addition of new products to the range; and
-- expansion of geographical reach within the UK.
Once again, this business reported record revenues and profits
for the year.
The 'Above the Roofline' range launched last year exceeded
expectations and we expect this new line of business to continue to
grow, with new products still to be added, now that it has become
established.
Investment of GBP0.3 million was made in additional sales and
operational resources during the year and this helped drive and
support the strong revenue growth. Most of the raw material
inflation and adverse foreign exchange impacts on margin were
offset by manufacturing efficiency gains.
The next milestone in Timloc's development will be the
commissioning of its new leased factory, expected in early 2018.
The factory will bring much needed additional capacity to meet
further anticipated growth in demand, and will also provide
additional operational flexibility. We anticipate that incremental
property costs of GBP0.2 million in the 2017/18 financial year will
be recovered through sales volume growth and margin improvement.
Non-recurring move and factory commissioning costs are expected to
be around GBP0.3 million in 2017/18.
Outlook
External forecasts anticipate continued UK construction market
growth of 1.2% in our 2017/18 financial year.
We anticipate further underlying growth in export sales in
2017/18, and this is expected to largely mitigate a high
concentration of large export projects in 2016/17.
Alumasc's order books and the level of specifications and
enquiries in the pre-order pipeline remain strong across the
group.
Therefore, the Board believes Alumasc can continue to grow
like-for-like revenues in its 2017/18 financial year, after
adjusting for the divestment in July 2017 of SCP which had revenues
of GBP4.2 million in 2016/17.
We are targeting an improvement in financial year-on-year
operating margins, assisted by new products and systems, the
annualised impact of selling price rises, the divestment of SCP and
further operational gearing.
We plan to invest at least another GBP1 million in people
resources during the 2017/18 financial year to assist us in
realising the group's medium to longer term growth potential.
The Board is conscious of the wider economic and political
uncertainties at the current time and is monitoring developments
carefully, retaining flexibility to adapt to events as
necessary.
Nonetheless, in view of the strategic positioning of our
building products businesses in specialised growth markets and the
significant further opportunities for international development at
Levolux and Gatic, the Board believes Alumasc can continue to
perform well in 2017/18 and beyond.
Dividends
The Board is recommending a final dividend of 4.3 pence per
share (2015/16: 3.8 pence), taking the total dividend for the year
to 7.15 pence (2015/16: 6.5 pence), an increase of 10%.
The final dividend will be paid on 31 October 2017 to
shareholders on the register on 6 October, subject to shareholder
approval at the AGM to be held on 26 October.
Paul Hooper
Chief Executive
Financial Review
Reconciliation of underlying to statutory profit before tax
A reconciliation of underlying to statutory profit before tax
from continuing operations is shown in the table below.
2016/17 2015/16
GBPm GBPm
============================== ======== ========
Underlying profit before tax 9.0 8.3
IAS 19 pension costs (0.6) (1.2)
Brand amortisation (0.3) (0.3)
Profit before tax 8.1 6.8
============================== ======== ========
Analysis of first and second half year operating performance and
margin in 2016/17
The table below shows that underlying operating profit
generation was, as is usual, weighted in the approximate ratio
45%/55% towards the second half year of the financial year.
Underlying operating margins recovered, as anticipated, in the
second half year as we began to recover imported input cost
inflation through selling price increases and internal
efficiencies.
H1 H2 Full Year
==================================== ===== ===== ==========
Revenue (GBPm) 50.8 54.0 104.8
H1/H2 % 48% 52%
Underlying operating profit (GBPm) 4.1 5.0 9.1
H1/H2 % 45% 55%
Underlying operating margin 8.2% 9.2% 8.7%
Taxation
The group's underlying tax rate reduced from 20.8% in 2015/16 to
20.6% in 2016/17, broadly in line with the reduction in the UK
statutory rate. The group's overall tax rate increased from 15.6%
in 2015/16 to 19.5% in 2016/17 mainly due to the one-off benefit of
non-taxable profits from business and related property disposals in
the prior year. We expect the group's underlying tax rate to be
19.7% in the 2017/18 financial year.
Cash flow and year end net cash position
The group's cash flow performance for the year is summarised
below. The key points are:
-- EBITDA was GBP10.5 million, an 8% increase on last year,
driven mainly by the increase in operating profit
-- The timing of cash receipts from customers on large
construction contracts, which benefited the prior financial year,
had a negative turnaround effect on working capital of GBP1.7
million in the 2016/17 financial year. Receipts from customers,
which had been in advance of work completed a year ago, reversed
during the 2016/17 financial year and were in arrears by 30 June
2017. We expect this to recover back to a broadly neutral position
in the current financial year, benefiting cash flow by circa GBP0.7
million in 2017/18
-- Other working capital outflows to support the 14% increase in
group revenues during the 2016/17 financial year were GBP3.7
million. The group continues to control working capital tightly and
the rolling average ratio of trade working capital as a percentage
of sales remained unchanged on a year ago at 11.3%. Cash flow prior
to the financial year end was impacted by high group revenues in
May and June, the cash proceeds from which were not collected until
just after the year end
-- Capital investment of GBP1.1 million was broadly in line with
depreciation and non-brand amortisation charges for the year. The
group plans to invest more in capital projects in 2017/18 to
support the continued growth in the business, currently estimated
to be in the range GBP3.5 to GBP4.0 million, including the new
Timloc factory fit out and commissioning costs of circa GBP1.8
million
-- Cash contributions to legacy defined benefit pension schemes
were GBP3.3 million, GBP0.4 million higher than the prior year
following agreement of the 2016 triennial valuation of pension
liabilities, see below, and the settlement of prior year end
expense accruals
-- Interest and tax payments were together GBP0.9 million (2015/16: GBP1.2 million)
-- Dividend payments to shareholders were GBP2.4 million (2015/16: GBP2.2 million).
In total, the net cash outflow for the year was GBP2.5 million.
Alumasc's net cash resources on the balance sheet therefore reduced
by GBP2.5 million from GBP8.6 million at 30 June 2016 to GBP6.1
million at 30 June 2017.
Summarised cash flow statement 2016/17 2015/16
GBPm GBPm
EBITDA(*) 10.5 9.7
Short term changes in working capital on
large construction contracts (1.7) 1.8
Underlying change in working capital (3.7) (0.3)
Operating cash flow from continuing operations 5.1 11.2
Capital expenditure (1.1) (1.1)
Pension deficit & scheme expenses funding (3.3) (2.9)
Interest (0.1) (0.2)
Tax (0.8) (1.0)
Dividends (2.4) (2.2)
Share schemes and other 0.1 (0.6)
Net cash flow from continuing operations (2.5) 3.2
Net sales proceeds from disposal of Dyson
Diecastings in 2015/16 - 4.5
Net cash flow (2.5) 7.7
-------------------------------------------------- ------- -------
Net cash on balance sheet at 30 June 6.1 8.6
-------------------------------------------------- ------- -------
(*) EBITDA: Underlying earnings before interest, tax,
depreciation and amortisation
Foreign currency
The group imports approximately 40% of its total purchases of
materials, and these transactions are mostly settled in Euros or US
Dollars. The group's net annual requirement for purchases in Euros
is circa GBP6 million. US Dollar income is largely offset by US
Dollar purchases and therefore the impact across the group as a
whole of changes in the US Dollar exchange rates are not as
material as is the case for Euros. The depreciation of Sterling
against the Euro and US Dollar since June 2016 has cost the group
over GBP1 million. The group has hedged approximately 75% of its
currency requirements for the 2017/18 financial year at average
rates of EUR/GBP: 1.13 and US$/GBP: 1.31. We continue to seek to
recover as much of this currency exchange cost as possible through
selling price increases and internal savings and efficiencies.
Pensions
The 31 March 2016 triennial valuation of Alumasc's legacy
defined benefit pension liabilities was agreed with the Pension
Trustees in the early part of the 2016/17 financial year. The
combined pension deficit of our two pension schemes, both of which
have been closed to future accrual since 2010, was valued at GBP33
million. This represented a funding level of 73% of scheme
liabilities, reflecting a market environment where gilt yields used
to discount future pension liabilities to present values were at
close to record lows.
We agreed a plan with the Trustees to recover this deficit over
a ten-year period, with the group making annual cash contributions
of GBP3.2 million pa (previously GBP3.0 million pa), including
scheme running expenses. The valuation of the schemes and
associated recovery plan is next scheduled to be formally
re-assessed in 2019.
The valuation of Alumasc's pension deficit for accounting
purposes at 30 June 2017 using IAS 19 valuation conventions was
GBP20.6 million, an improvement on the previous financial year end
valuation of GBP22.7 million, largely reflecting the benefit of
deficit recovery payments made by the group during the year,
described above.
Balance sheet, capital structure and return on investment
The group's net assets and shareholders' funds increased from
GBP16.6 million at the beginning of the financial year to GBP20.4
million at 30 June 2017, mainly as a result of retained profits for
the year after dividend payments.
The group defines its capital invested as the sum of
shareholders' funds, plus the pension deficit (net of tax), less
net cash resources. On this basis, capital invested increased from
GBP26.5 million at the end of the prior year to GBP31.5 million at
30 June 2017, largely reflecting the investment made in working
capital during the year to support the continued growth of the
business and work in progress on construction contracts.
Post tax return on investment advanced to 25.0% in the year to
30 June 2017 from 24.3% in the prior year as the growth in
operating profit exceeded the growth in average capital invested
during the year. The group's strong post-tax return on investment,
substantially above the group's cost of capital, demonstrates the
significant economic value added by the group, based on the
combination of:
-- the supply of premium building products, systems and
solutions from strong, specialised market positions in growth
markets; and
-- the group's relatively low capital intensity internal
manufacturing operations and outsourced supply chains.
Overall, 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
Having made due enquiry, and based on the information available
at the date of this report, the Board believes that Alumasc will
remain a going concern and financially viable on the basis of the
assumptions and relevant time horizons set out in the group's full
Report and Accounts 2017.
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 2017 which will be despatched
to shareholders on or around 27 September 2017 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 2017
2016/17 2015/16
Continuing operations: Notes GBP'000 GBP'000
Revenue 4 104,761 92,233
Cost of sales (72,022) (61,434)
-------- --------
Gross profit 32,739 30,799
Net operating expenses (23,864) (23,101)
Operating profit 4 8,875 7,698
Finance expenses (752) (939)
-------- --------
Profit before taxation 5 8,123 6,759
Tax expense 6 (1,583) (1,581)
-------- --------
Profit for the period 6,540 5,178
Discontinued operations:
Profit after taxation for the period
from discontinued operations - 1,306
Profit for the period 6,540 6,484
======== ========
Other comprehensive income
Items that will not be recycled to
profit or loss:
Actuarial loss on defined benefit pensions
net of tax (792) (3,172)
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 170 (23)
Exchange differences on retranslation
of foreign operations 34 1
204 (22)
-------- --------
Other comprehensive loss for the period,
net of tax (588) (3,194)
-------- --------
Total comprehensive profit for the
period, net of tax 5,952 3,290
======== ========
Earnings per share Pence Pence
Basic earnings per share
- Continuing operations 18.3 14.5
- Discontinued operations - 3.7
8 18.3 18.2
======== ========
Diluted earnings per share
- Continuing operations 18.0 14.3
- Discontinued operations - 3.6
8 18.0 17.9
======== ========
Reconciliations of underlying to statutory profits and earnings
per share are provided in notes 5 and 8 respectively.
consolidated statement of financial position
At 30 June 2017
Notes 2017 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 5,332 5,267
Goodwill 16,488 16,488
Other intangible assets 2,364 2,642
Deferred tax assets 6 3,501 4,080
-------- --------
27,685 28,477
Current assets
Inventories 10,508 10,238
Trade and other receivables 22,459 19,759
Cash and cash equivalents 9,014 10,540
-------- --------
41,981 40,537
Total assets 69,666 69,014
======== ========
Liabilities
Non-current liabilities
Interest bearing loans
and borrowings (2,938) (1,908)
Employee benefits payable (20,596) (22,668)
Provisions (890) (1,064)
Deferred tax liabilities 6 (595) (508)
-------- --------
(25,019) (26,148)
Current liabilities
Trade and other payables (23,497) (25,351)
Provisions (157) (478)
Corporation tax payable (494) (188)
Derivative financial liabilities (62) (269)
-------- --------
(24,210) (26,286)
Total liabilities (49,229) (52,434)
======== ========
Net assets 20,437 16,580
======== ========
Equity
Called up share capital 4,517 4,517
Share premium 9 445 445
Capital reserve - own
shares 9 (541) (931)
Hedging reserve 9 (51) (221)
Foreign currency reserve 9 84 50
Profit and loss account
reserve 15,983 12,720
-------- --------
Total equity 20,437 16,580
======== ========
Paul Hooper Andrew Magson
Director Director
5 September 2017
Company number 1767387
consolidated STATEMENT of cash flows
For the year ended 30 June 2017
2016/17 2015/16
Notes GBP'000 GBP'000
Operating activities
Operating profit 8,875 7,698
Adjustments for:
Depreciation 958 931
Amortisation 425 364
Gain on disposal of property, plant
and equipment (2) (11)
Increase in inventories (270) (400)
Increase in receivables (2,700) (804)
(Decrease)/Increase in trade and other
payables (1,994) 2,958
Decrease in provisions (585) (84)
Cash contributions to retirement benefit
schemes (3,200) (2,500)
Share based payments 157 181
------- -------
Cash generated by operating activities
of continuing operations 1,664 8,333
Operating profit from discontinued operations - 27
Depreciation and amortisation - 141
Movement in working capital from discontinued
operations - 15
------- -------
Cash generated by operating activities
of discontinued operations - 183
Tax paid (800) (980)
------- -------
Net cash inflow from operating activities 864 7,536
Investing activities
Purchase of property, plant and equipment
- continuing operations (909) (869)
Purchase of property, plant and equipment
- discontinued operations - (148)
Payments to acquire intangible fixed
assets (147) (255)
Proceeds from sales of plant and equipment 4 21
Proceeds from sale of business activities - 4,474
Net cash (outflow)/inflow from investing
activities (1,052) 3,223
Financing activities
Interest paid (120) (221)
Equity dividends paid 7 (2,368) (2,208)
Draw down/(repayment) of amounts borrowed 1,000 (3,000)
Refinancing costs - (119)
Exercise of share based incentives 116 (612)
Net cash outflow from financing activities (1,372) (6,160)
Net (decrease)/increase in cash and
cash equivalents (1,560) 4,599
======= =======
Net cash and cash equivalents brought
forward 10,540 5,914
Net (decrease)/increase in cash and
cash equivalents (1,560) 4,599
Effect of foreign exchange rate changes 34 27
------- -------
Net cash and cash equivalents carried
forward 9,014 10,540
======= =======
consolidated STATEMENT of changes in equity
For the year ended 30 June 2017
Hedging Foreign Profit Total equity
Capital reserve reserve currency and loss
Share - reserve account
Notes Share capital premium own shares reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
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 7 - - - - - (2,208) (2,208)
Share based payments - - - - - 181 181
Acquisition of own
shares (net) - - (313) - - - (313)
Exercise of share
based incentives - - - - - (299) (299)
At 1 July 2016 4,517 445 (931) (221) 50 12,720 16,580
Profit for the
period - - - - - 6,540 6,540
Exchange differences
on retranslation
of foreign
operations - - - - 34 - 34
Net gain on cash
flow hedges - - - 207 - - 207
Tax on derivative
financial liability - - - (37) - - (37)
Actuarial loss on
defined benefit
pensions, net of
tax - - - - - (792) (792)
Dividends 7 - - - - - (2,368) (2,368)
Share based payments - - - - - 157 157
Own shares used to
satisfy exercise
of share awards - - 390 - - - 390
Exercise of share
based incentives - - - - - (274) (274)
At 30 June 2017 4,517 445 (541) (51) 84 15,983 20,437
------------- -------- --------------- --------- ---------- --------- -------------
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 2017, 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 2017 or 2016, but is derived from the group's 2017 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
2017. Statutory accounts for 2016 have been delivered to the
registrar of companies and those for 2017 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).
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 cash flows 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 2017 the group's net cash resources were GBP6.1
million (2016: GBP8.6 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 judgements and estimates
The main source of estimation uncertainty that could have a
significant risk of causing material adjustment to the carrying
amounts of assets and liabilities at 30 June 2017 within the next
financial year are the 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.
Judgment is required in making forecasts of contract outcomes and
on revenue and profit recognition relating to:
(i) potential contract variations prior to these being fully agreed; and/or
(ii) if there are differences, timing or otherwise, between the
assessment of internal quantity surveyors and those of our
customers as to the level of work performed.
3 Principal risks and uncertainties
Risks and uncertainties Mitigating actions taken
------------------------------------ --------------------------------------------------------------
Economic, construction -- Strategic positioning in markets/sectors
market and foreign exchange anticipated to grow faster than the UK
risks construction market.
Comment -- Selected development of export sales
opportunities, especially for Levolux and
Alumasc is a UK-based Gatic (particularly in North America, Europe,
group of businesses. The the Middle East and Far East).
majority of group sales -- Revenues are derived from a variety
made to the construction of end use construction markets.
sector in the UK. This -- Development of added value systems and
market can be cyclical solutions that are either required by legislation,
in nature. building regulation and/or specified by
The depreciation of Sterling architects and engineers.
during the year impacted -- Continuous development and introduction
material costs. of innovative products, systems, solutions
There is relatively high and services that are market leading and
economic and political differentiated against the competition.
uncertainty at the current -- The group has exposure to currency risk,
time. particularly the Euro and US Dollar. Sterling
has depreciated against these currencies
since June 2016. The impact is being mitigated
by selling price increases, purchasing
savings, operational efficiencies and forward
currency hedging.
------------------------------------ --------------------------------------------------------------
-- Market competitive remuneration/incentive
Loss of key employees arrangements.
Comment -- Employee numbers and changes monitored
in monthly subsidiary board meetings.
Generally, staff turnover -- Key, high performing and high potential
is low. employees identified and monitored.
-- Training and development programmes.
-- Exit interviews held with learning points
shared.
------------------------------------ --------------------------------------------------------------
Product/service differentiation * A devolved operating model with both group and local
relative to competition management responsible for developing a deep
not developed or maintained knowledge of our specialist markets and identifying
Comment opportunities and emerging market trends.
Innovation and an entrepreneurial
spirit is encouraged in -- Innovation best practice days held annually
all group companies. Over at group level and more regularly in each
10% of group sales relate business.
to products launched in -- Annual group strategic planning meetings
the last three years. encourage innovation and "blue sky" thinking.
-- New product introduction/development
KPIs used to monitor progress.
-- Monitor the market for potentially new
and/or disruptive technologies.
------------------------------------ --------------------------------------------------------------
-- Develop and maintain strong customer
Loss of key customers. relationships.
Comment -- Product, system and service differentiation.
-- Good project tracking and enquiry/quote
Generally the group has conversion rate tracking.
a good track record of -- Increasing use of, and investment in,
customer retention. The customer relationship management (CRM)
group has a diversified software.
customer base with the -- Organisational and cultural flexibility
largest customer representing to adapt to changing and emerging customer
only circa 3% of group needs.
revenues.
------------------------------------ --------------------------------------------------------------
-- Continue to grow the business so the
Funding legacy pension relative affordability of pension contributions
obligations is improved over time.
-- Maintain constructive relationship with
Comment Pension Trustees.
-- Meet agreed pension funding commitments.
Alumasc's pension obligations -- Regular review at group board level.
are material relative -- Use of specialist advisors.
to its market capitalisation -- Investment performance and risk/return
and net asset value. 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.
------------------------------------ --------------------------------------------------------------
-- Robust internal quality systems; compliance
Product warranty/recall with relevant legislation, building regulations
risks and industry standards (eg ISO, BBA etc)
Comment and product testing, as appropriate.
-- Group insurance programme to cover larger
The group has a good potential risks.
track record with regard -- Back to back warranties obtained from
to the management of these suppliers where appropriate.
risks and does not have -- Specific local risk management procedures
a history of significant in group brands that also install (as well
claims. as supply) building products (i.e. Levolux
and Blackdown).
-- Internal reviews of quality and supply
chain and design procedures targeted at
higher risk areas, particularly Solar Shading
and Architectural Screening, Roofing and
Walling.
------------------------------------ --------------------------------------------------------------
-- Annual strategic reviews, including
Supply chain risks supplier concentration, quality, reliability
and sustainability.
Comment -- Regular key supplier visits, good relationships
maintained including quality control reviews
Whilst the group does and training.
not have undue concentration -- Regular reviews as to whether work should
on any single or small be brought back to the UK (or elsewhere)
group of suppliers, certain as economic conditions evolve, including
Alumasc businesses do the impact of foreign exchange rate movements.
have key strategic suppliers, -- Alumasc will seek to recover increased
some of whom are located EU customers duties through selling price
in the Far East. increases and internal efficiencies.
In August 2017 the EU
imposed a 33% customs
duty on certain iron castings
imported from China.
------------------------------------ --------------------------------------------------------------
-- Business continuity plans prepared at
Business continuity risks each business.
-- IT disaster recovery plans are in place,
Comment with close to real time back up arrangements.
-- Awareness training and management briefings
The group has not previously held on cyber security risks and actions
experienced any significant taken on preventative measures.
loss of operational capability -- Regular reviews of cyber security, including
causing business continuity external penetration testing.
issues. -- Energy supply and contingency arrangements
reviewed periodically, with back up supplies
Cyber security risks are in place as needed.
increasing globally. -- Critical plant and equipment is identified,
with associated breakdown/recovery plans,
including assessment of engineering spares
held on site.
------------------------------------ --------------------------------------------------------------
Strategic development -- Key strategic change projects are governed
risks and change projects by Steering Committees sponsored by independent
specialist consultants where necessary,
Comment for example IT and property.
-- Project risk reviews conducted and updated
There are execution risks regularly.
around a number of current -- Project plans established and monitored
strategic change projects, monthly.
including new product -- Use of proven, reliable software solutions
launches, the relocation and avoidance of bespoking wherever possible.
of Timloc to a new factory -- Careful documentation and challenge
in 2018 and various ERP of legacy business processes prior to implementation
and CRM system implementations. 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 risks -- Health and safety is the number one
Comment priority of management and the first board
agenda item.
The group has a strong -- Risk assessments are carried out and
overall track record of safe systems of work documented and communicated.
health & safety performance, -- All safety incidents and significant
with the number of lost near misses reported to board level monthly.
time accidents significantly Appropriate remedial action taken.
reduced over the last -- Group health and safety best practice
10 years. days are held twice 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 of higher risk operations.
------------------------------------ --------------------------------------------------------------
Credit risk -- Most credit risks are insured.
-- Large export contracts are backed by
Comment letters of credit, performance bonds, guarantees
or similar.
The group has a generally -- Any risks taken above insured limits
good record in managing are subject to strict delegated authority
credit risks. Risks can limit sign offs.
be higher amongst smaller -- Credit checks when accepting new customers/new
building contractor customers, work.
who are often installers -- The group employs experienced credit
of the group's products. 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 because
of similarities between the nature of products and services, routes
to market and supply chains in each segment.
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.
Analysis by reportable segment Revenue
2016/17
-------- --------------
Inter-segment Total Segmental
Operating
External Result
GBP'000 GBP'000 GBP'000 GBP'000
Solar shading & architectural screening 24,399 - 24,399 1,989
Roofing & walling 41,472 17 41,489 3,259
Water management 29,332 1,204 30,536 3,628
Housebuilding & ancillary products 9,558 4 9,562 1,573
Sub-total 104,761 1,225 105,986 10,449
Inter-segment elimination / unallocated
costs - (1,225) (1,225) (1,306)
Total 104,761 - 104,761 9,143
========= ============== ======= ==========
GBP'000
Segmental operating result 9,143
Brand amortisation (268)
Total operating profit from
continuing
operations 8,875
==============
Capital expenditure
----------------------------
Segment Property, Other Deprecia-tion Amortisa-tion
Liabilities Plant & Intangible
Segment Assets Equipment Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Solar shading &
architectural
screening 19,839 (5,261) 18 46 73 251
Roofing &
walling 17,212 (10,505) 306 6 155 102
Water
management 12,342 (5,550) 241 76 414 25
Housebuilding &
ancillary
products 7,315 (2,409) 447 17 283 47
Sub-total 56,708 (23,725) 1,012 145 925 425
Unallocated 12,958 (25,504) 13 2 33 -
Total 69,666 (49,229) 1,025 147 958 425
============== ============= ============== ============ ============== ==============
Analysis by reportable segment 2015/16 Revenue
-------- --------------
Inter-segment Total Segmental
Operating
External Result
GBP'000 GBP'000 GBP'000 GBP'000
Solar shading & architectural 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
Inter-segment 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 Deprecia-tion Amortisa-tion
Segment Liabilities Plant & Intangible
Assets Equipment Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Solar shading &
architectural
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 geographical segment 2016/17
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 87,396 3,905 8,009 630 2,359 2,462 104,761
Segment non-current
assets 24,184 - - - - - 24,184
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
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
2016/17 2015/16
------------------------ ------------------
Operating Profit before Operating Profit
profit tax profit before
tax
GBP'000 GBP'000 GBP'000 GBP'000
Underlying profit 9,143 9,011 8,476 8,261
Less: Brand amortisation (268) (268) (268) (268)
Less: IAS 19 pension scheme administration
costs - - (510) (510)
Less: IAS 19 net pension scheme
finance costs - (620) - (724)
Statutory profit from continuing
operations 8,875 8,123 7,698 6,759
Discontinued operations - - 27 928
Total statutory profit 8,875 8,123 7,725 7,687
========= ============= ========= =======
In the presentation of underlying profits, management treats the
amortisation of acquired brands and IAS 19 pension costs as
non-underlying items because they are material non-cash and
non-trading items that typically would be excluded in assessing the
value of the business. Following the 2016 triennial review and
agreement of the revised deficit recovery plan, pension scheme
administration costs are now paid directly by the pension schemes
rather than being reimbursed by the company.
6 TAX EXPENSE
(a.) Tax on profit on ordinary activities
Tax charged in the statement of comprehensive income
2016/17 2015/16
GBP'000 GBP'000
Current tax:
UK corporation tax - continuing operations 1,117 1,433
- discontinued operations - (697)
Overseas tax 11 5
Amounts over provided in previous years (22) (2)
Total current tax 1,106 739
======= =======
Deferred tax:
Origination and reversal of temporary differences:
- continuing operations 478 247
- discontinued operations - 319
Amounts under/(over) provided in previous years 78 (48)
Rate change adjustment (79) (54)
------- -------
Total deferred tax 477 464
Total tax expense 1,583 1,203
======= =======
Tax charge on continuing operations 1,583 1,581
Tax credit on discontinued operations - (378)
Total tax expense 1,583 1,203
===== =====
Tax recognised in other comprehensive income
Deferred tax:
Actuarial losses on pension schemes 152 (240)
Cash flow hedge 37 1
Tax charged/(credited) to other comprehensive income 189 (239)
===== =====
Total tax charge in the statement of comprehensive
income 1,772 964
===== =====
(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 19.5% is lower than
(2015/16: 15.6% was lower than) the standard rate of corporation
tax in the UK of 19.75% (2015/16: 20%). The differences are
reconciled below:
2016/17 2015/16
GBP'000 GBP'000
Profit before tax from continuing operations 8,123 6,759
Profit before tax from discontinued operations - 928
------- -------
Accounting profit before tax 8,123 7,687
Current tax at the UK standard rate of 19.75% (2015/16:
20.00%) 1,604 1,537
Expenses not deductible for tax purposes 2 139
Chargeable gains/use of capital losses - (369)
Rate change adjustment (79) (54)
Tax over provided in previous years - current tax (22) (2)
Tax under/(over) provided in previous years - deferred
tax 78 (48)
1,583 1,203
======= =======
The group's total tax charge in 2015/16 of GBP1,203,000
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 (2016: 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 (2016: 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 (2016: 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:
Pension
Accelerated Short term Total Deferred
capital temporary Deferred tax
allowances differences Brands Hedging tax liability asset
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 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)
Charged/(credited)
to the statement
of comprehensive
income - current
year 33 4 (65) - (28) 427
Charged to the statement
of comprehensive
income - prior year 73 5 - - 78 -
Charged to equity - - - 37 37 152
At 30 June 2017 339 (32) 299 (11) 595 (3,501)
============ ============= ======= ======== ============== =========
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 GBP3.2 million
(2016: GBP3.4 million) have not been recognised in respect of net
capital losses of GBP19 million (2016: GBP19 million), see note 6
(c).
(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
substantively enacted at the balance sheet date. Deferred tax
assets and liabilities have been calculated based on the rate of
17% substantively enacted at the balance sheet date.
7 dividends
2016/17 2015/16
GBP'000 GBP'000
Interim dividend for 2017 of 2.85p paid on 7
April 2017 1,018 -
Final dividend for 2016 of 3.8p paid on 1 November
2016 1,350 -
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
2,368 2,208
======= =======
A final dividend of 4.3 pence per equity share, at a cash cost
of GBP1,538,000, has been proposed for the year ended 30 June 2017,
payable on 31 October 2017. In accordance with IFRS accounting
requirements this dividend has not been accrued in these
consolidated financial statements.
8 earnings per share
Basic earnings per share is calculated by dividing the net
profit for the period attributable to ordinary equity shareholders
of the parent by the weighted average number of ordinary shares in
issue during the period. Diluted earnings per share is calculated
by dividing the net profit attributable to ordinary equity
shareholders of the parent by the weighted average number of
ordinary shares in issue during the period, after allowing for the
exercise of outstanding share options. The following sets out the
income and share data used in the basic and diluted earnings per
share calculations:
2016/17 2015/16
GBP'000 GBP'000
Profit attributable to equity holders of the
parent - continuing operations 6,540 5,178
Profit attributable to equity holders of the
parent - discontinued operations - 1,306
Net profit attributable to equity holders of
the parent 6,540 6,484
======= =======
000s 000s
Weighted average number of shares 35,663 35,618
Dilutive potential ordinary shares - employee
share options 556 520
36,219 36,138
======= =======
Calculation of underlying earnings per share from continuing
operations:
2016/17 2015/16
GBP'000 GBP'000
Reported profit before taxation from continuing
operations 8,123 6,759
Add: brand amortisation 268 268
Add: IAS 19 pension scheme administration costs - 510
Add: IAS 19 net pension scheme finance costs 620 724
Underlying profit before taxation from continuing
operations 9,011 8,261
Tax at underlying group tax rate of 20.6% (2015/16:
20.8%) (1,856) (1,718)
------- -------
Underlying earnings from continuing operations 7,155 6,543
------- -------
Weighted average number of shares 35,663 35,618
Underlying earnings per share from continuing
operations 20.1p 18.4p
======= =======
9 movements in equity
Share capital and share premium
The balances classified as share capital and share premium are
the proceeds of the nominal value and premium value respectively on
issue of the company's equity share capital net of issue costs.
Capital reserve - own shares
The capital reserve - own shares relates to 361,789 (2016:
622,528) ordinary own shares held by the company. The market value
of shares at 30 June 2017 was GBP672,928 (2016: GBP756,372). These
are held to help satisfy the exercise of awards under the company's
Long Term Incentive Plans. During the year 260,739 shares at a cost
of GBP390,000 were used to satisfy the exercise of awards. A Trust
holds the shares in its name and shares are awarded to employees on
request by the company. The company bears the expenses of the
Trust.
Hedging reserve
This reserve records the post-tax portion of the gain or loss on
a hedging instrument in a cash flow hedge that is determined to be
an effective hedge.
Foreign currency reserve
This foreign currency reserve is used to record exchange
differences arising from the translation of the financial
statements of foreign subsidiaries
10 Related party disclosure
The group's principal subsidiaries are listed below:
Country of % of equity interest
Principal subsidiaries Principal activity incorporation and votes held
2017 2016
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.
11 post balance sheet events
As described in the Strategic Report above, the group sold
Scaffold and Construction Products on 31 July 2017. Disposal
proceeds were GBP1,000,000. The business generated revenues of
GBP4,200,000 in the year to 30 June 2017 and recorded a break-even
result at operating profit level.
In late August 2017 the EU announced it was imposing a 33% duty
on certain iron castings imported from China. This will impact
Gatic's UK access covers business. The additional cost will be
recovered through selling price increases and internal
efficiencies, where possible.
Five Year Summary 2012/13 2013/14 2014/15 2015/16 2016/17
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income Statement Summary
Revenue 85,291 80,301 90,295 92,233 104,761
Underlying operating profit 7,133 6,645 8,314 8,476 9,143
Underlying operating margin 8.4% 8.3% 9.2% 9.2% 8.7%
Net interest cost on borrowings (767) (521) (592) (215) (132)
Underlying profit before tax 6,366 6,124 7,722 8,261 9,011
Non-underlying costs* (2,984) (1,168) (1,434) (1,502) (888)
Profit before taxation 3,382 4,956 6,288 6,759 8,123
Taxation (1,025) (1,016) (1,483) (1,581) (1,583)
Profit for the year from continuing
operations 2,357 3,940 4,805 5,178 6,540
Discontinued operations - (Loss)/profit
after tax (471) 101 (429) 1,306 -
Profit for the year 1,886 4,041 4,376 6,484 6,540
------------------------------------------ ------------- ------------- ------------- ---------- ----------
Underlying earnings per share (pence) 13.3 13.0 16.9 18.4 20.1
Basic earnings per share - continuing
operations (pence) 6.6 11.1 13.5 14.5 18.3
Basic earnings per share (pence) 5.3 11.3 12.3 18.2 18.3
Dividends per share (pence) 4.5 5.0 6.0 6.5 7.15
Balance Sheet Summary at 30 June
Shareholders' funds 22,443 17,042 15,929 16,580 20,437
Net debt/(cash) 7,687 7,666 (914) (8,632) (6,076)
Pension deficit (net of associated
deferred tax asset) 7,748 14,338 16,748 18,588 17,095
Discontinued operations (12,169) (11,037) (2,969) - -
Capital Invested - continuing operations 25,709 28,009 28,794 26,536 31,456
------------------------------------------ ------------- ------------- ------------- ---------- ----------
Underlying return on capital invested
(post-tax)** 19.0% 18.8% 22.8% 24.3% 25.0%
Underlying tax rate 25.7% 24.2% 22.0% 20.8% 20.6%
Order book at 30 June 21,116 19,737 24,014 26,569 28,565
Notes
* Non-underlying costs comprise brand amortisation and IAS 19 pension
costs in all years. In 2012/13 non-underlying costs also included
restructuring costs and a goodwill impairment charge.
** Underlying operating profit after tax from continuing operations
calculated using the underlying tax rate, as a percentage of average
capital invested
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LIMATMBAMBJR
(END) Dow Jones Newswires
September 05, 2017 02:00 ET (06:00 GMT)
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