TIDMALU
RNS Number : 9186X
Alumasc Group PLC
03 September 2015
IMMEDIATE RELEASE 3 September 2015
THE ALUMASC GROUP PLC - FULL YEAR RESULTS ANNOUNCEMENT
Alumasc (ALU.L), the premium building and engineering products
group, announces results for the year ended 30 June 2015.
Year to 30 June 2015 2014 % change
Continuing operations:
Revenue (GBPm) 98.1 88.9 + 10
Underlying operating profit (GBPm) 9.0 7.8 + 16
Underlying profit before tax (GBPm)* 8.4 7.2 + 16
Underlying earnings per share
(pence)* 18.4 15.4 + 19
Profit before tax (GBPm) 7.0 6.0 + 15
Total group:
Profit after discontinued operations
and tax (GBPm) 4.4 4.0 + 8
Basic earnings per share (pence) 12.3 11.3 + 9
Dividends per share (pence) 6.0 5.0 + 20
Net cash/(debt) at 30 June (GBPm) 0.9 (7.7) -
(*) Underlying profits and earnings from continuing operations
are stated prior to the deduction IAS19 pension costs of GBP1.1
million (2013/14: GBP0.9 million) and brand amortisation of GBP0.3
million (2013/14: GBP0.3 million).
Key points
-- Alumasc has accelerated revenue and profit growth following
its strategic decision to focus on Building Products.
-- Earnings enhancing disposals during the year of the
loss-making Alumasc Precision Components ("APC") business for
GBP5.8m and the non-core Pendock Profiles business for GBP1.5m.
-- Building Products continued to outperform the UK construction
market (by an average 3% per annum over the past 5 years) with
revenue UP 12% to GBP90.3m and underlying operating profit UP 23%
to GBP9.8m.
-- All building products operating segments improved year on year results.
-- Solar Shading & Screening profit UP 83% to GBP0.9m on
maintained revenue of GBP16m. Levolux is continuing to gain
traction in North America and, with 30 June order books 19% ahead
of last year, should increase revenues and margins in 2016 and
beyond.
-- Roofing & Walling revenue UP 22% to GBP32.8m and profit
UP 28% to GBP3.8m. Following the appointment of high calibre
managers over the past 3 years, Roofing has been transformed into a
strongly profitable business with sales volume growth achieved from
the introduction of new products, systems and solutions, and
synergies from the full integration of Blackdown (green roofs) and
Roof-Pro (roofing support) with the larger Roofing business.
Facades had a record year with strong demand in Scotland under the
HEEPS funding regime. It is growing new build specification
sales.
-- Rainwater, Drainage & Housebuilding Products revenue UP
11% to GBP23.9m and profit UP 5% to GBP3m. A new umbrella brand,
Alumasc Water Management Solutions, was launched to encompass the
Alumasc Rainwater (gutters and downpipes), Harmer (building
drainage) and Gatic (civil drainage) brands. Investment in people
and new products drove growth in all areas including a record
post-acquisition performance from Rainclear. Capacity constraints
experienced in H1 are resolved for now, but anticipated ongoing
growth means AWMS and Alumasc Roofing will move to a new GBP10m
purpose built facility near Kettering in 2017. Timloc (house
building products) had another record year and will consolidate
from two leased sites to one near the M62, also in 2017.
-- Construction Products revenue UP 13% to GBP17.6m and profit
UP 25% to GBP2.1m. Gatic had a strong year in domestic and
international markets including a major project at Doha Port, and
successfully launched new drainage products in the USA. Scaffold
and Construction Products again delivered growth in revenue and
profit.
-- Group order books of GBP26.5m at 30 June 2015 were 27% up on a year ago.
-- 20% dividend increase to 6.0 pence for the year reflects improved performance and prospects.
Paul Hooper, Chief Executive, commented:
"With our strategic focus and actions being taken to exploit
opportunities for organic growth and synergy, Alumasc is
increasingly well positioned to benefit from the current forecast
growth in both the UK economy and UK construction output."
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
Overview
This has been a year of major strategic re-alignment for
Alumasc, coupled with a strong trading performance.
Revenue from continuing operations rose by GBP9.2 million (+10%)
to GBP98.1 million. Underlying profit before tax rose by GBP1.2
million (+16%) to GBP8.4 million, building on the improving trend
of recent years, and our best performance since 2008.
This improvement, we believe, is further evidence of
outperformance by our portfolio of sustainable building products
businesses against the welcome background of improving demand from
UK construction. We estimate that our building products businesses
have outgrown the sector by an average 3% per annum over the past
five years.
Following its review of group strategy, the Board initiated the
sale of two businesses during the year, which it considered
unsuited to its more focused vision for the future. The smaller of
the two, Pendock Profiles, sold in September 2014, generated a
small trading profit prior to its sale and was sold at a profit to
its book value. The much larger of the two, Alumasc Precision
Components, continued to make losses until its sale at the close of
the financial year, and a loss was incurred upon sale.
After taking full account of the impact of these two sales,
basic earnings per share increased by 9% from 11.3 pence to 12.3
pence. The transactions will be earnings enhancing in the coming
year.
The disposal of these businesses is viewed by the board as a
major step towards the greater focus of group resources in the
field of sustainable building products foreshadowed in last year's
annual report. It is pleasing that both businesses have found new
owners providing a better fit for their particular attributes, and
we wish them every success for the future.
The combination of the strong performance outlined above with
the sales proceeds from the two business disposals enabled the
group to record a small cash surplus at the year-end. This provides
an ideal base from which to pursue the development opportunities
for our continuing activities referred to later in this report.
Dividends
In view of the trading performance, and consistent with its
policy broadly to grow dividend payments in line with profit
growth, the Board is recommending a final dividend of 3.5 pence per
share (2014: 2.8 pence), giving a total for the year of 6 pence per
share (2014: 5 pence), an increase of 20%.
Board
David Armfield, a founding partner of Kinetix Corporate Finance
LLP, was appointed a director in October 2014. David has had a 30
year career in the City and, through Kinetix, provides corporate
finance advice to the clean technology and environmental
sustainability sectors. His insights in these fields and, more
generally, sustainable solutions for the built environment, are of
real relevance to the group's plans for development.
After a little over six years as a non-executive director, John
Pilkington retires from the Board following the announcement of
these results. John's contribution and support have been much
valued during this period of change and we wish him continued
success with his wide-ranging interests.
Strategy
Our central strategy is to develop our market-leading positions
in the supply of products and solutions for managing water and
energy in buildings. This marketplace embraces both new-build and
refurbishment activities and presents some specific opportunities
outside Alumasc's UK base. In addition to the continuing drive for
organic growth, acquisitions will be considered where they
complement this focused development.
The strategic disposal of Alumasc Precision Components
necessarily triggers the relocation of certain group business
activities to new premises. In addition to providing an opportunity
for rationalising several operations, this move will also assist
with the commercial opportunity to restructure our approach to the
market for our water management product ranges under the banner of
Alumasc Water Management Solutions.
Prospects
Alumasc's focus on premium building products for sustainable
building, coupled with the steady improvement in the UK economy,
have resulted in widespread growth in demand for our product ranges
during the past year. This improvement is widely forecast to
continue, both generally and in the construction sector. Against
this background, and with higher order intake and continuing
success in establishing our overseas presence, the Board believes
that the group will continue to make progress in the coming
year.
John McCall
Chairman
Chief Executive's Strategic and Performance Overview
Strategic overview
Alumasc's strategic objectives are to continue to develop and
invest in our market leading building products businesses,
primarily through organic growth but also through selective
acquisitions. In addition, we will continue to grow and develop
Dyson Diecastings by winning new work and improving operational
efficiencies.
Over the last year the Board concluded its review of where
Alumasc's best opportunities lie for focusing and directing group
resources in building value for shareholders. The outcomes
were:
1. The decision to focus the group's strategy for future
profitable growth on our market leading building products
businesses;
2. Strategic reviews of each of our businesses during the year
identified a number of exciting opportunities for further organic
growth and synergy:
(MORE TO FOLLOW) Dow Jones Newswires
September 03, 2015 02:00 ET (06:00 GMT)
-- Alumasc Rainwater and the existing Harmer and Gatic drainage
brands, complemented by the introduction of new products, were
combined on 1 July 2015 to form one holistic rainwater and drainage
business, Alumasc Water Management Solutions;
-- there is increasing evidence in our order books of the
anticipated recovery of Levolux towards mid-cycle revenues and
operating margins. This will be leveraged by the development of
balcony products and growth in export sales;
-- a planned major product range expansion at Timloc; and
-- further growth potential in our roofing and walling
businesses, including new product introductions and investment in
additional high quality sales and commercial resources; and
3. The decision to sell:
(a) Alumasc Precision Components ("APC"), the group's loss
making engineering products business. The sale of APC, which was
completed on 26 June 2015 for cash consideration of GBP5.8 million,
will be significantly earnings and cash flow enhancing for the
group in the 2015/16 financial year; and
(b) Pendock Profiles, a small non-core building products
business, sold in September 2014 for GBP1.5 million.
The initial results from this more focused strategic approach
began to be evident in the financial year to 30 June 2015 when the
group's rate of revenue and profit growth from continuing
operations accelerated, with group revenues ahead by 10% and
underlying profit before tax increasing by 16%.
The key features of the business model for our building products
activities, which in 2014/15 represented over 90% of group revenues
and profit from continuing operations, are:
-- strong strategic positioning in sustainable building products
market niches, particularly those connected with the management of
the scarce resources of energy and water in the built
environment;
-- continuing investment in people and innovation to underpin
the delivery of the medium to longer term growth potential of our
business. The related average annual incremental cost of this
investment absorbed within operating profit over the last five
years is approaching GBP1 million per annum, with an investment of
just over GBP1 million planned for the 2015/16 financial year;
-- increasing penetration of higher growth markets within the UK
such as London and the South East where some of our businesses were
historically under-represented;
-- evolution towards a better balance of end-user markets for
our building products sales, particularly through penetration of
refurbishment markets;
-- the ability to leverage existing routes to market with new
products and development of e-commerce channels; and
-- the continuing expansion of Alumasc's international reach,
particularly through Levolux and Gatic.
These strategic initiatives have enabled our Building Products
division to outperform growth rates in the UK construction sector
by around 3% per annum over the last five years.
In view of the actions being taken to exploit the organic growth
and synergistic opportunities described above, management believes
Alumasc can continue to outperform forecast UK construction market
growth over the coming years.
Performance overview
2014/15 2013/14
Revenue (GBPm) 98.1 88.9
======= =======
Underlying operating profit (GBPm) 9.0 7.8
Underlying operating margin (%) 9.2 8.7
Net interest on borrowings (GBPm) (0.6) (0.6)
Underlying profit before tax (GBPm) 8.4 7.2
IAS19 pension interest and brand amortisation
(GBPm) (1.4) (1.2)
Profit before tax (GBPm) 7.0 6.0
======= =======
Once again, the Board is pleased to report the group's highest
annual profit from continuing operations since 2007/08. Underlying
profit before tax advanced to GBP8.4 million compared with GBP7.2
million in 2013/14, an increase of 16%.
This improved performance was driven entirely by our building
products activities, with every operating segment in the building
products division recording better results than a year ago.
Group revenues from continuing operations increased by 10% to
GBP98.1 million (2013/14: GBP88.9 million), driven by a GBP10.0
million increase in Building Products revenues partly offset by a
GBP0.8m reduction in Dyson Diecastings' revenues.
The group's underlying operating profit increased to GBP9.0
million (2013/14: GBP7.8 million) and operating margins improved to
9.2%, some 0.5 percentage points above the prior financial year, as
sales revenue growth allowed better leverage of Building Products'
overheads.
Interest costs on borrowings were similar to the prior financial
year. However, net bank financing charges in total were a little
higher than in the prior year at GBP0.6 million due to the
accelerated amortisation of banking fees as we completed our
routine refinancing of the group earlier than anticipated.
The resultant group underlying profit before tax from continuing
operations improved to GBP8.4 million (2013/14: GBP7.2
million).
Total profit for the year (after discontinued operations and
tax) improved from GBP4.0 million in 2013/14 to GBP4.4 million in
2014/15. A reconciliation between underlying profit before tax and
profit for the year is shown in the Financial Review section
below.
Group cash generation for the year was again strong with EBITDA
(earnings before interest, tax, depreciation and amortisation) from
continuing operations increasing to GBP10.6 million (2013/14:
GBP9.1 million). Following the sale of APC just prior to the
financial year end, the group finished the year in a debt-free
position.
Earnings per share
Underlying earnings per share from continuing operations
improved by 19% to 18.4 pence compared with 15.4 pence in 2013/14,
reflecting the higher underlying profit before tax combined with a
reduction in the group's underlying tax rate from 24% to 22% in
line with the reduction in UK corporation tax rates. The number of
shares in issue was unchanged in the year.
Basic earnings per share from continuing operations increased
from 13.4 pence to 15.0 pence, reflecting improved underlying
profits and also higher non-cash pension scheme financing costs
calculated under IAS19.
Basic earnings per share (after discontinued operations)
improved by 9% from 11.3 pence to 12.3 pence.
Future prospects
The group's order books at 30 June 2015 were GBP26.5 million,
27% ahead of 30 June 2014.
Whilst the timing of larger construction contracts can impact
the outcome in any one year, and two large multi-million pound
contracts (Kitimat and Chiswick Park Building 7) completed in the
second half of 2014/15, Alumasc is increasingly well positioned to
benefit from the current forecast growth in both the UK economy and
UK construction output.
Dividends
In view of the improved results for the year and the exit from
APC, the Board is proposing an increased final dividend of 3.5
pence per share (2013/14: 2.8 pence), to be paid on 28 October 2015
to shareholders on the register on 2 October 2015. This would give
a total dividend for the year of 6.0 pence per share (2013/14: 5.0
pence), an increase of 20%. The Board confirms its previous
intention to grow the dividend broadly in line with the growth in
underlying earnings, having regard to the cash required to invest
in the business to support delivery of the group's growth ambitions
and its pension scheme funding commitments.
Health and safety
The group's number one priority continues to be to provide a
safe place of work for our employees. Further progress has been
made during the year in ensuring our strong health and safety ethos
is fully embedded throughout our businesses. Our principal health
and safety KPI, the performance rate index, improved to 3.76 from
4.92 in the previous year. This reflected a reduction in both the
number and the severity of incidents, particularly in the higher
risk engineering businesses. The improvement in health and safety
performance over the last year is consistent with longer term
trends resulting from prioritisation, focus and the continuous
improvement actions taken by both management and employees over
many years. There were further successes in identifying near miss
incidents during the year and we are using this information to take
action to prevent potential future accidents. Our recent initiative
of strengthening risk assessments, safe systems of work and
training in those areas of our businesses judged to be those
capable of causing the most serious incidents is now almost
complete.
Review of operations - continuing operations
Building Products division
Divisional revenues grew by over 12% to GBP90.3 million
(2013/14: GBP80.4 million) and underlying operating profit grew 23%
to GBP9.8 million from GBP8.0 million. Divisional operating margins
improved to 10.8% from 9.9% in the prior year, benefiting from
revenue growth and the impact of operational gearing.
Profits improved year on year in all operating segments in the
division.
Solar Shading and Screening
(MORE TO FOLLOW) Dow Jones Newswires
September 03, 2015 02:00 ET (06:00 GMT)
Levolux is a late cycle business, with most of its revenues
generated from the new build commercial market sector, which has
only recently begun to recover from the recession of a few years
ago. Against this background, Levolux's revenues for the year
remained similar to the prior year at GBP16.0 million. Despite
this, Levolux's profit nearly doubled year on year to GBP0.9
million as the execution of construction contracts was consistently
well managed across the portfolio, leading to a good project margin
performance. Results also benefited from the successful delivery of
a multi-million pound solar shading solution to the final building
at Chiswick Park in West London. Overheads were reduced, benefiting
from the "One Levolux" initiative which merged the two former
Levolux businesses into one, under a common management structure
with a single set of business processes.
Levolux continues to gain traction in North America where it is
building a reputation not only in solar shading but also in
assisting architects and building owners to achieve innovative
design solutions. Repeat business is now being secured in the
North-East of the USA, California, Texas, the area around the Great
Lakes and in Canada. Additional sales resources are being added in
2015/16 to build on this positive momentum. North American sales
are expected to be in excess of 10% of Levolux's revenues in the
current financial year. We also plan to add dedicated sales
resource in the Middle East.
Encouragingly, order intake in the 2014/15 financial year
exceeded expectations and was some 18% ahead of the prior year. At
30 June 2015, Levolux's closing order book was GBP15.6 million, 19%
up on a year previously, with GBP2.1 million of that order book
expected to convert into revenue beyond the current financial year.
Some of the additional orders received relate to a new range of
balcony products introduced during the year. These have attracted
an encouraging initial level of customer interest.
However, in the absence of any notable large project wins that
will benefit the current 2015/16 financial year, we believe that
the more significant recovery in this business, now being evidenced
by improving order intake, remains some twelve months away.
Roofing and Walling
This was the group's best performing operating segment in the
year, with revenues increasing by 22% to GBP32.8 million and
underlying operating profit growing by 28% to GBP3.8 million. This
result was achieved despite a significant year on year reduction in
both revenues and profits from the large Kitimat smelter
refurbishment project in Canada, which was very close to completion
at 30 June 2015.
Our roofing business has transformed its performance over the
last three years from a loss making operation to one that is now
strongly profitable. This has been achieved through strong sales
volume growth, following an increase in the number of high calibre
managers, sales and commercial personnel, who have enabled us to
introduce new products, systems, services and solutions. These
include the resurgent Euroroof-branded portfolio of waterproofing
solutions targeted at refurbishment markets; the Alumasc BluRoof
storm water management solution; The Alumasc Quality Promise; and
the Surefoot range of roofing support systems. These developments
have allowed greater penetration of refurbishment as well as new
build end user markets, with a growing presence in the more active
markets of London and the South East of England. In addition, the
former Blackdown green roof and Roof-Pro roofing support businesses
are now fully integrated as brands within our larger Roofing
business, facilitating a more effective systems selling approach
across the portfolio, generating both revenue and cost
synergies.
Our Facades business had a record year, benefiting from strong
demand in Scotland under the HEEPS funding regime, which is
providing financial support for the refurbishment of hard to heat
homes mainly in the social housing refurbishment sector. Action is
being taken to develop the presence of Alumasc's Facades business
in new build and specification markets in order to reduce exposure
to potentially volatile refurbishment demand dependent on
government funding, particularly against a background of
significant cuts to the Eco and Green Deal schemes in England and
Wales. Initial projects involving the new Alumasc Ventilated
System, developed over the last year, have been very encouraging
and this system should help us to win work in the timber frame
housing market in the current financial year.
Rainwater, Drainage and Housebuilding Products
This segment grew overall revenues by 11% to GBP23.9 million and
underlying operating profit by 5% to GBP3.0 million. The level of
incremental profit drop through from the additional sales was
impacted by capacity issues in the first half of the 2014/15
financial year. These short term issues are now resolved, although
these businesses will require investment in larger facilities to
support further planned growth in the coming years.
Our Rainwater & Drainage business had another successful
year, driven by strong growth in sales from the Harmer drainage
brand, benefiting from new cast iron and steel products added to
the range and new sales and commercial personnel who have joined
the business over the last year. Additional products are currently
being introduced to further complement the existing range and to
allow the business to better access the civils drainage market.
These include the Harmer SML Below Ground and Gatic Filcoten
channel drainage ranges. Gatic Filcoten is a modern, high quality
fibre-reinforced composite product, which provides a number of
benefits relative to traditional concrete solutions, including
improved tensile strength and recyclability.
The combination of the requirements of the Flood and Water
Management Act 2010, evolving customer needs and Harmer's widened
product range have provided the ideal opportunity for Alumasc to
offer a more holistic approach to providing specifiers and end
users with integrated solutions. Therefore a new umbrella brand,
Alumasc Water Management Solutions ("AWMS"), was launched on 1 July
2015 to combine and leverage the strengths of the Skyline fascia,
soffit and copings; Alumasc Rainwater; Harmer building drainage;
and Gatic civil drainage brands, supported by combined sales,
commercial and technical resources. This is an exciting example of
the type of organic growth and synergistic opportunity identified
in the Strategic Review during the year.
Alumasc Rainwater delivered another year of growth, including
increased sales of pre-painted aluminium gutters, which reduce
overall life cycle costs to customers, and increased penetration of
the contemporary and bespoke markets for rainwater and related
goods.
In view of increasing physical capacity constraints, and given
the two year transitional arrangement we have agreed regarding the
relocation of AWMS, currently co-located on the property sold
together with APC in June, we are taking the opportunity to invest
in a new purpose built factory. This will also have capacity to
incorporate Alumasc Roofing's operations and logistics functions,
increasing the potential to achieve warehousing and logistics
synergies. The associated capital investment is expected to be
around GBP10 million over the next two years.
Rainclear, the specialist distributor of Rainwater products that
was acquired by Alumasc in 2012, reported a record profit in its
first full year under new Alumasc management, following the planned
departure of the former owner and founder of the business in 2014.
Rainclear continues to develop its web-based sales, whilst also
growing sales through its traditional independent merchant
base.
Timloc, Alumasc's housebuilding products business, also
delivered another record year of revenue and profit, benefiting
from the further introduction of new products into its established
distribution channels, and through increased penetration of markets
in London and the South East. In view of challenges in the first
half of the year in managing this growth caused by physical
capacity constraints in its existing premises near Goole, and with
existing property leases due to expire in the next two years, it
has been decided that Timloc also needs new premises to support
future growth. Therefore, Timloc will relocate from two existing
sites to a single new leased facility, close to the M62 near Goole
in 2017. This will enable it to consolidate all its operations
under one roof providing a platform to continue its track record of
sales growth and improvement in operational efficiency.
Construction Products
Divisional revenues increased by 13% to GBP17.5 million and
operating profit by 25% to GBP2.1 million.
Gatic had a strong year both in domestic and overseas markets,
including a major project at Doha Port. It is currently completing
another significant contract at London Gateway, following a
successful initial project there two years ago. After a slow start
to the 2014/15 financial year, Slotdrain sales into the domestic
market improved markedly in the second half. Alongside Alumasc
Rainwater & Drainage, Gatic will also now benefit from the new
Alumasc Water Management Solutions brand, including the ability to
sell the new SML below ground and Filcoten products as part of its
own range and enabling the ProSlot product launched last year to be
sold through Harmer's established distribution channels.
In the USA, new Gatic drainage products, including a grated
system, were successfully launched in April. The initial market
reaction has been positive. We are hopeful that 2015/16 will be the
year in which Gatic gains some real traction in the USA.
Scaffold and Construction Products had another successful year,
growing revenues and profits once again. It benefited from new
product introductions and broadening distribution channels.
Dyson Diecastings
(MORE TO FOLLOW) Dow Jones Newswires
September 03, 2015 02:00 ET (06:00 GMT)
The 2014/15 year was one of transition for Dyson as a number of
key managers retired and replacements were recruited. Dyson's
revenues reduced by 9% to GBP8.1 million, much of this reflecting
the non-recurring impact of the initial stocking of a new product
line by a customer in the first half of the previous financial
year. Lower revenue led to a reduction in operating profit to
GBP0.7 million from GBP1.1 million, after one-off charges of GBP0.1
million relating to the establishment of the new management team.
Dyson is a strong business within its niche and management expects
to be able to improve profitability in the current financial year,
predicated on a combination of:
(a) securing new business including some known transfer work; and
(b) operational efficiencies including better production
planning, capacity management and modest investment in the
foundry.
Review of operations - discontinued operations
Discontinued operations comprise APC, sold in June 2015 and
Pendock Profiles, sold in September 2014.
APC
Consistent with group strategy, the APC business including the
freehold property from which it operates, was sold for gross sales
proceeds of GBP5.8 million on 26 June 2015. APC's legacy defined
benefit obligations to the Alumasc Group Pension Scheme remain
within the continuing group.
The overall level of pre-tax losses relating to APC in 2014/15
was GBP3.0 million comprising a lower level of operating losses,
costs of settling the customer claims described in our interim
report, a small loss on sale and the costs of selling the
business.
Further detail is provided in note 6 below.
Pendock Profiles
Pendock Profiles made a small trading profit prior to its sale
in September 2014. The gross sales proceeds of the business were
GBP1.5 million. The value of net assets sold was GBP0.6 million and
after transaction costs of GBP0.1 million, the book gain on sale
was GBP0.8 million.
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.
Financial KPIs: 2014/15 2013/14 Comment/explanation
Continuing Operations
------------------------------ --------- --------- ------------------------------------
Increased level of Building
Year end group order Products orders, particularly
book (GBPm) 26.5 20.9 Levolux
------------------------------ --------- --------- ------------------------------------
Increase in Building Products
Group revenues (GBPm) 98.1 88.9 sales
------------------------------ --------- --------- ------------------------------------
Better leverage of Building
Underlying operating Products overheads from additional
margin % 9.2 8.7 sales
------------------------------ --------- --------- ------------------------------------
Growth in Building Products
Underlying profit before operating profit driven by
tax (GBPm) 8.4 7.2 higher revenues
------------------------------ --------- --------- ------------------------------------
Growth in underlying profit
Underlying earnings before tax at a lower underlying
per share (pence) 18.4 15.4 group tax rate
------------------------------ --------- --------- ------------------------------------
Average trade working
capital % sales (continuing
operations, excluding Some investment in working
the Kitimat contract) 11.9 11.1 capital to support growth.
------------------------------ --------- --------- ------------------------------------
Reduction in net debt 8.6 - Sales proceeds from the APC
(GBPm) and Pendock business disposals
in 2014/15, in addition to
free cash flow generation
from continuing operations,
resulted in a strong overall
cash inflow and a debt free
position at the year end
------------------------------ --------- --------- ------------------------------------
Year-end net cash/(debt)
(GBPm) 0.9 (7.7)
------------------------------ --------- --------- ------------------------------------
Pension scheme actuarial
Year-end shareholders' losses exceeded retained
funds (GBPm) 15.9 17.0 profit after tax
------------------------------ --------- --------- ------------------------------------
Grew substantially due to
the disposal of the loss
making and relatively more
capital intensive APC business
Return on investment and due to improved operating
(post-tax)* (%) 19.9 13.4 profit from continuing operations.
------------------------------ --------- --------- ------------------------------------
*from continuing operations in 2014/15 to better illustrate the
impact of the disposal of APC
Cash flow and net debt
The group's cash flow performance is summarised in the table
below. The sale of APC on 26 June 2015 allowed the group to repay
its remaining net indebtedness, thereby putting Alumasc in a modest
net cash positon of GBP0.9 million at the year end.
Cash generation was strong with group EBITDA from continuing
operations increasing to GBP10.6 million (2013/14: GBP9.1 million),
reflecting the increased level of operating profit generated by
building products activities. Tight control was maintained over
working capital. Average trade working capital as a percentage of
sales (excluding short-term working capital movements relating to
the large Kitimat construction contract as it neared completion)
increased modestly to 11.9% reflecting some inventory build during
the year to support ongoing growth. The final Kitimat project
milestone payment of GBP1.1 million, relating to work completed in
the 2014/15 financial year, is expected to be received in the
2015/16 financial year.
Summarised Cash Flow Statement
2014/15 2013/14
GBPm GBPm
Continuing operations:
EBITDA(*) 10.6 9.1
Underlying change in working capital 0.1 (0.3)
Short term changes in working capital on large construction
contracts (0.5) (1.1)
----------- -----------
Operating cash flow from continuing operations 10.2 7.7
Capital expenditure (1.2) (1.1)
Pension deficit & scheme expenses funding (2.9) (2.4)
Interest (0.4) (0.5)
Tax (0.9) (1.1)
Dividends (1.9) (1.7)
Operating and investing cash flows from discontinued
operations (0.4) (0.6)
Net sales proceeds from APC and Pendock Profiles 6.2 -
Other (0.1) (0.3)
Reduction in net debt 8.6 -
=========== ===========
(*) EBITDA: Underlying earnings before interest, tax,
depreciation and amortisation.
Reconciliation of underlying profit before
tax to profit for the year
2014/15 2013/14
GBPm GBPm
Underlying profit before tax from
continuing operations 8.4 7.2
IAS19 pension costs (1.1) (0.9)
Brand amortisation (0.3) (0.3)
------- -------
Profit before tax from continuing
operations 7.0 6.0
Discontinued operations:
Alumasc Precision Components (3.0) (1.2)
Pendock Profiles 0.8 0.3
Tax expense (0.4) (1.1)
Profit for the year 4.4 4.0
======= =======
Capital expenditure and capital investment plans
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Capital expenditure related to continuing operations of GBP1.2
million in the 2014/15 financial year was broadly in line with the
prior year level. Following relatively low levels of capital spend
during the period when the group was recovering from the recession
of a few years ago, demand for capital spend across Alumasc is now
increasing to support the anticipated ongoing growth in the
business. Capital spend in the current financial year is expected
to be in the range of GBP2-3 million including tooling for new
product development. This is prior to the anticipated GBP3-4
million spend as part of the overall GBP10 million investment in
the new facility for AWMS and Alumasc Roofing to be built near
Kettering.
Taxation
The group's underlying tax rate reduced from 24.2% in 2013/14 to
22.0% in 2014/15, broadly in line with the UK statutory rate. The
reduction in group's total tax charge to GBP0.4 million (2013/14:
GBP1.1 million) reflected the impact of business disposals where
gains on the sale of assets were shielded by indexation allowances
and capital losses brought forward.
Pensions
The group's defined benefit pension deficit calculated under
IAS19 conventions for accounting purposes increased during the year
to GBP20.9 million (30 June 2014: GBP17.9 million). This mainly
reflects the further reduction during the year in AA corporate bond
yields which are used to discount future pension liabilities to
present values under IAS19's methodology. Each 10 basis point
change in yields impacts the present value of the group's pension
liabilities (up or down) by GBP1.7 million. Corporate bond yields
did begin to rise once again towards the end of the financial
year.
The base level of pension deficit reduction payments agreed with
the Pension Trustees, following the 2013 triennial actuarial review
will remain unchanged in the 2015/16 financial year at GBP2.5
million, plus scheme running expenses and PPF levy payments of
circa GBP0.5 million. However, prior to the results of the
forthcoming 2016 triennial review being concluded, Alumasc has
agreed to make an additional one-off cash payment to the pension
schemes at a rate of 25% of any amount by which group underlying
profit before tax exceeds GBP8.4 million in the year ending 30 June
2016.
The group is working on a number of initiatives to reduce gross
pension liabilities, improve pension scheme investment performance
at an acceptable level of risk, and to reduce pension scheme
administration costs.
Capital structure, capital invested and shareholders' funds
The group defines its capital invested as the sum of
shareholders' funds, bank debt and the pensions deficit (net of
tax).
Capital invested remained broadly stable during most of the year
at just under GBP40.0 million, but reduced to GBP31.8 million just
ahead of the 30 June 2015 year end following the receipt of
proceeds from the sale of APC.
Post tax returns on investment from continuing operations grew
significantly during the year to 19.9%, compared to the 13.4%
reported in the prior year, mainly as a result of the sale of APC,
which was both a loss making business and relatively capital
intensive, and also as a result of the growth in the operating
profits of the Building Products division.
Year end shareholders' funds decreased from GBP17.0 million at
30 June 2014 to GBP15.9 million at 30 June 2015, as actuarial
losses on defined benefit pension schemes exceeded the retained
profit after tax for the year.
Going concern
The Board's assessment of going concern is set out in note
1.
Re-financing and banking facilities
The group has recently entered into a five year, GBP30.0 million
revolving credit facility ("RCF") with its existing relationship
banks, Barclays and HSBC. This facility will be sufficient to allow
the group to fund its organic growth plans, including the property
investment near Kettering, and potential acquisitions should the
right opportunities arise at an appropriate price. The new RCF is
structured as an accordion facility, whereby GBP12.5 million is
currently formally committed and the remainder available as needed
but subject to final credit approval from the banks at the relevant
time. In view of the group's low current borrowing requirements,
this structure will give Alumasc the flexibility it needs, and
avoid significant commitment fees being incurred on unutilised
facilities, some of which might not be needed.
The RCF is unsecured, but is subject to similar cross-guarantees
between the group and subsidiary companies as those contained in
its predecessor facility. Loan covenants remain unchanged: EBITDA
interest cover of at least 4 times and a net debt to EBITDA ratio
of less than 3 times.
In addition to the RCF, the group has recently renewed for one
year its overdraft facilities of GBP3.0 million. These are
repayable on demand.
Goodwill impairment reviews
The Board conducted goodwill impairment reviews at the financial
year end. No impairments were identified.
Business risk and internal control
A summary of the group's principal risks and mitigating controls
is set out in note 3.
As evidenced by the results of internal and external audits, the
group's internal financial controls strengthened further during the
year, reflecting continuous improvement activities.
Andrew Magson
Group Finance Director
Responsibility Statement
We confirm that to the best of our knowledge:
a) the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the
group and the company;
b) the Strategic Report includes a fair review of the
development and performance of the business and the position of the
group, together with a description of the principal risks and
uncertainties that the group faces; and
c) The Annual Report and financial statements, taken as a whole
are fair, balanced and understandable and provides the information
necessary for shareholders to assess the company's 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 2015 which will be despatched
to shareholders on or around 23 September 2015 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 2015
2014/15 2013/14 (re-stated)
Non-underlying Non-underlying
Underlying Total Underlying Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations:
Revenue 4 98,082 - 98,082 88,857 - 88,857
Cost of sales (67,269) - (67,269) (60,781) - (60,781)
---------- ---------------- --------- ---------- ---------------- ---------
Gross profit 30,813 - 30,813 28,076 - 28,076
Net operating expenses
before non-underlying
items (21,791) - (21,791) (20,311) - (20,311)
Brand amortisation 5 - (268) (268) - (268) (268)
IAS19 pension scheme
administration
costs 5 - (455) (455) - (452) (452)
Net operating expenses (21,791) (723) (22,514) (20,311) (720) (21,031)
Operating profit 4 9,022 (723) 8,299 7,765 (720) 7,045
Finance income 5 - 5 10 - 10
Finance expenses 5 (597) (711) (1,308) (531) (448) (979)
---------- ---------------- --------- ---------- ---------------- ---------
Profit before taxation 8,430 (1,434) 6,996 7,244 (1,168) 6,076
Tax (expense)/income 7 (1,855) 216 (1,639) (1,753) 466 (1,287)
---------- ---------------- --------- ---------- ---------------- ---------
Profit for the year from
continuing
operations 6,575 (1,218) 5,357 5,491 (702) 4,789
Discontinued operations
Loss after taxation for the
year
from discontinued
operations 6 - (981) (981) - (748) (748)
Profit for the year 6,575 (2,199) 4,376 5,491 (1,450) 4,041
========== ================ ========= ========== ================ =========
consolidated STATEMENT of comprehensive income (continued)
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For the year ended 30 June 2015
Other comprehensive income 2014/15 2013/14
Notes GBP'000 GBP'000
Items that will not be recycled to profit
or loss:
Actuarial loss on defined benefit pensions (4,726) (9,350)
Tax credit on actuarial loss on defined
benefit pensions 7 945 1,618
(3,781) (7,732)
------- -------
Items that are or may be recycled subsequently
to profit or loss:
Effective portion of changes in fair value
of cash flow hedges (179) (70)
Exchange differences on retranslation of
foreign operations 17 (19)
Tax on cash flow hedge 7 43 20
(119) (69)
------- -------
Other comprehensive loss for the year, net
of tax (3,900) (7,801)
------- -------
Total comprehensive profit/(loss) for the
year, net of tax 476 (3,760)
======= =======
Earnings per share Pence Pence
Basic earnings per share
- Continuing operations 15.0 13.4
- Discontinued operations (2.7) (2.1)
9 12.3 11.3
====== ======
Diluted earnings per share
- Continuing operations 14.8 13.3
- Discontinued operations (2.7) (2.1)
9 12.1 11.2
====== ======
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2015
Notes 2015 2015 2014 2014
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 7,473 12,039
Goodwill 16,488 16,488
Other intangible assets 2,831 2,770
Financial asset investments 17 17
Deferred tax assets 7 4,187 3,584
-------- --------
30,996 34,898
Current assets
Inventories 10,592 12,523
Biological assets 75 171
Trade and other receivables 20,317 23,693
Cash and cash equivalents 5,914 2,224
Derivative financial assets - 40
-------- --------
36,898 38,651
Total assets 67,894 73,549
======== ========
Liabilities
Non-current liabilities
Interest bearing loans and
borrowings - (9,890)
Employee benefits payable (20,935) (17,922)
Provisions (1,224) (1,047)
Deferred tax liabilities 7 (390) (1,220)
-------- --------
(22,549) (30,079)
Current liabilities
Interest bearing loans and
borrowings (5,000) -
Trade and other payables (23,338) (25,694)
Provisions (402) (221)
Corporation tax payable (429) (445)
Derivative financial liabilities (247) (68)
-------- --------
(29,416) (26,428)
Total liabilities (51,965) (56,507)
======== ========
Net assets 15,929 17,042
======== ========
Equity
Called up share capital 4,517 4,517
Share premium 10 445 445
Capital reserve - own shares 10 (618) (618)
Hedging reserve 10 (198) (62)
Foreign currency reserve 10 49 32
Profit and loss account reserve 11,734 12,728
-------- --------
Total equity 15,929 17,042
======== ========
consolidated STATEMENT of cash flows
For the year ended 30 June 2015
2014/15 2013/14 (re-stated)
GBP'000 GBP'000
Operating activities
Operating profit 8,299 7,045
Adjustments for:
Depreciation 1,157 1,175
Amortisation 332 381
Gain on disposal of property, plant and
equipment (14) (3)
Increase in inventories (1,266) (344)
Decrease/(increase) in biological assets 96 (8)
(Increase)/decrease in receivables (1,924) 306
Increase/(decrease) in trade and other payables 2,435 (1,461)
Movement in provisions 358 168
Cash contributions to retirement benefit
schemes (2,500) (1,992)
Share based payments 300 34
------- -------------------
Cash generated from continuing operations 7,273 5,301
Loss before taxation from discontinued operations (1,604) (987)
Depreciation and amortisation 798 884
Movement in working capital from discontinued
operations 612 (57)
------- -------------------
Cash absorbed by discontinued operations (194) (160)
Tax paid (907) (1,114)
------- -------------------
Net cash inflow from operating activities 6,172 4,027
Investing activities
Purchase of property, plant and equipment (1,114) (1,319)
Payments to acquire intangible fixed assets (322) (175)
Proceeds from sales of plant and equipment 60 10
Proceeds from sale of business activity 6,168 -
Acquisition of subsidiary, net of cash acquired - (320)
Interest received 5 10
------- -------------------
Net cash inflow/(outflow) from investing
activities 4,797 (1,794)
Financing activities
Interest paid (408) (465)
Equity dividends paid (1,889) (1,675)
Repayment of amounts borrowed (5,000) (7,000)
------- -------------------
Net cash outflow from financing activities (7,297) (9,140)
------- -------------------
Net increase/(decrease) in cash and cash
equivalents 3,672 (6,907)
Net cash and cash equivalents brought forward 2,224 9,147
Effect of foreign exchange rate changes 18 (16)
------- -------------------
Net cash and cash equivalents carried forward 5,914 2,224
======= ===================
Net cash and cash equivalents comprise:
Cash and cash equivalents 5,914 2,224
======= ===================
consolidated STATEMENT of changes in equity
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For the year ended 30 June 2015
Notes Capital Hedging Foreign Profit Total
reserve reserve currency and loss equity
Share Share - reserve account
capital premium own shares reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2013 4,517 445 (618) (12) 51 18,060 22,443
Profit for the
period - - - - - 4,041 4,041
Exchange
differences
on
retranslation
of
foreign
operations - - - - (19) - (19)
Net loss on
cash flow
hedges - - - (70) - - (70)
Tax on
derivative
financial
liability - - - 20 - - 20
Actuarial loss
on defined
benefit
pensions, net
of tax - - - - - (7,732) (7,732)
Dividends 8 - - - - - (1,675) (1,675)
Share based
payments - - - - - 34 34
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 30 June 2015 4,517 445 (618) (198) 49 11,734 15,929
------------ ---------- ---------- ---------- ---------- ---------- ----------
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 2015, and the
Companies Act 2006.
The financial information set out in this announcement does not
constitute statutory information as defined in section 434 of the
Companies Act 2006.
The consolidated balance sheet at 30 June 2015 and the
consolidated statement of comprehensive income, consolidated cash
flow statement, consolidated statement of changes in equity and
associated notes for the year
then ended have been extracted from the Group's 2015 statutory
financial statements upon which the auditor's
opinion is unmodified and does not include any statement under
section 498 (2) or (3) of the Companies Act 2006. Those financial
statements have not yet been delivered to the registrar of
companies.
The consolidated financial statements consolidate those of the
Company and its subsidiaries (together referred to
as the 'Group').
The prior year cost of sales have been increased by
GBP1,532,000, with gross margins decreasing correspondingly, to
reflect a re-classification of costs relating to the management of
construction contracts that were previously disclosed within
operating expenses. The re-classification has arisen due to
improved analysis and greater consistency of reporting across the
group to better reflect the nature of the underlying costs. Gross
margin has decreased by a further GBP1,016,000 due to the results
of Alumasc Precision Components and Pendock Profiles being restated
as discontinued operations as a result of the disposal of these
businesses.
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.
Following the year end the group signed a new five year GBP30
million revolving credit banking facility consisting of a GBP12.5
million committed element and a GBP17.5 million uncommitted
accordion element. In addition, the group has recently renewed
overdraft facilities totalling GBP3 million for another year. At 30
June 2015 the group's net cash was GBP0.9 million (2014: net debt
GBP7.7 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 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 goodwill and brands, the
measurement and valuation of defined benefit pension obligations
and the recognition of revenues and profit on construction
contracts.
The measurement of intangible assets other than goodwill on a
business combination involves estimation of future cash flows and
the selection of a suitable discount rate.
The group determines whether goodwill is impaired on an annual
basis and this requires an estimation of the value in use of the
cash generating units to which the intangible assets are allocated.
This involves estimation of future cash flows and choosing a
suitable discount rate.
Measurement of defined benefit pension obligations requires
estimation of future changes in inflation, 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' judgement is limited in most cases due
to the involvement of quantity surveyors during the assessment
process.
3. PRINCIPAL RISKS AND UNCERTAINTIES
Risks Mitigating actions taken
------------------------------------ --------------------------------------------------
Loss of key employees -- Market competitive remuneration
Comment and incentive arrangements.
Generally, staff turnover -- Changes in numbers of people employed
is low. monitored in monthly subsidiary board
meetings, with staff turnover a KPI
in most businesses.
-- Key and high potential employees
identified and monitored on a local
and group basis.
-- Focused training and development
programmes for key and high potential
people.
-- Exit interviews held for senior
people who leave the business, with
learning points shared.
------------------------------------ --------------------------------------------------
Product/service differentiation -- Devolved operating model with local
relative to competition management responsible for identifying
not developed or maintained opportunities and emerging niche market
Comment trends.
Innovation and an entrepreneurial -- Group-wide innovation best practice
spirit is encouraged in days are held annually.
all group companies. -- Innovation and new product development
workshops held regularly in most group
companies.
-- Annual group strategic planning
meetings encourage innovation and "blue
sky" thinking, with group resources
allocated and prioritised as appropriate
to support approved ideas.
------------------------------------ --------------------------------------------------
Economic and market risks -- Develop and retain strong management
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Comment teams (see above).
Alumasc is a UK-based group -- Ensure Alumasc products are market
of businesses with the leading and differentiated against
majority of group sales the competition to improve specification
made to the UK construction and to protect margin (see above).
sector. -- Develop export sales (particularly
in North America, the Middle East and
Far East).
-- Increasing sales to the more resilient
building refurbishment (relative to
new build) markets.
-- Increasing mix of UK sales towards
the stronger London & South East regional
markets.
------------------------------------ --------------------------------------------------
Risk of loss of customers. -- Develop and maintain strong relationships
Comment through regular contact and seeking
Generally good track record always to provide superior products,
of customer retention systems, solutions and service.
-- Good project tracking and enquiry/quote
conversion rate tracking.
-- Increasing use of, and investment
in, customer relationship management
(CRM) software.
------------------------------------ --------------------------------------------------
International Business -- Group board involvement in export
Development risk development programme planning and
Comment monitoring.
International business -- Monthly agenda item (where relevant)
development plans might in Operating Company board meetings.
take longer to succeed -- Employ people with knowledge of
than initially anticipated both local markets and our products/systems.
or, in some instances, -- Take appropriate UK and local professional
not succeed as intended. advice.
-- Regular monitoring/tracking of progress
against plans and forecasts, adapting
management action accordingly (for
example recent widening of the product
range in Gatic USA).
------------------------------------ --------------------------------------------------
Pension obligations -- Continue to grow the business so
the relative affordability of pension
Comment contributions is improved over time.
Alumasc's pension obligations -- Maintain a good, constructive and
are material relative to open relationship with Pension Trustees.
its market capitalisation -- Meet agreed pension funding commitments.
and net asset value. -- Pension scheme management is a regular
group board agenda item.
-- Use of specialist advisors on both
actuarial and investment matters.
-- Monitor and seek market opportunities
to reduce gross pension liabilities.
------------------------------------ --------------------------------------------------
Health and safety risks -- Health and safety is the number
Comment one priority of management and the
The group has a strong first agenda item on all subsidiary
overall track record of and group board agendas.
health & safety performance, -- Risk assessments are carried out
with the number of lost and safe systems of work documented
time accidents significantly and communicated.
reduced over the last 10 -- All safety incidents and significant
years. near misses reported to board level
with appropriate remedial action taken.
-- Group health and safety best practice
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 in higher risk operations.
-- All safety incidents and near misses
reported monthly.
------------------------------------ --------------------------------------------------
Product warranty/recall -- Robust internal quality systems,
risks compliance with relevant industry standards
Comment (eg ISO, BBA etc) and close co-operation
The group has a good track with customers in their design and
record with regard to the specification of the group's products.
management of these risks -- Group insurance programme to cover
and does not have a history larger potential risks and exposures,
of significant claims. where available.
-- Back to back warranties from suppliers,
where appropriate.
-- 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 install, assemble
and supply building products (Levolux,
Blackdown).
------------------------------------ --------------------------------------------------
Reliance on key suppliers -- Annual reviews of supplier concentration
Comment as part of strategic planning/formal
Whilst the group does not business risk review process, with
have undue concentration alternative suppliers sought and developed
on any single or small where practicable.
group of suppliers, certain -- Regular visits to key suppliers,
Alumasc businesses do have good relationships maintained and quality
key strategic suppliers, control checks/training carried out.
some of whom are located -- Regular reviews as to whether work
in the Far East. should be brought back to the UK (or
elsewhere) as economic conditions evolve.
------------------------------------ --------------------------------------------------
Loss of key production -- Business continuity plans prepared
facilities/business continuity at subsidiary level, having regard
Comment to the specific risk factors.
The group has not experienced -- Advice is being taken from insurers
any significant loss of on continuous improvement of these
production facilities causing plans.
business continuity issues. -- IT disaster recovery plans are in
Whilst the likelihood of place, with close to real time back
a catastrophic loss is up arrangements using either off-site
low, the impact if it were servers or cloud technology.
to happen could be high. -- Critical plant and equipment is
identified, with associated breakdown/recovery
plans, including assessment of engineering
spares held on site.
------------------------------------ --------------------------------------------------
Strategic development and -- Key strategic change projects are
change projects governed by Steering Committees sponsored
by the managing director of the business,
Comment with group executive director involvement,
There are execution risks supported by independent specialist
around a number of current consultants where necessary particularly
strategic change projects, IT and property.
including the establishment -- Risk reviews conducted and updated
of the AWMS brand, the regularly.
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relocation of AWMS and -- Project plans established and monitored
Timloc to the new properties monthly.
in 2017 and various ERP -- Project boards established. The
systems implementations. project manager reports to the Steering
Committee.
-- Use of proven, reliable software
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.
------------------------------------ --------------------------------------------------
Credit risk -- Most credit risks are insured.
-- Large export contracts are backed
Comment by letters of credit, performance bonds,
The group has a generally guarantees or similar.
good record in managing -- Any risks taken above insured limits
credit risks. Risks are in the Building Products division are
higher amongst smaller subject to strict delegated authority
building contractor customers, limit sign offs, including group executives'
who are often installers sign off for risks 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 IFRS8 "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.
Analysis by reportable segment Revenue
2014/15
-------------- ----------------- -------------------
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 32,837 - 32,837 3,758
-------------------- ------------------- --------------- ------------------
Energy Management 48,844 - 48,844 4,687
Construction Products 17,542 - 17,542 2,094
Rainwater, Drainage & House
Building
Products 23,909 33 23,942 3,018
-------------------- ------------------- --------------- ------------------
Water Management & House
Building
Products 41,451 33 41,484 5,112
Building Products 90,295 33 90,328 9,799
-------------------- ------------------- --------------- ------------------
Dyson Diecastings 7,787 272 8,059 708
-------------------- ------------------- --------------- ------------------
Elimination / Unallocated costs - (305) (305) (1,485)
Total 98,082 - 98,082 9,022
==================== =================== =============== ==================
GBP'000
Segmental operating result 9,022
Brand amortisation (268)
IAS19 pension scheme
administration
costs (455)
Total operating profit from
continuing
operations 8,299
==================
Analysis by Capital expenditure
reportable
segment
2014/15
-------------------------------------
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 13,225 (7,876) 64 5 127 11
---------- -------------- ------------------- ---------------- ----------------- -----------------
Energy
Management 31,396 (12,584) 191 272 173 179
Construction
Products 7,847 (3,366) 112 8 206 14
Rainwater,
Drainage &
House
Building
Products 12,706 (5,283) 586 137 435 118
---------- -------------- ------------------- ---------------- ----------------- -----------------
Water
Management &
House
Building
Products 20,553 (8,649) 698 145 641 132
Building
Products 51,949 (21,233) 889 417 814 311
---------- -------------- ------------------- ---------------- ----------------- -----------------
Dyson
Diecastings 4,475 (1,527) 135 5 245 7
---------- -------------- ------------------- ---------------- ----------------- -----------------
Unallocated &
Discontinued 11,470 (29,205) 140 - 889 21
Total 67,894 (51,965) 1,164 422 1,948 339
========== ============== =================== ================ ================= =================
Analysis by reportable segment 2013/14 Revenue
(re-stated)
-------------------- ------------------
Inter-segment Total Segmental
Operating
External Result
GBP'000 GBP'000 GBP'000 GBP'000
Solar Shading & Screening 16,339 - 16,339 507
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Roofing & Walling 26,927 - 26,927 2,929
------------ ---------------- ----------- ------------
Energy Management 43,266 - 43,266 3,436
Construction Products 15,534 - 15,534 1,676
Rainwater, Drainage & House Building
Products 21,501 60 21,561 2,865
------------ ---------------- ----------- ------------
Water Management & House Building
Products 37,035 60 37,095 4,541
Building Products 80,301 60 80,361 7,977
------------ ---------------- ----------- ------------
Dyson Diecastings 8,556 322 8,878 1,120
------------ ---------------- ----------- ------------
Elimination / Unallocated costs - (382) (382) (1,332)
Total 88,857 - 88,857 7,765
============ ================ =========== ============
GBP'000
Segmental operating result 7,765
Brand amortisation (268)
IAS19 pension scheme administration
costs (452)
Total operating profit from continuing
operations 7,045
================
Analysis by reportable Capital expenditure
segment 2013/14 (re-stated)
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 17,914 (4,818) 16 50 49 168
Roofing & Walling 12,387 (6,208) 203 12 132 10
---------- ------------- ----------- ------------ ------------- -------------
Energy Management 30,301 (11,026) 219 62 181 178
Construction Products 7,291 (2,947) 211 97 176 38
Rainwater, Drainage &
House Building Products 13,095 (5,319) 373 7 414 133
---------- ------------- ----------- ------------ ------------- -------------
Water Management & House
Building Products 20,386 (8,266) 584 104 590 171
Building Products 50,687 (19,292) 803 166 771 349
---------- ------------- ----------- ------------ ------------- -------------
Dyson Diecastings 16,791 (6,643) 27 4 179 19
---------- ------------- ----------- ------------ ------------- -------------
Unallocated & Discontinued 6,071 (30,572) 403 5 1,109 13
Total 73,549 (56,507) 1,233 175 2,059 381
========== ============= =========== ============ ============= =============
Analysis by geographical segment 2014/15
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 88,738 3,058 2,004 2,134 1,526 622 98,082
Segment non-current
assets 26,808 - - - 1 - 26,809
Analysis by geographical segment 2013/14 (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 77,008 3,362 4,524 1,795 1,155 1,013 88,857
Segment non-current
assets 31,279 - - - 35 - 31,314
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 NON-UNDERLYING ITEMS
2014/15 2013/14
GBP'000 GBP'000
Brand amortisation (268) (268)
IAS19 pension scheme administration costs (455) (452)
IAS19 net pension scheme finance costs (711) (448)
(1,434) (1,168)
======= =======
6 DISCONTINUED OPERATIONS
Discontinued operations 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:
Alumasc Precision Pendock
Components Profiles
Period to Period to Total
26 June 2015 30 September GBP'000
GBP'000 2014
GBP'000
Year ended 30 June 2015
Revenue 16,672 785 17,457
Cost of sales (17,140) (530) (17,670)
----------------- ------------- ---------
Gross (loss)/ profit (468) 255 (213)
Net operating expenses (1,191) (200) (1,391)
----------------- ------------- ---------
Operating (loss)/profit (1,659) 55 (1,604)
Non-cash (loss)/gain on disposal
of discontinued operations (300) 862 562
Costs of disposal of discontinued
operations (1,040) (92) (1,132)
----------------- ------------- ---------
(Loss)/gain before taxation (2,999) 825 (2,174)
Tax credit/(charge) 1,205 (12) 1,193
(Loss)/profit after taxation (1,794) 813 (981)
================= ============= =========
Alumasc Pendock Total
Precision Profiles
Components
GBP'000 GBP'000 GBP'000
Year ended 30 June 2014
Revenue 21,420 3,125 24,545
Cost of sales (21,385) (2,144) (23,529)
----------- ---------- --------
Gross profit 35 981 1,016
Net operating expenses (1,353) (650) (2,003)
----------- ---------- --------
Operating (loss)/profit (1,318) 331 (987)
Tax credit/(charge) 319 (80) 239
(Loss)/profit after taxation (999) 251 (748)
=========== ========== ========
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The net cash flows attributable to discontinued operations are
as follows:
Alumasc Pendock
Precision Profiles
Components
Period to Period to
26 June 30 September
2015 2014
GBP'000 GBP'000 Total GBP'000
Year ended 30 June 2015
Operating cash flows (134) (60) (194)
Investing cash flows 4,624 1,363 5,987
Net cash inflow 4,490 1,303 5,793
=========== ============= =============
Alumasc Pendock Total
Precision Profiles
Components
GBP'000 GBP'000 GBP'000
Year ended 30 June 2014
Operating cash flows (497) 337 (160)
Investing cash flows (418) (5) (423)
Net cash (outflow)/inflow (915) 332 (583)
=========== ========== =======
Details of the sale of the trade and assets of Alumasc Precision
Components and Pendock Profiles are as follows:
Alumasc Pendock Profiles Total
Precision
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
2014/15 2013/14
(re-stated)
GBP'000 GBP'000
Current tax:
UK corporation tax - continuing operations 1,138 1,168
- discontinued operations (297) (197)
Overseas tax 11 30
Amounts under/(over) provided in previous years 39 (26)
Total current tax 891 975
======= ============
Deferred tax:
Origination and reversal of temporary differences:
- continuing operations 483 291
- discontinued operations (896) (42)
Amounts over provided in previous years (56) -
Rate change adjustment 24 (176)
------- ------------
Total deferred tax (445) 73
Total tax expense 446 1,048
======= ============
Tax charge on continuing operations 1,639 1,287
Tax credit on discontinued operations (1,193) (239)
Total tax expense 446 1,048
======= =====
Tax recognised in other comprehensive income
Deferred tax:
Actuarial losses on pension schemes (945) (1,618)
Cash flow hedge (43) (20)
Tax credited to other comprehensive income (988) (1,638)
===== =======
Total tax credit in the statement of comprehensive
income (542) (590)
===== =======
(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 9.2% is lower than
(2013/14: 20.6% was lower than) the standard rate of corporation
tax in the UK of 20.75% (2013/14: 22.5%). The differences are
reconciled below:
2014/15 2013/14
(re-stated)
GBP'000 GBP'000
Profit before tax from continuing operations 6,996 6,076
Loss before tax from discontinued operations (2,174) (987)
------- ------------
Accounting profit before tax 4,822 5,089
Current tax at the UK standard rate of 20.75% (2013/14:
22.5%) 1,001 1,145
Expenses not deductible for tax purposes 212 105
Chargeable gains/use of capital losses (774) -
Rate change adjustment 24 (176)
Tax under/(over) provided in previous years - current
tax 39 (26)
Tax over provided in previous years - deferred
tax (56) -
446 1,048
======= ============
The group's total tax charge in 2014/15 of GBP446,000 (2013/14:
GBP1,048,000) 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
Following utilisation of GBP1 million of capital losses brought
forward, the group has agreed tax capital losses in the UK
amounting to GBP20 million (2014: GBP21 million) that relate to
prior years. Under current legislation these losses are available
for offset against future chargeable gains. A deferred tax asset
has not been recognised in respect of these losses, as they do not
meet the criteria for recognition.
Revaluation gains on land and buildings amount to GBP1 million
(2014: GBP1 million). These have been offset against the capital
losses detailed above, therefore net capital losses carried forward
amount to GBP19 million (2014: GBP20 million). The capital losses
are able to be carried forward indefinitely.
(d.) Deferred tax
A reconciliation of the movement in deferred tax during the year
is as follows:
Accelerated Short term Total Pension
capital temporary deferred deferred
allowances differences
Brands Hedging tax liability tax
asset
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2013 895 (44) 650 14 1,515 (2,314)
(Credited)/charged
to the statement
of comprehensive
income - current
year (171) 34 (138) - (275) 348
Credited to equity - - - (20) (20) (1,618)
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)
=========== ============ ======= ======== ============= ==========
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 GBP3.8 million
(2014: GBP4.0 million) have not been recognised in respect of net
capital losses of GBP19 million (2014: GBP20 million).
(e.) Factors affecting the tax charge in future periods
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