REG - Alumasc Group Plc - Interim results
06/02/2024 07:00
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RNS Number : 0780C Alumasc Group PLC 06 February 2024
Tuesday 6 February 2024
The Alumasc Group plc
Interim results
Encouraging first half, confident of delivering expectations
Alumasc (ALU.L) the sustainable building products, systems and solutions Group
today announces results for the six months ended 31 December 2023.
Commenting on the interim results, Paul Hooper, Chief Executive of Alumasc
said:
"We are very pleased to report an encouraging first half in which we continued
to outperform our underlying construction markets. As expected, UK sales were
resilient in a challenging environment; and coupled with strong overseas
sales, Group revenue and underlying profit before tax grew by 6% and 12%
respectively. We have again demonstrated the resilience of our business model
with its multi-markets exposure.
"We were delighted to complete the strategic acquisition of ARP Group during
the period and welcome our new colleagues to the Group. There are exciting
synergies and opportunities for cross-selling ahead, which will support the
delivery of the Group's growth ambitions.
"The Board remains confident in achieving full year expectations, despite the
expected continuation of UK demand headwinds and the further delay of a
significant export contract in Hong Kong."
Organic growth demonstrates resilience of business model and progress against
strategic initiatives
· Group revenues up by 6.4% to £47.8m (H1 FY23: £45.0m):
o Strong performance in Water Management, with revenues up 12% to £22.0m.
o Building Envelope resilient, with revenues of £18.7m (H1 FY23: £18.3m).
o Housebuilding Products also had a resilient first half, with revenues up
slightly to £7.1m.
o Strong recovery in overseas sales to £5.7m, over twice the level of the
prior period.
· Underlying Group operating margin of 14.1% (H1 FY23: 13.4%):
o Water Management 16.0% (H1 FY23: 12.8%).
o Building Envelope 12.8% (H1 FY23: 14.1%).
o Record underlying operating margin in Housebuilding Products of 24.5% (H1
FY23: 23.0%).
· Underlying profit before tax grew 12.4% to £6.3m (H1 FY23: £5.6m)
as a result of increased volumes, complemented by the management team's focus
on price and cost control.
· Reported profit before tax was £5.6m (H1 FY23: £5.3m).
· Underlying earnings per share of 13.0p (H1 FY23: 12.3p).
· Statutory earnings per share (continuing operations) of 11.4p (H1
FY23: 12.5p).
· Net bank debt at December 2023 was £7.4m (H1 FY2023: £6.8m), after
net cash outflow on ARP acquisition of £6.5m:
o Represents gearing of 0.5x (H1 FY2023: 0.5x).
o Comfortably within bank covenant of less than 2.5x.
· Interim dividend per share increased to 3.45p (H1 FY23: 3.40p).
Accelerating growth with the acquisition of ARP Group
· Acquisition of ARP Group ('ARP') for a maximum cash consideration of
£10.0m on a cash and debt free basis completed in December 2023.
· ARP is a manufacturer and distributor of specialist metal rainwater
and architectural aluminium products and will sit within Water Management
division.
· The acquisition strengthens Alumasc's rainwater product offering,
brings exciting consolidation synergies and will support delivery of the
Group's strategic growth plans.
Outlook
· The Group's focus on sustainable building products, coupled with
innovation, cost base management and outstanding customer service, will help
mitigate the external geopolitical and economic environment, which is expected
continue to create uncertainty for our sector for the remainder of the year.
· With significant funding capacity and a clear, investment-led
strategy supporting both organic and acquisitive growth, the Group is focused
on delivering outperformance during this period of market volatility.
· Structural drivers of energy and water management mean the Group
remains well positioned to deliver significant long term growth when markets
recover.
Enquiries:
The Alumasc Group plc +44 (0) 1536 383844
Paul Hooper, Chief Executive
Simon Dray, Group Finance Director
Peel Hunt (Broker)
Mike Bell, Ed Allsop +44 (0) 20 7418 8831
Cavendish Capital Markets Ltd (Nominated Adviser)
Julian Blunt, Edward Whiley + 44 (0) 207 220 0500
Camarco (Financial PR) alumasc@camarco.co.uk (mailto:alumasc@camarco.co.uk)
Ginny Pulbrook + 44 (0) 203 757 4992
Rosie Driscoll + 44 (0) 203 757 4981
REVIEW OF INTERIM RESULTS
Chief Executive's Statement: resilient performance enhanced by increased
overseas sales
We are pleased to report an encouraging Group result for the six months ended
31 December 2023. Revenue from continuing operations was £47.8m (H1 FY23:
£45.0m), 6.4% ahead of the prior period. UK sales, 2% below the prior period,
were resilient in a challenging market, which was estimated to have declined
by over 6%. This was offset, as expected, by a strong first half contribution
from overseas sales, which at £5.3m were more than twice the level of the
prior period. This was achieved despite further delays in call-offs on a
significant project at Chek Lap Kok airport in Hong Kong, announced in
November 2022, which is now expected to ship after our June 2024 year end.
Underlying profit before tax grew by 12.4% to £6.3m (H1 FY23: £5.6m) as a
result of increased sales volumes, complemented by the management team's focus
on control of costs and pricing. Reported profit before tax grew by 6% to
£5.6m (H1 FY23: £5.3m).
After investment in the ARP acquisition of £6.5m, net bank debt at December
2023 was £7.4m (H1 FY23: £6.8m), representing gearing of 0.5x (H1 FY23:
0.5x), comfortably within our bank covenant of less than 2.5x. The Group's
underlying operating cash flow was £10.0m, 80% higher than H1 FY23, after a
£1.7m inflow from working capital (H1 FY23: £1.9m outflow).
The financial and operational performance during the period has provided a
good platform, with the Group entering the second half of the year with good
momentum and a strong order book. Notwithstanding the current geopolitical and
economic uncertainties, the Board remains confident in the Group achieving its
full year expectations and has approved an interim dividend per share of 3.45
pence (FY23 interim dividend: 3.40 pence).
This performance further demonstrates the resilience of our business model,
and was underpinned by progress against our strategic initiatives, positioning
the Group well for when markets recover.
Acquisition of ARP Group: accelerating organic growth with targeted
acquisitions
On 25th July 2023, Alumasc announced the proposed acquisition of the entire
share capital of ARP Group ("ARP"), a manufacturer and distributor of
specialist metal rainwater and architectural aluminium goods, for a maximum
cash consideration of £10.0m on a cash and debt free basis. The acquisition
completed in December 2023 following its unconditional clearance by the UK
Competition and Markets Authority.
ARP marks the first acquisition by Alumasc since 2018 and demonstrates the
Group's strategy to supplement organic growth through earnings-accretive
acquisitions. ARP shares many qualities with Alumasc, including outstanding
customer service, and strong relationships with contractors which will
complement Alumasc's business model. ARP also broadens the Group's existing
product offerings, augments the routes to market and improves the online
presence for both businesses.
The acquisition aligns with our strategy of accelerating our organic growth
with bolt-on acquisitions which complement our existing businesses and broaden
our sales offering. Our initial work on ARP's integration has reaffirmed our
belief that the acquisition will bring significant synergistic benefits.
Strategic Overview
The Group's performance during the period reflects further progress on
delivering the Group's growth strategy:
· Accelerating sales growth
· Driving margin improvement
· Championing sustainable building products
· Value-enhancing investment
The Group has continued to progress its long-term strategy to deliver
profitable growth through leveraging its strong strategic positions in
sustainable building products, and to outperform the UK construction market
while continuing development of export markets. The Group's outperformance
versus the UK construction market and its more than doubling of its export
revenue in H1 reflects continued strong progress.
The Group's strong margins are as a result of high value-add products, tight
cost management, and a relentless focus on efficiency. The restructuring of
the sales and commercial teams in our Water Management division right-sizes
the team for current UK market activity, while simplifying the organisational
structure and improving capability and customer service. We continue to
identify opportunities to improve our efficiency and will act quickly should
conditions require it.
Alumasc is also in a very strong position to benefit from the growth in
sustainable construction and green buildings, both in terms of its own
decarbonisation actions and through the development of its portfolio of
products to manage energy consumption in buildings, to produce a greener built
environment, and to manage the scarce resource of water. Many internal
initiatives have also been taken to act in an environmentally sustainable
manner, including the sourcing of electricity from renewable sources for 100%
of the Group's supply. The Group's near-term Net Zero targets have been set,
and will be verified with the Science Based Target Initiative later in the
year.
The Group has continued to invest in value-enhancing growth initiatives,
including improving geographical sales coverage in Building Envelope,
expanding the overseas sales team in Water Management, and improving new
product development capability in Housebuilding Products. The acquisition of
ARP Group, which will sit within our Water Management division, strengthens
our rainwater product offering, brings exciting consolidation synergies, and
will accelerate delivery of our strategic growth ambitions.
Operational Review
Water Management
H1 FY24 H1 FY23
Revenue £22.0m £19.6m
Underlying operating profit £3.5m £2.5m
Underlying operating margin 16.0% 12.8%
Operating profit £3.2m £2.5m
In H1 FY24 the Water Management division, after a quieter FY23, delivered a
very strong performance with revenue ahead by £2.4m (12%). This was augmented
by a strong export performance, driven by the recent investments in overseas
sales resource and project work at Chek Lap Kok airport in Hong Kong, despite
a further delay in call-offs from a £7m order, announced in November 2022,
which is now likely to be shipped after our June 2024 year end. Underlying
operating profit increased by 40% to £3.5m, and the division achieved an
increased 16% operating margin (H1 FY23: 13%).
Significant UK orders were delivered to prison and naval projects, and a large
data centre, helping to offset lower levels of work on distribution
warehouses. Overseas sales benefited from work at a number of airports, mostly
significantly at Chek Lap Kok airport, and projects were also won in New
Zealand, Saudi Arabia, Ireland and Peru.
In the light of the subdued UK demand, we announced in October 2023 the
reorganisation of the UK sales and commercial teams. This will deliver
annualised savings of £0.8m, while simplifying the management structure and
improving capability and customer service.
The division finished the half year with a very strong order book, albeit this
contains several overseas projects whose financial impact will be after the
FY24 year end. Several important projects are, however, expected to support
improved UK sales in the second half of the current year.
Building Envelope
Continuing operations H1 FY24 H1 FY23
Revenue £18.7m £18.3m
Underlying operating profit £2.4m £2.6m
Underlying operating margin 12.8% 14.1%
Operating profit £2.4m £2.6m
The Building Envelope Division grew its revenue by 2%, despite a challenging
marketplace. New products continued to be an important contributor. The
business continued its development of carbon-reducing specified systems and in
Green and Blue Roofing areas whilst focusing on Bio Solar techniques and the
continued success of the CO(2) reducing product, Olivine. The portfolio was
also supplemented by the recently launched metal profiled roof and abutment
system and further enhancement of the liquid roofing systems.
The prior year's successful strengthening of areas with previously limited
sales representation, whilst expanding the division's internal trainee
programme, continues to contribute to the overall performance. A feature of
the first half year has been the winning of larger multi-site refurbishment
projects, as a result of Alumasc's service reputation. This provides a
stronger platform of ongoing work and helps underpin future performance.
Despite the challenging market conditions, the Building Envelope Division's
underlying operating profit was only marginally impacted.
Housebuilding Products
H1 FY24 H1 FY23
Revenue £7.1m £7.0m
Underlying operating profit £1.7m £1.6m
Underlying operating margin 24.5% 23.0%
Operating profit £1.7m £1.4m
Against a housebuilding market widely reported to have declined by over 17%
year-on-year, Timloc, our Housebuilding Products Business, delivered a robust
first half year and grew its revenue by 1% to £7.1m.
This was partially achieved through the extended distribution of its existing
products, where new customers appreciate the industry-leading next day service
and low carriage paid order values. In addition, sales were supported by the
continued growth of new products even though overall market demand in the
housebuilding sector has declined.
Inventive Roof Tile Vents and additional Roofline products, launched in the
second half of the prior year, continue to take market share as Timloc expands
its distribution model to Roofing Merchants. These products have been
particularly well received for their quality and service proposition.
Improved efficiencies, through further investment in automation, energy
efficient moulding machines and rigorous cost controls, have all contributed
to the division achieving a record first half underlying operating margin of
24.5%, up from 23.0%.
Timloc's focus on sustainability, including being the first building products
manufacturer to achieve carbon neutral operations (scope 1 and 2), leaves it
well positioned to support the housebuilders' drive to build zero carbon homes
and meet the current underlying demand for new houses.
Financial Review
Tax rate and earnings per share (continuing operations)
The Group's underlying tax rate was 25.4% (H1 FY23: 21.2%), reflecting the
increase in UK Corporation Tax rate from 19% to 25% from April 2023.
Underlying earnings per share for the period was 13.0p (H1 FY23: 12.2p); 6%
higher than the prior period, but lower than the underlying profit increase
due to the higher tax rate. Basic earnings per share were 11.4p (H1 FY23:
12.5p).
Acquisition of ARP Group
The acquisition of ARP Group completed on 21 December 2023, following its
unconditional clearance by the UK Competition and Markets Authority. The
initial net cash outflow on acquisition was £6.5m, representing the initial
cash and debt free consideration of £8.5m, plus a net debt and working
capital adjustment of £0.2m, less £2.2m of net cash held by ARP at
completion. A further £1.2m of working capital adjustment, and the first earn
out payment of £0.75m, were paid in January 2024. A final earn out payment of
£0.75m, due for payment in January 2025, subject to ARP's profit for the year
to November 2024, has been accrued in full.
Cash flow and net debt
£m (continuing operations) H1 FY24 H1 FY23
Underlying operating profit 6.7 6.0
Depreciation/underlying amortisation 1.5 1.3
Share-based payments 0.1 0.1
Working capital inflow/(outflow) 1.7 (1.9)
Underlying operating cash flow 10.0 5.5
Pension deficit funding (0.6) (1.0)
Non-underlying cash flows (0.5) (0.2)
Cash generated by operating activities 8.9 4.3
Capital expenditure (1.5) (1.4)
Interest (0.3) (0.3)
Tax (1.7) (0.1)
Lease payments (0.5) (0.4)
Purchase of own shares (0.4) (0.1)
Dividend payment (2.5) (2.4)
Acquisition of ARP Group (6.5) -
Disposals - (1.7)
Increase in net bank debt (4.5) (2.1)
£m H1 FY24 H1 FY23
Net bank debt 7.4 6.8
Lease liabilities 4.8 4.6
Total (IFRS 16) net debt 12.2 11.4
The Group's underlying operating cash flow was £10.0m, 80% higher than H1
FY23, after a £1.7m inflow from working capital (H1 FY23: £1.9m outflow).
Average trade working capital as a percentage of sales for the half year was
16.7% (H1 FY23: 19.4%), as surplus inventory holdings unwound with the easing
of supply chain pressures.
After pension deficit funding of £0.6m (H1 FY23: £1.0m), reduced in line
with the agreement with trustees, and non-underlying cash flows of £0.5m (H1
FY23: £0.2m), cash generated from operating activities was £8.9m (H1 FY23:
£4.3m).
Capital expenditure of £1.5m (H1 FY23: £1.4m) was 115% (H1 FY23: 111%) of
depreciation. Principal investments were in tooling for new products and
capacity upgrades at Timloc, our Housebuilding Products business.
Tax paid was £1.7m (H1 FY23: £0.1m), reflecting the expiry of the capital
allowance super deduction which benefited the prior period.
After lease payments of £0.5m (H1 FY23: £0.4m), the payment of the prior
year's final dividend of £2.5m (H1 FY23 £2.4m), own share purchases to
fulfil the vesting of employee share options of £0.4m (H1 FY23: £0.1m), the
initial net consideration for ARP of £6.5m (H1 FY23: £nil), and the cash
outflow on disposal of Levolux of £nil (H1 FY23 : £1.7m), the increase in
net bank debt in the half year was £4.5m (H1 HY23: £2.1m).
Net bank debt at December 2023 was £7.4m (H1 FY23: £6.8m), representing
gearing of 0.5x (H1 FY23: 0.5x), comfortably within our bank covenant of less
than 2.5x.
Pension deficit and net assets
The Group's IAS 19 pension deficit was £4.8m (H1 FY23: £8.4m), an increase
of £0.5m since June 2023. An increase in the value of scheme liabilities, on
lower bond yields, was only partially offset by company contributions and
higher asset values. The Group continues to expect the current level of
contributions, and a recovery in asset values, to bring the scheme to a low
dependency position within a reasonable timeframe.
Group net assets increased to £26.3m (H1 FY23: £20.7m, FY23: £25.7m).
Interim Dividend
The Board declared an increased interim dividend of 3.45p (H1 FY23: 3.40p) per
ordinary share, payable on 8 April 2024 to shareholders on the register on 23
February 2024.
Outlook
The Board does not expect the current demand headwinds to alleviate
significantly in the second half of the year. However Alumasc has a proven
track record of outperforming its UK construction end markets through product
innovation, experienced management teams and its focus on best in class
service and operational excellence. The Board therefore remains confident in
the Group achieving its full year expectations.
Alumasc is well positioned, as a producer of innovative products which meet
the growing demand for environmental solutions and sustainable products, to
benefit when markets recover and to deliver long-term significant shareholder
value.
Paul Hooper, Chief Executive
6 February 2024
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
for the half year to 31 December 2023
Half year to 31 December 2023 Half year to 31 December 2022 Year to
30 June 2023
Underlying Non-underlying Underlying Non-underlying
Total Total Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Continuing operations: Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 5 47,812 - 47,812 44,953 - 44,953 89,135
Cost of sales (29,864) - (29,864) (28,449) - (28,449) (56,406)
Gross profit 17,948 - 17,948 16,504 - 16,504 32,729
Net operating expenses
Net operating expenses before non-underlying items
(11,211) - (11,211) (10,499) - (10,499) (20,620)
Non-underlying items 4 - (584) (584) - (229) (229) (585)
Net operating expenses (11,211) (584) (11,795) (10,499) (229) (10,728) (21,205)
Operating profit 4, 5 6,737 (584) 6,153 6,005 (229) 5,776 11,524
Net finance costs 7 (460) (104) (564) (419) (24) (443) (985)
Profit before taxation 6,277 (688) 5,589 5,586 (253) 5,333 10,539
Tax expense 8 (1,594) 109 (1,485) (1,184) 337 (847) (2,186)
Profit for the period from continuing operations 4,683 (579) 4,104 4,402 84 4,486 8,353
Discontinued operations:
Loss after taxation for the period from discontinued operations 6
- - - - (1,795) (1,795) (1,750)
Profit/(loss) for the period 4,683 (579) 4,104 4,402 (1,711) 2,691 6,603
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Actuarial loss on defined benefit pensions, net of tax (2,796)
(739) (5,404)
Items that are or may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges, net of tax (285)
(46) (27)
Exchange differences on retranslation of foreign operations
(31) 12 (18)
(77) (15) (303)
Other comprehensive loss for the period, net of tax (816) (5,419) (3,099)
Total comprehensive profit/(loss) for the period, net of tax 3,288 (2,728) 3,504
Earnings per share: Pence Pence Pence
Basic earnings per share
- Continuing operations 11 11.4 12.5 23.3
- Discontinued operations - (5.0) (4.9)
11 11.4 7.5 18.4
Diluted earnings per share
- Continuing operations 11.3 12.4 23.1
- Discontinued operations - (5.0) (4.9)
11 11.3 7.4 18.2
Reconciliations of underlying to statutory profit and earnings per share are
provided in notes 4 and 11 respectively.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
at 31 December 2023
31 December 31 December 30 June
2023 2022 2023
(Unaudited) (Unaudited) (Audited)
Notes £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment - owned assets 14,584 12,733 13,227
Property, plant and equipment - right of use assets 4,517 4,444 5,007
Goodwill 14 13,493 8,526 8,526
Other intangible assets 5,292 2,035 2,073
Deferred tax assets 1,203 2,094 1,081
39,089 29,832 29,914
Current assets
Inventories 12,952 14,376 11,561
Trade and other receivables 18,350 15,462 20,748
Derivative financial assets - 314 -
Cash at bank 12 7,186 5,962 5,995
38,488 36,114 38,304
Total assets 77,577 65,946 68,218
Liabilities
Non-current liabilities
Interest bearing loans and borrowings 12 (14,556) (12,782) (8,848)
Lease liability 12 (3,979) (3,696) (4,366)
Employee benefits payable (4,812) (8,375) (4,323)
Provisions (1,503) (811) (1,185)
Deferred tax liabilities (2,865) (1,907) (1,614)
(27,715) (27,571) (20,336)
Current liabilities
Trade and other payables (20,854) (15,259) (19,120)
Lease liability 12 (836) (881) (868)
Provisions (776) (1,033) (612)
Corporation tax payable (1,005) (491) (1,505)
Derivative financial liabilities (91) - (30)
(23,562) (17,664) (22,135)
Total liabilities (51,277) (45,235) (42,471)
Net assets 26,300 20,711 25,747
Equity
Share capital 4,517 4,517 4,517
Share premium 445 445 445
Capital reserve - own shares (378) (587) (577)
Hedging reserve (68) 236 (22)
Foreign currency reserve 167 228 198
Profit and loss account reserve 21,617 15,872 21,186
Total equity 26,300 20,711 25,747
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
for the half year to 31 December 2023
Half year to Half year to Year to
31 December 31 December 30 June
2023 2022 2023
(Unaudited) (Unaudited) (Audited)
Notes £'000 £'000 £'000
Operating activities
Operating profit from continuing operations 6,153 5,776 11,524
Adjustments for:
Depreciation 1,319 1,249 2,681
Amortisation 124 98 247
Loss on disposal of property, plant and equipment 15 12 1
Decrease/(increase) in inventories 127 (982) 1,833
Decrease/(increase) in receivables 4,334 3,324 1,897
(Decrease)/increase in trade and other payables (2,728) (3,796) (3,948)
Movement in provisions 14 (577) (624)
Cash contributions to retirement benefit schemes (600) (967) (1,567)
Share based payments 138 130 182
Cash generated by operating activities of continuing operations 8,896 4,267 12,226
Tax paid (1,674) (139) (530)
Net cash inflow from operating activities 7,222 4,128 11,696
Investing activities
Purchase of property, plant and equipment (1,274) (1,378) (2,545)
Payments to acquire intangible fixed assets (243) (7) (194)
Proceeds from sales of property, plant and equipment - - 24
Acquisition of subsidiary (8,679) - -
Cash acquired on acquisition of subsidiary 2,223 - -
Loss on disposal of subsidiary - (1,686) (1,750)
Net cash outflow from investing activities (7,973) (3,071) (4,465)
Financing activities
Bank interest paid (269) (264) (671)
Equity dividends paid (2,482) (2,381) (3,599)
Draw down/(repayment) of amounts borrowed 5,700 - (4,000)
Refinancing costs (78) (262) (262)
Principal paid on lease liabilities (419) (362) (765)
Interest paid on lease liabilities (88) (80) (154)
Purchase of own shares (480) (54) (51)
Exercise of share based payments 89 12 -
Net cash inflow/(outflow) from financing activities 1,973 (3,391) (9,502)
Net increase/(decrease) in cash at bank and bank overdrafts 1,222 (2,334) (2,271)
Net cash at bank and bank overdrafts brought forward 5,995 8,284 8,284
Net increase/(decrease) in cash at bank and bank overdrafts 1,222 (2,334) (2,271)
Effect of foreign exchange rate changes (31) 12 (18)
Net cash at bank and bank overdrafts carried forward 12 7,186 5,962 5,995
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the half year to 31 December 2023
Share Share Capital reserve - Profit
Foreign and loss account
Hedging currency
capital premium own shares reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 July 2023 4,517 445 (577) (22) 198 21,186 25,747
Profit for the period - - - - - 4,104 4,104
Exchange differences on retranslation of foreign operations - - - - (31) - (31)
Net loss on cash flow hedges - - - (61) - - (61)
Tax on derivative financial liability - - - 15 - - 15
Share based payments - - - - - 138 138
Actuarial loss on defined benefit pension schemes, net of tax - - - - - (739) (739)
Acquisition of own shares - - (480) - - - (480)
Own shares used to satisfy exercise of share awards - - 679 - - - 679
Exercise of share-based incentives - - - - - (590) (590)
Dividends - - - - - (2,482) (2,482)
At 31 December 2023 4,517 445 (378) (68) 167 21,617 26,300
Share Share Capital
reserve - Profit
Foreign and loss account
Hedging currency
capital premium own shares reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 July 2022 4,517 445 (601) 263 216 20,892 25,732
Profit for the period - - - - - 2,691 2,691
Exchange differences on retranslation of foreign operations - - - - 12 - 12
Net loss on cash flow hedges - - - (10) - - (10)
Tax on derivative financial liability - - - (17) - - (17)
Share based payments - - - - - 130 130
Actuarial loss on defined benefit pension schemes, net of tax - - - - - (5,404) (5,404)
Acquisition of own shares - - (55) - - - (55)
Own shares used to satisfy exercise of share awards - - 69 - - - 69
Exercise of share-based incentives - - - - - (56) (56)
Dividends - - - - - (2,381) (2,381)
At 31 December 2022 4,517 445 (587) 236 228 15,872 20,711
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the half year to 31 December 2023
1. Basis of preparation
The condensed consolidated interim financial statements of The Alumasc Group
plc and its subsidiaries have been prepared in accordance with International
Financial Reporting Standards (IFRS) in conformity with the requirements of
the Companies Act 2006 that are effective at 31 December 2023.
The condensed consolidated interim financial statements have been prepared
using the accounting policies set out in the statutory accounts for the
financial year to 30 June 2023 and in accordance with AIM Rule 18, and the
same accounting policies will be adopted in the 2024 annual financial
statements.
The consolidated financial statements of the Group as at and for the year
ended 30 June 2023 are available on request from the Company's registered
office at Burton Latimer, Kettering, Northants, NN15 5JP or on the website
www.alumasc.co.uk (http://www.alumasc.co.uk) .
The comparative figures for the financial year ended 30 June 2023 are not the
Company's statutory accounts for that financial year but have been extracted
from those accounts. Those accounts have been reported on by the Company's
auditors and delivered to the registrar of companies. The report of the
auditors was (i) unqualified, (ii) did not include a reference to any matters
to which the auditors drew attention by way of emphasis without qualifying
their report, and (iii) did not contain a statement under section 498
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(2) or (3) of the Companies Act 2006.
The condensed consolidated interim financial statements for the half year
ended 31 December 2023 are not statutory accounts and have been neither
audited nor reviewed by the Group's auditors. They do not contain all of the
information required for full financial statements, and should be read in
conjunction with the consolidated financial statements of the Group as at and
for the year ended 30 June 2023.
These condensed consolidated interim financial statements were approved by the
Board of Directors on 6 February 2024.
The Group performed ahead of the Base Case trading scenario modelled as part
of the 30 June 2023 year end Going Concern review, and also ahead of the
stress testing performed. On the basis of the Group's financing facilities and
current financial plans and sensitivity analyses, the Board is satisfied that
the Group has adequate resources to continue in operational existence for
twelve months from the date of signing this report and accordingly continues
to adopt the going concern basis in preparing these condensed consolidated
interim financial statements.
2. Estimates
The preparation of condensed consolidated interim financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amount of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
Except as described below, in preparing these condensed consolidated interim
financial statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated financial
statements as at and for the year ended 30 June 2023, namely the valuation of
defined benefit pension obligations and the valuation of the Group's acquired
goodwill.
During the six months ended 31 December 2023, management reassessed and
updated its estimates in respect of retirement benefit obligations based on
market data available at 31 December 2023. The resulting impact was a £1.0
million pre-tax actuarial loss, calculated using IAS 19 conventions,
recognised in the six month period to 31 December 2023.
3. Risks and uncertainties
A summary of the Group's principal risks and uncertainties was provided on
pages 57 to 60 of Alumasc's Report and Accounts for the year ended 30 June
2023. The Board considers these risks and uncertainties remain relevant to the
current financial year.
Specific risks and uncertainties relating to the Group's performance in the
second half year are:
- Inflation and interest rates, and their impact on the Group's
construction markets;
- Prolonged periods of bad weather which may impact the Group's
construction markets; and
- Potential impacts on customer demand or our supply chain from
the current global geopolitical environment.
4. Underlying to statutory profit reconciliation
Profit before tax Half year to 31 December 2023 Half year to 31 December 2022 Year to 30 June
2023
£'000 £'000 £'000
Underlying profit before tax from continuing operations 6,277 5,586 11,172
Amortisation of acquired intangible assets (35) (35) (70)
IAS 19 net pension scheme finance costs (104) (24) (48)
Acquisition costs (259) - (253)
Restructuring & legal costs (290) (194) (262)
Reported profit before tax from continuing operations 5,589 5,333 10,539
Operating profit Half year to 31 December 2023 Half year to 31 December 2022 Year to 30 June
2023
£'000 £'000 £'000
Underlying operating profit from continuing operations 6,737 6,005 12,109
Amortisation of acquired intangible assets (35) (35) (70)
Acquisition costs (259) - (253)
Restructuring & legal costs (290) (194) (262)
Reported operating profit from continuing operations 6,153 5,776 11,524
The Group reports underlying profit and underlying earnings in addition to the
financial information prepared under IFRS. The Board believes that underlying
profit and underlying earnings provide additional and more consistent measures
of underlying performance by removing items that are not closely related to
the Group's day-to-day trading activities and which would typically be
excluded in assessing the value of the business. The following items have been
treated as non-underlying, and consequently disclosed separately from
underlying profit and earnings:
Amortisation of intangible assets that are acquired through business
combinations of £35,000 (H1 FY23: £35,000) are treated as non-underlying, as
they are non-cash items that are based on judgements about their value and
economic life and are not related to the Group's underlying trading
performance.
IAS 19 net pension scheme finance costs of £104,000 (H1 FY23: £24,000) are
considered non-underlying as they are notional non-cash items, and as they are
past service costs they are not related to current trading activities.
Acquisition costs of £259,000 (H1 FY23: £nil) relate to the acquisition of
ARP Group, which completed in December 2023. These are legal fees which are
treated as non-underlying as they are one-off, non-trading items.
Restructuring and legal costs of £290,000 (H1 FY23: £194,000) represent the
costs of a restructuring of the Water Management division's sales and
commercial teams and, in the prior year, legal costs incurred in resolving a
commercial dispute. These items are considered non-underlying as they are
significant, one-off items that are non-trading or, in the case of
restructuring costs, incremental to normal operations undertaken to add value
to the business that will not be incurred in the ongoing business.
5. Segmental analysis
In accordance with IFRS 8 Operating Segments, the segmental analysis below
follows the Group's internal management reporting structure.
Revenue Half year to 31 December 2023 Half year to 31 December 2022 Year to 30 June
2023
£'000 £'000 £'000
Water Management 22,027 19,581 39,841
Building Envelope 18,680 18,324 34,559
Housebuilding Products 7,105 7,048 14,735
Group Revenue 47,812 44,953 89,135
Operating profit Half year to 31 December 2023 Half year to 31 December 2022 Year to 30 June
2023
£'000 £'000 £'000
Water Management 3,521 2,510 5,765
Building Envelope 2,384 2,589 4,084
Housebuilding Products 1,741 1,622 3,518
Unallocated central costs (909) (716) (1,258)
Underlying operating profit from continuing operations 6,737 6,005 12,109
Non-underlying items (584) (229) (585)
Operating profit from continuing operations 6,153 5,776 11,524
6. Discontinued operations
Discontinued operations relate to the Levolux business which was divested by
the Group on 26 August 2022 and therefore disclosed as held for sale at 30
June 2022. The liabilities held for resale at 30 June 2022 were £3,859,000
and the assets held for resale were written down to £3,859,001 to reflect the
sales proceeds of £1 received on 26 August 2022. In the year to 30 June 2023,
a further loss on disposal of £1,750,000 was recorded, representing cash held
by Levolux at the date of disposal, other related write downs and transaction
costs.
The results of Levolux included in the condensed consolidated interim
statement of comprehensive income are as follows:
Half year to 31 December 2023 Half year to 31 December 2022 Year to 30 June
2023
£'000 £'000 £'000
Revenue - 436 436
Underlying operating loss - - (350)
Write back of Assets held for sale - - 350
Loss on disposal - (1,795) (1,750)
Loss before taxation - (1,795) (1,750)
Tax credit - - -
Loss after taxation - (1,795) (1,750)
7. Finance expenses
Half year to Half year to Year to
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
Finance costs - Bank overdrafts 14 12 29
- Revolving credit facility 358 327 754
- Interest on lease 88 80 154
liabilities
460 419 937
- IAS 19 net pension scheme 104 24 48
finance costs
564 443 985
8. Tax expense
Half year to 31 December 2023 Half year to 31 December Year to 30 June
2022 2023
£'000 £'000 £'000
Current tax:
UK corporation tax - continuing operations 729 438 1,704
Overseas tax 138 10 (6)
Amounts under provided in previous years - - 175
Total current tax 867 448 1,873
Deferred tax:
Origination and reversal of temporary differences 618 399 404
Amounts over provided in previous years - - (206)
Rate change adjustment - - 115
Total deferred tax 618 399 313
Total tax expense 1,485 847 2,186
Deferred tax recognised in other comprehensive income:
Actuarial losses on pension schemes (246) (1,801) (932)
Cash flow hedge (15) 17 (70)
Tax credited to other comprehensive income (261) (1,784) (1,002)
Total tax charge/(credit) in the statement of comprehensive income
1,224 (937) 1,184
9. Dividends
The Directors have approved an interim dividend per share of 3.45 pence (FY23
interim dividend: 3.40 pence) which will be paid on 8 April 2024 to
shareholders on the register at the close of business on 23 February 2024. The
cash cost of the dividend is expected to be £1,240,000. As the dividend was
approved after the statement of financial position date, it has not been
accrued in the interim consolidated financial statements. A final dividend per
share of 6.90 pence in respect of the 2022/23 financial year was paid at a
cash cost of £2,482,000 during the six months to 31 December 2023.
10. Share Based Payments
During the period the Group awarded 210,000 options (H1 FY23: 225,000) under
the Executive Share Option Scheme ("ESOS"). These options have an exercise
price of 160.3 pence and require certain criteria to be fulfilled before
vesting. 90,000 existing options were exercised during the period (H1 FY23:
15,380) and no existing options lapsed (H1 FY23: 104,620).
Total awards granted under the Group's Long Term Incentive Plans ("LTIP")
amounted to 316,472 (H1 FY23: 307,264). LTIP awards have no exercise price but
are dependent on certain vesting criteria being met. 130,251 existing LTIP
awards were exercised during the period (H1 FY23: 22,175) and 53,691 existing
LTIP awards lapsed (H1 FY23: 48,717).
11. 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:
Half year to 31 December Half year to 31 December 2022 Year to
2023 30 June
2023
£'000 £'000 £'000
Net profit attributable to equity holders - continuing operations 4,104 4,486 8,353
Net profit attributable to equity holders - discontinued operations - (1,795) (1,750)
4,104 2,691 6,603
000s 000s 000s
Basic weighted average number of shares 35,942 35,806 35,806
Dilutive potential ordinary shares - employee share options 292 334 386
Diluted weighted average number of shares 36,234 36,140 36,192
Half year to 31 December Half year to 31 December 2022 Year to
2023 30 June
2023
Pence Pence Pence
Basic earnings per share:
Continuing operations 11.4 12.5 23.3
Discontinued operations - (5.0) (4.9)
11.4 7.5 18.4
Diluted earnings per share:
Continuing operations 11.3 12.4 23.1
Discontinued operations - (5.0) (4.9)
11.3 7.4 18.2
11. Earnings per share (continued)
Calculation of underlying earnings per share:
Half year to 31 December Half year to 31 December 2022 Year to
2023 30 June
2023
£'000 £'000 £'000
Reported profit before taxation from continuing operations 5,589 5,333 10,539
Amortisation of acquired intangible assets 35 35 70
IAS 19 net pension scheme finance costs 104 24 48
Restructuring & legal costs 290 194 262
Acquisition costs 259 - 253
Underlying profit before taxation from continuing operations 6,277 5,586 11,172
Tax at underlying Group tax rate of 25.4% (1,594) (1,184) (2,234)
(2022/23 first half year: 21.2%; full year: 20.0%)
Underlying earnings from continuing operations 4,683 4,402 8,938
Weighted average number of shares 35,942 35,806 35,806
13.0p 12.3p 25.0p
Basic underlying earnings per share from continuing operations
Diluted underlying earnings per share from continuing operations 12.9p 12.2p 24.7p
12. Movement in borrowings
Cash at
bank /bank overdrafts Bank loans Net bank cash/(debt) Lease liabilities Total borrowings
£'000 £'000 £'000 £'000 £'000
At 1 July 2023 5,995 (8,848) (2,853) (5,234) (8,087)
Cash flow movements 1,222 (5,622) (4,400) 419 (3,981)
Non-cash movements - (86) (86) - (86)
Effect of foreign exchange rates (31) - (31) - (31)
At 31 December 2023 7,186 (14,556) (7,370) (4,815) (12,185)
Cash at
bank /bank overdrafts Bank Net bank cash/(debt) Lease liabilities Total borrowings
loans
£'000 £'000 £'000 £'000 £'000
At 1 July 2022 8,284 (13,000) (4,716) (5,132) (9,848)
Cash flow movements (2,334) 262 (2,072) 362 (1,710)
Non-cash movements - (44) (44) 193 149
Effect of foreign exchange rates 12 - 12 - 12
At 31 December 2022 5,962 (12,782) (6,820) (4,577) (11,397)
13. Related party disclosure
The Group has a related party relationship with its Directors and with its UK
pension schemes. There has been no material change in the nature of the
related party transactions described in note 30 of Alumasc's Report and
Accounts for the year ended 30 June 2023.
14. Acquisition of ARP
On 21 December 2023 the Group acquired the entire issued share capital of ARP
Group, a manufacturer and distributor of specialist metal rainwater and
architectural aluminium products, for an initial cash consideration of £8.5
million together with a £0.2 million adjustment for net debt and working
capital, with a further £1.5 million payable subject to ARP Group's
performance over the two years ending November 2024 and a further £1.2
million working capital adjustment payable by the end of January 2024. ARP's
consolidated unaudited results for the year ended February 2023 showed revenue
of £10.8 million and adjusted EBITDA of £1.3 million. Reported net assets at
completion were £3.3 million, including £2.2 million of net cash.
Directly attributable acquisition costs of £259,000 were incurred in the
period in respect of the transaction and these have been recognised as
non-recurring expenses in the income statement. Business combination
accounting is expected to be finalised within 12 months from the completion
date of the acquisition.
Responsibility Statement
The Directors confirm that, to the best of their knowledge, the condensed
consolidated interim financial statements have been prepared in accordance
with Alternative Investment Market ("AIM") Rule 18.
On behalf of the Board
Paul
Hooper
Simon
Dray
Chief
Executive
Group Finance Director
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