- Part 2: For the preceding part double click ID:nRSA6193Ia
- - (1) - - (1)
Actuarial loss on defined benefit pensions, net of tax - - - - - (3,172)
(3,172)
Dividends 8 - - - - - (2,208) (2,208)
Share based payments - - - - - 181 181
Acquisition of own shares (net) - - (313) - - - (313)
Exercise of share based incentives - - - - - (299) (299)
At 30 June 2016 4,517 445 (931) (221) 50 12,720 16,580
1 basis of preparation
The Alumasc Group plc is incorporated and domiciled in England and Wales. The
company's ordinary shares are traded on the London Stock Exchange.
The group's financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS), as adopted by the European
Union as they apply to the financial statements of the group for the year
ended 30 June 2016, and the Companies Act 2006.
The financial information set out in this announcement does not constitute the
group's statutory information for the years ended 30 June 2016 or 2015, but is
derived from the group's 2016 statutory financial statements. The group's
consolidated financial information has been prepared in accordance with
accounting policies consistent with those adopted for the year ended 30 June
2016. Statutory accounts for 2015 have been delivered to the registrar of
companies and those for 2016 will be delivered following the group's Annual
General Meeting. The auditor has reported on these accounts, their reports
were unqualified and did not contain statements under the Companies Act 2006,
s498(2) or (3).
Prior year figures have been restated, where applicable, due to the
presentation in 2015/16 of Dyson Diecastings as a discontinued operation. This
business was sold on 30 June 2016.
Going concern
The group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the Strategic
Report above. The financial position of the group, its cashflows and
liquidity position are set out in the above financial statements.
The group has committed borrowing facilities of £12.5 million which expire in
August 2020. In addition, the group has recently renewed overdraft facilities
totalling £2 million for another year. At 30 June 2016 the group's net cash
resources were £8.6 million (2015: £0.9 million).
On the basis of the group's financing facilities and current operating and
financial plans and sensitivity analyses, the Board is satisfied that the
group has adequate resources to continue in operational existence for the
foreseeable future and accordingly continues to adopt the going concern basis
in preparing the financial statements.
2 judgments and estimates
The key sources of estimation uncertainty that have a significant risk of
causing material adjustment to the carrying amounts of assets and liabilities
within the next financial year are the measurement and valuation of defined
benefit pension obligations and the recognition of revenues and profit on
construction contracts.
Measurement of defined benefit pension obligations requires estimation of
future changes in inflation, mortality rates and the selection of a suitable
discount rate.
Revenue recognised on construction contracts is determined by the assessment
of the stage of completion of each contract. The requirement for Directors'
judgment is limited in most cases due to the involvement of quantity surveyors
during the assessment process.
3 Principal risks and uncertainties
Risks and uncertainties Mitigating actions taken
Economic, construction market and foreign exchange risks Comment Alumasc is a UK-based group of businesses with the majority of group sales made to the construction sector in the UK, which can be cyclical in nature. • Strategic positioning in markets/sectors anticipated to grow faster than the UK construction market with potential for growth through the cycle.• Develop international sales (particularly in North America, the Middle East and Far East).• Increasing sales
The UK's 'Brexit' vote adds to economic uncertainty at the current time. to the more resilient building refurbishment (relative to new build) markets.• Increasing mix of UK sales towards the stronger London & South East regional markets.• Development of added value systems and solutions that are either required by building
regulation and/or specified by architects and engineers.• Develop and retain strong management teams.• Ensure Alumasc products are market leading and differentiated against the competition to improve specification and to protect margin.• Management has
developed contingency plans to mitigate risks arising from Brexit uncertainty, including the further development of international markets in view of the recent depreciation of Sterling.• The group has some exposure to currency risk, particularly the Euro,
following Sterling's recent devaluation. This is being mitigated by purchasing efficiencies, some selling price increases and currency hedging.
Loss of key employees Comment Generally, staff turnover is low. • Market competitive remuneration and incentive arrangements.• Changes in numbers of people employed monitored in monthly subsidiary board meetings.• Key and high potential employees identified and monitored on a local and group basis.• Focused training
and development programmes for high potential and key people.• Exit interviews held for senior people who leave the business, with learning points shared.
Product/service differentiation relative to competition not developed or maintained Comment Innovation and an entrepreneurial spirit is encouraged in all group companies. Some 20% of sales are earned from products launched in the last three years. • Devolved operating model with both group and local management responsible for identifying opportunities and emerging niche market trends.• Group-wide innovation best practice days are held annually.• 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.
Risk of loss of customers. CommentGenerally good track record of customer retention. The group has a diversified customer base with the largest customer representing only circa 2% of group revenues. • Develop and maintain strong relationships through regular contact and seeking always to provide superior products, systems, solutions and service.• Good project tracking and enquiry/quote conversion rate tracking.• Increasing use of, and investment in,
customer relationship management (CRM) software.• Organisational and cultural flexibility to adapt to changing and emerging customer needs.
Pension obligations Comment Alumasc's pension obligations are material relative to its market capitalisation and net asset value. • Continue to grow the business so the relative affordability of pension contributions is improved over time.• Maintain a good, constructive and open relationship with Pension Trustees.• Meet agreed pension funding commitments.• Pension scheme management
is a regular group board agenda item.• Use of specialist advisors on actuarial, investment and advisory matters.• Monitor and seek market opportunities to reduce gross pension liabilities, through, for example, transfers or partial buy outs.
Product warranty/recall risks Comment The group has a good track record with regard to the management of these risks and does not have a history of significant claims. • Robust internal quality systems, compliance with relevant industry standards (eg ISO, BBA etc) and close co-operation with customers in their design and specification of the group's products.• Group insurance programme to cover larger potential risks and
exposures, 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 also install (as well as supply) building products (i.e. Levolux and Blackdown).• Internal audits of quality and supply chain and design procedures targeted at higher risk areas, particularly
Solar Shading and Roofing.
Reliance on key suppliers Comment Whilst the group does not have undue concentration on any single or small group of suppliers, certain Alumasc businesses do have key strategic suppliers, some of whom are located in the Far East. • Annual reviews of supplier concentration as part of strategic planning/formal business risk review process, with alternative suppliers sought and developed where practicable.• Regular key supplier visits, good relationships maintained and quality control
checks/training carried out.• Regular reviews as to whether work should be brought back to the UK (or elsewhere) as economic conditions evolve, including the impact of foreign exchange rate movements.
Business continuity risks CommentThe group has not previously experienced any significant loss of operational capability causing business continuity issues. Whilst the likelihood of a catastrophic loss is low, the impact if it were to happen could be high. Particular areas of focus this year with regard to risk mitigation have been cyber security and resilience of energy supplies. • Business continuity plans prepared at each business, having regard to the specific risk factors.• Advice is being taken from insurers on continuous improvement of these plans.• IT disaster recovery plans are in place, with close to real time back up
arrangements using either off-site servers or cloud technology.• Cyber security reviews carried out at a group level and in all operating companies during the year.• Reviews of energy supply and contingency arrangements reviewed during the year, with back
up supplies in place as needed.• Critical plant and equipment is identified, with associated breakdown/recovery plans, including assessment of engineering spares held on site.
Strategic development risks and change projects CommentThere are execution risks around a number of current strategic change projects, including new product launches, the relocation of Timloc to a new property in 2017 and various ERP and CRM systems implementations. • Key strategic change projects are governed by Steering Committees sponsored by the managing director of the business, with group executive director involvement, supported by independent specialist consultants where necessary (for example IT and
property).• Project risk reviews conducted and updated regularly.• Project plans established and monitored monthly.• Project boards established. The 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.
Health and safety risks Comment The group has a strong overall track record of health & safety performance, with the number of lost time accidents significantly reduced over the last 10 years. • Health and safety is the number one priority of management and the first agenda item on all subsidiary and group board agendas.• Risk assessments are carried out and safe systems of work documented and communicated.• All safety incidents and significant
near misses reported to board level monthly. Appropriate remedial action taken.• Group health and safety best practice days are held twice a year, chaired by the Chief Executive.• Annual audit of health and safety in all group businesses by independent
consultants.• Specific focus on improving health and safety in higher risk operations.
Credit risk CommentThe group has a generally good record in managing credit risks. Risks can be higher amongst smaller building contractor customers, who are often installers of the group's products. • Most credit risks are insured.• Large export contracts are backed by letters of credit, performance bonds, guarantees or similar.• Any risks taken above insured limits in the Building Products division are subject to strict delegated authority limit sign
offs, including group executives' sign off for uninsured risks above £50k.• Credit checks when accepting new customers/prior to accepting new work.• The group employs experienced credit controllers, and aged debt reports are reviewed in monthly Board
meetings.
4 segmental analysis - continuing operations
In accordance with IFRS 8 "Operating Segments", the segmental analysis below
follows the group's internal management reporting structure.
The Chief Executive reviews internal management reports on a monthly basis,
with performance being measured based on segmental operating result as
disclosed below. Performance is measured on this basis as management believes
this information is the most relevant when evaluating the impact of strategic
decisions.
Inter-segment transactions are entered into applying normal commercial terms
that would be available to third parties. Segment results, assets and
liabilities include those items directly attributable to a segment.
Unallocated assets comprise cash and cash equivalents, deferred tax assets,
income tax recoverable and corporate assets that cannot be allocated on a
reasonable basis to a reportable segment. Unallocated liabilities comprise
borrowings, employee benefit obligations, deferred tax liabilities, income tax
payable and corporate liabilities that cannot be allocated on a reasonable
basis to a reportable segment.
Since the publication of Alumasc's 2015 Report and Accounts the group's
operating segments have been revised to reflect changes to internal management
responsibilities and the reports reviewed by the Chief Executive. The
principal changes are the combination of our former Construction Products and
Rainwater and Drainage businesses into the new Water Management segment to
reflect the formation of the Alumasc Water Management Solutions brand in July
2015, and the separate analysis of our Housebuilding & Ancillary Products
business this year. The segmental analysis of comparative data for the period
ended 30 June 2015 has been re-presented to show Dyson Diecastings as a
discontinued operation where necessary.
Analysis by reportable segment 2015/16 Revenue
External Inter-segment Total Segmental OperatingResult
£'000 £'000 £'000 £'000
Solar Shading & Screening 17,359 - 17,359 954
Roofing & Walling 40,045 6 40,051 3,959
Water Management 26,269 1,299 27,568 3,489
Housebuilding & Ancillary Products 8,560 10 8,570 1,420
Sub-total 92,233 1,315 93,548 9,822
Elimination / Unallocated costs - (1,315) (1,315) (1,346)
Total 92,233 - 92,233 8,476
£'000
Segmental operating result 8,476
Brand amortisation (268)
IAS 19 pension scheme administration costs (510)
Total operating profit from continuing operations 7,698
7,698
Capital expenditure
Segment Assets Segment Liabilities Property,Plant &Equipment OtherIntangibleAssets Depreciation Amortisation
£'000 £'000 £'000 £'000 £'000 £'000
Solar Shading & Screening 19,266 (7,178) 80 57 70 214
Roofing & Walling 16,281 (10,185) 71 - 146 104
Water Management 11,439 (5,256) 212 34 422 17
Housebuilding & Ancillary Products 6,350 (2,390) 488 91 213 27
Sub-total 53,336 (25,009) 851 182 851 362
Unallocated & Discontinued 15,678 (27,425) 88 - 219 4
Total 69,014 (52,434) 939 182 1,070 366
366
Analysis by reportable segment 2014/15 (re-stated) Revenue
External Inter-segment Total Segmental OperatingResult
£'000 £'000 £'000 £'000
Solar Shading & Screening 16,007 - 16,007 929
Roofing & Walling 40,577 8 40,585 4,461
Water Management 25,935 1,109 27,044 3,272
Housebuilding & Ancillary Products 7,776 - 7,776 1,137
Sub-total 90,295 1,117 91,412 9,799
Elimination / Unallocated costs - (1,117) (1,117) (1,485)
Total 90,295 - 90,295 8,314
£'000
Segmental operating result 8,314
Brand amortisation (268)
IAS 19 pension scheme administration costs (455)
Total operating profit from continuing operations 7,591
Capital expenditure
Segment Assets Segment Liabilities Property,Plant &Equipment OtherIntangibleAssets Depreciation Amortisation
£'000 £'000 £'000 £'000 £'000 £'000
Solar Shading & Screening 18,171 (4,708) 127 267 46 168
Roofing & Walling 16,759 (9,420) 84 5 139 111
Water Management 11,522 (4,913) 475 18 438 21
Housebuilding & Ancillary Products 5,497 (2,192) 203 127 191 11
Sub-total 51,949 (21,233) 889 417 814 311
Unallocated & Discontinued 15,945 (30,732) 275 5 1,134 28
Total 67,894 (51,965) 1,164 422 1,948 339
Analysis by geographical segment 2015/16
United North Middle Far Rest of
Kingdom Europe America East East World Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Sales to external customers 84,217 3,262 1,860 337 1,593 964 92,233
Segment non-current assets 24,397 - - - - - 24,397
Analysis by geographical segment 2014/15 (re-stated)
United North Middle Far Rest of
Kingdom Europe America East East World Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Sales to external customers 81,527 2,576 2,004 2,134 1,432 622 90,295
Segment non-current assets 26,808 - - - 1 - 26,809
Segment revenue by geographical segment represents revenue from external
customers based upon the geographical location of the customer. The analyses
of segment non-current assets are based upon location of the assets.
5 UNDERLYING to Statutory profit reconciliation
2015/16 2014/15 (re-stated)
Operating profit Profit before tax Operating profit Profit before tax
£'000 £'000 £'000 £'000
Underlying profit 8,476 8,261 8,314 7,722
Less: Brand amortisation (268) (268) (268) (268)
Less: IAS 19 pension scheme administration costs (510) (510) (455) (455)
Less: IAS 19 net pension scheme finance costs - (724) - (711)
Statutory profit from continuing operations 7,698 6,759 7,591 6,288
Discontinued operations 27 928 (896) (1,466)
Total statutory profit 7,725 7,687 6,695 4,822
7,687
6,695
4,822
Underlying profits are stated prior to brand amortisation and IAS 19 pension
scheme finance costs, as these are non-trading and non-cash items, and prior
to IAS 19 pension scheme administration costs, as this is a non-trading
expense.
6 DISCONTINUED OPERATIONS
Discontinued operations in 2015/16 relate to the sale of the trade and assets
of the Dyson Diecastings business on 30 June 2016. Discontinued operations in
2014/15 relate to the sale of the trade and assets of Pendock Profiles in
September 2014 and the sale of the trade and assets of Alumasc Precision
Components in June 2015. Further details are provided in the Strategic Report
above. The results of discontinued operations included in the consolidated
statement of comprehensive income are as follows:
Dyson Diecastings
£'000
Year ended 30 June 2016
Revenue 6,556
Cost of sales (5,897)
Gross profit 659
Net operating expenses (632)
Operating profit 27
Non-cash gain on disposal of discontinued operations 1,401
Costs of disposal of discontinued operations (500)
Profit before taxation 928
Tax credit 378
Profit after taxation 1,306
1,306
Dyson Diecastings Alumasc PrecisionComponents PendockProfiles
Period to 30 June 2015 £'000 Period to 26 June 2015£'000 Period to 30 September 2014£'000 Total£'000
Year ended 30 June 2015 (re-stated)
Revenue 7,787 16,672 785 25,244
Cost of sales (6,528) (17,140) (530) (24,198)
Gross profit/(loss) 1,259 (468) 255 1,046
Net operating expenses (551) (1,191) (200) (1,942)
Operating profit/(loss) 708 (1,659) 55 (896)
Non-cash (loss)/gain on disposal of discontinued operations - (300) 862 562
Costs of disposal of discontinued operations - (1,040) (92) (1,132)
Profit/(loss) before taxation 708 (2,999) 825 (1,466)
Tax (charge)/credit (156) 1,205 (12) 1,037
Profit/(loss) after taxation 552 (1,794) 813 (429)
Profit/(loss) after taxation
552
(1,794)
813
(429)
The net cash flows attributable to discontinued operations are as follows:
Dyson Diecastings
£'000
Year ended 30 June 2016
Operating cash flows 183
Investing cash flows - proceeds from sale of business 4,474
Investing cash flows - purchase of property, plant and equipment (148)
Net cash inflow 4,509
4,509
Dyson Diecastings Alumasc PrecisionComponents PendockProfiles Total
£'000 £'000 £'000 £'000
Year ended 30 June 2015 (re-stated)
Operating cash flows 874 (134) (60) 680
Investing cash flows- proceeds from sale of businesses - 4,760 1,408 6,168
Investing cash flows - purchase of property, plant and equipment (45) (136) (45) (226)
Net cash inflow 829 4,490 1,303 6,622
1,303
6,622
Details of the sale of the trade and assets of discontinued operations are as
follows:
Year ended 30 June 2016 Dyson Diecastings
£'000
Sales proceeds 4,500
Assets disposed of:
Land and buildings 1,643
Plant and equipment 454
Working capital 1,002
Gain on disposal 1,401
Costs of disposal (500)
Net gain on disposal 901
Year ended 30 June 2015 Alumasc PrecisionComponents Pendock Profiles Total
£'000 £'000 £'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
£1,040,000 are consequential intra-group restructuring costs of £171,000 and
insurance run-off premium costs of £270,000.
7 TAX EXPENSE
(a.) Tax on profit on ordinary activities
Tax charged in the statement of comprehensive income
2015/16 2014/15(re-stated)
£'000 £'000
Current tax:
UK corporation tax - continuing operations 1,433 922
- discontinued operations (697) (81)
Overseas tax 5 11
Amounts (over)/under provided in previous years (2) 39
Total current tax 739 891
Deferred tax:
Origination and reversal of temporary differences:
- continuing operations 247 543
- discontinued operations 319 (956)
Amounts over provided in previous years (48) (56)
Rate change adjustment (54) 24
Total deferred tax 464 (445)
Total tax expense 1,203 446
1,203
446
Tax charge on continuing operations 1,581 1,483
Tax credit on discontinued operations (378) (1,037)
Total tax expense 1,203 446
446
Tax recognised in other comprehensive income
Deferred tax:
Actuarial losses on pension schemes (240) (945)
Cash flow hedge 1 (43)
Tax credited to other comprehensive income (239) (988)
Total tax charge/(credit) in the statement of comprehensive income 964 (542)
964
(542)
(b.) Reconciliation of the total tax charge
The total tax rate applicable to the tax expense shown in the statement of
total comprehensive income of 15.6% is lower than (2014/15: 9.2% was lower
than) the standard rate of corporation tax in the UK of 20% (2014/15: 20.75%).
The differences are reconciled below:
2015/16 2014/15(re-stated)
£'000 £'000
Profit before tax from continuing operations 6,759 6,288
Profit/(loss) before tax from discontinued operations 928 (1,466)
Accounting profit before tax 7,687 4,822
Current tax at the UK standard rate of 20.00% (2014/15: 20.75%) 1,537 1,001
Expenses not deductible for tax purposes 139 212
Chargeable gains/use of capital losses (369) (774)
Rate change adjustment (54) 24
Tax (over)/under provided in previous years - current tax (2) 39
Tax over provided in previous years - deferred tax (48) (56)
1,203 446
1,203
446
The group's total tax charge in 2015/16 of £1,203,000 (2014/15: £446,000)
benefited from the impact of business disposals where capital gains on sale of
assets were shielded by indexation allowances and capital losses brought
forward.
(c.) Unrecognised tax losses
The group has agreed tax capital losses in the UK amounting to £20 million
(2015: £20 million) that relate to prior years. Under current legislation
these losses are available for offset against future chargeable gains. The
capital losses are able to be carried forward indefinitely. Revaluation gains
on land and buildings amount to £1 million (2015: £1 million). These have been
offset against the capital losses detailed above. A deferred tax asset has not
been recognised in respect of the net capital losses carried forward of £19
million (2015: £19 million) as they do not meet the criteria for recognition.
(d.) Deferred tax
A reconciliation of the movement in deferred tax during the year is as
follows:
Acceleratedcapitalallowances Short termtemporarydifferences Totaldeferred Pensiondeferred
Brands Hedging tax liability taxasset
£'000 £'000 £'000 £'000 £'000 £'000
At 1 July 2014 724 (10) 512 (6) 1,220 (3,584)
(Credited)/charged to the statement of comprehensive income - current year (649) (28) (54) - (731) 342
Credited to the statement of comprehensive income - prior year (56) - - - (56) -
Credited to equity - - - (43) (43) (945)
At 30 June 2015 19 (38) 458 (49) 390 (4,187)
Charged/(credited) to the statement of comprehensive income - current year 267 (8) (94) - 165 347
(Credited)/charged to the statement of comprehensive income - prior year (53) 5 - - (48) -
Charged/(credited) to equity - - - 1 1 (240)
At 30 June 2016 233 (41) 364 (48) 508 (4,080)
508
(4,080)
Deferred tax assets and liabilities are presented as non-current in the
consolidated statement of financial position.
Deferred tax assets have been recognised where it is probable that they will
be recovered. Deferred tax assets of £3.4 million (2015: £3.8 million) have
not been recognised in respect of net capital losses of £19 million (2015: £19
million).
(e.) Factors affecting the tax charge in future periods
In the Budget on 16 March 2016, the UK Government announced its intention to
further reduce the main rate of UK corporation tax to 17% with effect from 1
April 2020. Existing temporary differences on which deferred tax has been
provided may therefore unwind in future periods at this reduced rate. This
rate change was not substantively enacted at the balance sheet date. Deferred
tax assets and liabilities have been calculated based on the rate of 18%
substantively enacted at the balance sheet date.
8 dividends
2015/16 2014/15
£'000 £'000
Interim dividend for 2016 of 2.7p paid on 7 April 2016 960 -
Final dividend for 2015 of 3.5p paid on 28 October 2015 1,248 -
Interim dividend for 2015 of 2.5p paid on 7 April 2015 - 891
Final
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