REG - Alumasc Group Plc - Interim Results
07/02/2023 07:00
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RNS Number : 0867P Alumasc Group PLC 07 February 2023
Tuesday 7 February 2023
The Alumasc Group plc
Interim results
Confidence in delivering full year expectations
Alumasc (ALU.L) the sustainable building products, systems and solutions Group
today announces results for the six months ended 31 December 2022.
Commenting on the interim results, Paul Hooper, Chief Executive of Alumasc
said:
"This was a strong first half performance, against a comparative that included
significant sales to Chek Lap Kok airport in Hong Kong. While the short term
market remains uncertain, we enter the second half with encouraging momentum
and a record half year order book, which includes the next phase of the Chek
Lap Kok project, giving us confidence in the delivery of our expectations for
the full year."
Financial Overview: continuing operations
· Group revenues up by 5% to £45.0m (H1 FY22: £42.6m), with organic
growth and pricing offsetting significant export orders in the first half of
the prior year:
o Building Envelope delivered a 29% increase in revenues to £18.3m (H1
FY22: £14.2m).
o Housebuilding Products delivered a 24% increase in revenues to £7.0m (H1
FY22: £5.7m).
o Water Management delivered revenues of £19.6m (H1 FY22: £22.8m),
reflecting significant export project sales in the prior half year.
· Underlying((1)) operating margin((2)) of 13.4% (H1 FY22: 15.3%):
o Building Envelope underlying operating margin of 14.1% (H1 FY22: 13.3%).
o Housebuilding Products underlying operating margin of 23.0% (H1 FY22:
19.3%).
o Water Management underlying operating margin of 12.8% (H1 FY22: 18.1%),
reflecting the prior year divisional mix benefitting from large export orders.
· Underlying((1)) profit before tax of £5.6m (H1 FY22: £6.3m).
· Reported profit before tax of £5.3m (H1 FY22: £6.2m).
· Underlying((1)) earnings per share of 12.3p (H1 FY22: 14.1p).
· Dividend per share increased to 3.40p (H1 FY22: 3.35p) reflecting the
Board's confidence in the future performance of the business.
Outlook
· Building Envelope and Housebuilding Products had strong first half
performances and good momentum going into the second half.
· Water Management has seen lower first half export volumes, but a
stronger performance is expected in H2 as a result of the next phase of the
Chek Lap Kok airport project and other overseas project phasing.
· Whilst market conditions remain uncertain in the near term, the Group
continues to demonstrate its ability to outperform underlying markets through
innovation and service, as well as manage costs and improve efficiency.
· As a result, the Board remains confident in the Group achieving its
full year expectations.
· With a clear strategy and the majority of revenues directly linked to
sustainability benefits to its customers, the Group remains well positioned to
deliver long term market outperformance.
Notes:
((1) ) A reconciliation of underlying to statutory profit is provided
in note 4 to the interim financial statements
((2) ) Underlying operating margin: underlying operating profit as a
percentage of sales
Enquiries:
The Alumasc Group plc +44 (0) 1536 383844
Paul Hooper, Chief Executive
Simon Dray, Group Finance Director
Peel Hunt (Broker)
Mike Bell +44 (0) 20 7418 8831
Ed Allsopp
finnCap (Nominated Adviser)
Julian Blunt, Edward Whiley + 44 (0)207 220 0561
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
Group sales from continuing operations for the six months ended 31 December
2022 were £45.0m (2021: £42.6m). UK sales were strong, increasing by £6.7m
(18%). In particular, the Building Envelope and Housebuilding Products
Divisions had strong first half performances driven by very good sales, the
result of efforts in taking market share and the launch of new products into
existing and adjacent markets.
As expected, Export sales in the period were lower, due to the timing of
several significant contracts in Asia. The prior period included c.£2.8m of
sales of Gatic access and drainage products into a number of projects, notably
Chek Lap Kok airport in Hong Kong. This project was successfully completed in
the prior year, and the next phase is due to commence in the final quarter of
this financial year. Export sales outside Asia were also lower, due to
project timings and in particular to the temporary slowing of sales to the
Middle East caused by the FIFA World Cup in Qatar, but are expected to recover
in the second half of the year.
The results of Levolux, which was sold by the Group on 26 August 2022, have
been excluded from continuing operations in the current and prior period, and
presented as discontinued operations.
Operational Review
Water Management
H1 FY23 H1 FY22
Revenue £19.6m £22.8m
Underlying operating profit £2.5m £4.1m
Underlying operating margin 12.8% 18.1%
Operating profit £2.5m £4.1m
Following two successive years of record performance, the Water Management
Division fell back predominantly due to the timing of several significant
projects, including at Chek Lap Kok airport in Hong Kong, which delivered
c.£2.8m of sales to the prior period. Export sales are expected to recover in
the second half of the financial year, as the next phase of the Chek Lap Kok
development starts.
UK sales were strong, with several large projects for Gatic Slotdrain and
Access Covers and another very good performance by our Architectural Aluminium
business, Skyline, which benefitted from the successful introduction of a
number of new products to complement the existing ranges.
With its greater exposure to self-build projects, Rainclear had a slower
performance than the prior period, due to pressure on household income.
However, it mitigated some of these effects through work with regional
housebuilders, and the high profile launches of its new canopy and veranda
ranges, both of which are showing early promise.
Building Envelope
Continuing operations H1 FY23 H1 FY22*
Revenue £18.3m £14.2m
Underlying operating profit £2.6m £1.9m
Underlying operating margin 14.1% 13.3%
Operating profit £2.6m £1.9m
* The results for the half year to 31 December 2021 have been re-presented to
show the Levolux business as a discontinued operation.
The Building Envelope Division had a very strong first half year, growing its
revenue by 29%, the result of investment in high quality employees and some
new products, including a very successful flat to pitch roof system along with
the successfully increased promotion of the CO(2) reducing product, Olivine.
Previously weaker areas of the UK have improved significantly following the
strengthened representation in those areas. A good level of Academy work was
won in the year. Some reasonably significant cost increases were successfully
passed on. The Roofing business continues to focus on high end specification
offers supported by the highest standards, and a customer focused service
level which delivers low carbon systems combined with safety in installation,
all supported by long term warranties. This has allowed the business to
increase market share in its core areas.
Housebuilding Products
H1 FY23 H1 FY22
Revenue £7.0m £5.7m
Underlying operating profit £1.6m £1.1m
Underlying operating margin 23.0% 19.3%
Operating profit £1.4m £1.1m
Timloc, our Housebuilding Products business, had an outstanding first half,
growing its revenue by 24%. This was achieved through the extended
distribution of its existing products and the continued growth of new
products, including the significant launch of its new range of Tile Vents.
These have been very well received by the marketplace for their quality and
service proposition and take Timloc into a new distribution channel of roofing
merchants.
Despite the challenges of cost increases, which were successfully passed on,
the Housebuilding Products Division managed to increase its operating margin
to a record 23.0%. Improved efficiencies, outstanding next day service and
rigorous cost controls contributed significantly to this performance.
Timloc's continued investment and focus on sustainability, including being the
first building products company to become a carbon neutral manufacturer,
leaves it well positioned to support the Housebuilders drive to build carbon
zero homes. During 2022 Timloc moved all of its company vehicles to fully
electric.
Strategic Overview
The significant improvement in the Group's performance across the last two
years emanate from the execution of the Group's strategy which includes the
stated objectives of:
Short-term:
· Continuing to simplify, streamline and reduce fixed costs across the
Group.
Long-term:
· Drive organic growth across the Group by increasing market share and
entering adjacent categories.
· Continual efficiency improvements.
· Geographical expansion within selected territories.
· New product development focused on environmental and sustainable
solutions.
· Bolt-on M&A to expand products and markets.
· Use of sustainable materials with recycled and fully recyclable
materials.
We have managed to streamline the business and have removed reasonable levels
of cost in the last three years, while continuing to invest in capacity and
capability. The Group's full year operating margin from its continuing
operations increased from 8.4% in FY20 to 14.9% in FY22, and our medium term
target is to increase this to between 15% and 20%.
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 18% increase in UK
revenues is testament to that.
Alumasc is also in a very strong position to benefit from the move towards
sustainable construction and green buildings, both in terms of its own 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 Net Zero planning is underway.
Financial Review
Discontinued operations
The Group sold Levolux Ltd on 26 August 2022, for an initial consideration of
£1. Additional consideration, contingent on a subsequent sale of the
business, is unlikely to be paid and has not been included in the loss on
disposal. Levolux's trading results up to the date of disposal, which were
formerly reported within the Building Envelope division, have been presented
within discontinued operations, together with the loss arising on disposal.
Results for H1 FY22 have been re-presented accordingly.
Tax rate and earnings per share
The Group's underlying tax rate was 21.2%, above the H1 FY22 rate of 19.4%
reflecting the increase of UK corporation tax rate from 19% to 25% which comes
into effect from April 2023, part way through our financial year ending 30
June 2023. Underlying earnings per share for the period were 12.3p, 12.8%
lower than H1 FY22 (14.1p), reflecting the lower underlying profit before tax
and the higher effective tax rate. Basic earnings per share were 7.5p (H1
FY22: 11.2p).
Cash flows and net debt
H1 FY23 H1 FY22
£m
£m
Underlying operating profit from continuing operations 6.0 6.5
Underlying depreciation/amortisation 1.4 1.3
Underlying EBITDA 7.4 7.8
Change in working capital (1.9) (2.1)
Deferred VAT paid - (0.6)
Operating cash flow from continuing operations 5.5 5.1
Discontinued operation - (0.7)
Operating cash flow from continuing and discontinued operations 5.5 4.4
Capital expenditure (1.4) (1.4)
Interest (0.3) (0.2)
Tax (0.1) (1.3)
Pension deficit funding (1.0) (1.3)
Lease payments (0.4) (0.4)
Dividend payments (2.4) (2.2)
Purchase of own shares (0.1) (0.4)
Sub total (0.2) (2.8)
Cash outflow on Levolux disposal (1.7) -
Other non-underlying payments (0.2) (0.3)
Net cash flow (2.1) (3.1)
Net bank debt at 31 December 6.8 4.1
The Group's operating cash inflow was £5.5m (H1 FY22: £4.4m). Operating cash
inflow from continuing operations as a percentage of underlying operating
profit was 92% (H1 FY22: 78%). Supply chain disruption and cost price
inflation eased over the period, allowing partial reversal of the selective
inventory investments made over FY22 to maintain customer service. Provided
these pressures continue to ease, this trend will continue in H2 FY23. Average
trade working capital as a percentage of sales for the half year was 19.4% (H1
FY22: 14.6%).
Capital expenditure was £1.4m (H1 FY22: £1.4m), representing 111% of
depreciation (H1 FY22: 111%). Key investments were made on capacity/capability
upgrades (£0.9m), tooling for new products (£0.4m) and system upgrades
(£0.1m).
Tax paid of £0.1m included the benefit of the capital allowance
super-deduction, which is in place until April 2023.
The £1.0m (H1 FY22: £1.3m) of pension fund payments reflects the £1.1m
reduction in annual employer contributions, from 1 October 2022, agreed at the
latest triennial valuation.
The disposal of Levolux, which completed on 26 August 2022, led to a £1.7m
cash outflow in the period, which represented transaction costs together with
cash held by Levolux on disposal.
The net cash outflow for the period was £2.1m (H1 FY22: £3.1m). Net bank
debt at December 2022 was £6.8m (December 2021: £4.1m).
Pensions and net assets
The Group's IAS19 pension deficit increased to £8.4m at December 2022 (June
2022: £2.1m, December 2021: £2.5m), as a result of market volatility
reducing the value of the scheme's growth assets. This reduction exceeds the
reduction in liabilities over the period, driven by the increase in bond
yields, which was partially hedged, as intended, by matching assets. The
deficit remains within performance scenarios considered at the 2022 triennial
valuation, and the Group continues to expect the lower level of contributions
agreed with trustees to bring the scheme to a fully funded position over a
reasonable timeframe.
Group net assets decreased in the period by £5.0m to £20.7m, as the retained
profit was exceeded by the increase in pension deficit, payment of the final
dividend for FY22 and the loss on disposal of Levolux. Post tax return on
investment (rolling twelve month underlying operating profit from continuing
operations divided by capital invested) was 23.1% (December 2022: 19.0%, June
2022: 25.8%).
Interim Dividend
The Board has decided to declare an increased interim dividend of 3.40p (H1
FY22: 3.35p) per ordinary share, payable on 6 April 2023 to shareholders on
the register on 24 February 2023.
Outlook
The Group has entered the second half with encouraging momentum, and a record
half year order book fortified by the £7.0 m+ Chek Lap Kok Airport project.
As a result, the Board remains confident in the Group achieving its full year
expectations.
Whilst market expectations remain uncertain in the near term, the Group
continues to demonstrate its ability to outperform underlying markets, through
innovation and service, as well as manage costs and improve efficiency. With
the majority of revenues directly linked to sustainability benefits to its
customers, the Board remains confident in the significant opportunity
available to the Group over the longer term.
Paul Hooper, Chief Executive
7 February 2023
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
for the half year to 31 December 2022
Half year to 31 December 2022 Half year to 31 December 2021 (restated)* Year to
30 June 2022
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 44,953 - 44,953 42,649 - 42,649 89,381
Cost of sales (28,449) - (28,449) (26,889) - (26,889) (56,015)
Gross profit 16,504 - 16,504 15,760 - 15,760 33,366
Net operating expenses
Net operating expenses before non-underlying items
(10,499) - (10,499) (9,224) - (9,224) (20,033)
Other non-underlying items 4 - (229) (229) - (35) (35) (634)
Net operating expenses (10,499) (229) (10,728) (9,224) (35) (9,259) (20,667)
Operating profit 4, 5 6,005 (229) 5,776 6,536 (35) 6,501 12,699
Net finance costs 7 (419) (24) (443) (265) (67) (332) (668)
Profit before taxation 5,586 (253) 5,333 6,271 (102) 6,169 12,031
Tax expense 8 (1,184) 337 (847) (1,217) (34) (1,251) (2,421)
Profit for the period from continuing operations 4,402 84 4,486 5,054 (136) 4,918 9,610
Discontinued operations:
Loss after taxation for the period from discontinued operations 6
- (1,795) (1,795) (816) (84) (900) (16,657)
Profit/(loss) for the period 4,402 (1,711) 2,691 4,238 (220) 4,018 (7,047)
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Actuarial (loss)/gain on defined benefit pensions, net of tax (25)
(5,404) 616
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 480
(27) 83
Exchange differences on retranslation of foreign operations
12 10 161
(15) 93 641
Other comprehensive (loss)/gain for the period, net of tax (5,419) 709 616
Total comprehensive (loss)/profit for the period, net of tax (2,728) 4,727 (6,431)
Earnings per share: Pence Pence Pence
Basic earnings per share
- Continuing operations 11 12.5 13.7 26.8
- Discontinued operations (5.0) (2.5) (46.5)
11 7.5 11.2 (19.7)
Diluted earnings per share
- Continuing operations 12.4 13.5 26.4
- Discontinued operations (5.0) (2.5) (46.5)
11 7.4 11.0 (20.1)
* The results for the half year to 31 December 2021 have been re-presented to
show the Levolux business as a discontinued operation.
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 2022
31 December 31 December 30 June
2022 2021 2022
(Unaudited) (Unaudited) (Audited)
Notes £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment - owned assets 12,733 12,368 12,573
Property, plant and equipment - right of use assets 4,444 5,081 4,926
Goodwill 8,526 18,705 8,526
Other intangible assets 2,035 3,152 2,126
Deferred tax assets 2,094 630 529
29,832 39,936 28,680
Current assets
Inventories 14,376 13,488 13,394
Trade and other receivables 15,462 16,895 18,786
Derivative financial assets 314 - 325
Cash at bank 12 5,962 2,878 8,284
36,114 33,261 40,789
Total assets 65,946 73,197 69,469
Liabilities
Non-current liabilities
Interest bearing loans and borrowings 12 (12,782) (6,963) (13,000)
Lease liability (3,696) (4,475) (4,251)
Employee benefits payable (8,375) (2,520) (2,114)
Provisions (811) (1,251) (1,061)
Deferred tax liabilities (1,907) (1,010) (1,730)
(27,571) (16,219) (22,156)
Current liabilities
Trade and other payables (15,259) (16,449) (19,031)
Lease liability (881) (1,145) (881)
Provisions (1,033) (471) (1,360)
Corporation tax payable (491) (419) (309)
Derivative financial liabilities - (165) -
(17,664) (18,649) (21,581)
Total liabilities (45,235) (34,868) (43,737)
Net assets 20,711 38,329 25,732
Equity
Share capital 4,517 4,517 4,517
Share premium 445 445 445
Capital reserve - own shares (587) (435) (601)
Hedging reserve 236 (134) 263
Foreign currency reserve 228 65 216
Profit and loss account reserve 15,872 33,871 20,892
Total equity 20,711 38,329 25,732
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
for the half year to 31 December 2022
Half year to Half year to Year to
31 December 31 December 30 June
2022 2021 2022
(Unaudited) (Unaudited) (Audited)
Notes £'000 £'000 £'000
Operating activities
Operating profit from continuing operations 5,776 6,501 12,699
Adjustments for:
Depreciation 1,249 1,137 2,459
Amortisation 98 90 257
Loss/(gain) on disposal of property, plant and equipment 12 17 (18)
Increase in inventories (982) (2,617) (2,573)
Decrease/(increase) in receivables 3,324 3,175 (2,536)
(Decrease)/increase in trade and other payables (3,796) (3,218) 279
Movement in provisions (577) (379) (298)
Cash contributions to retirement benefit schemes (967) (1,307) (2,561)
Share based payments 130 50 118
Cash generated by operating activities of continuing operations 4,267 3,449 7,826
Operating loss from discontinued operations - (1,097) (2,125)
Depreciation/amortisation - 113 224
Movement in working capital from discontinued operations - 259 (438)
Cash utilised by operating activities of discontinued operations - (725) (2,339)
Tax paid (139) (1,320) (1,615)
Net cash inflow from operating activities 4,128 1,404 3,872
Investing activities
Purchase of property, plant and equipment (1,378) (1,361) (2,449)
Payments to acquire intangible fixed assets (7) (5) (123)
Proceeds from sales of property, plant and equipment - - 22
Payments for disposal costs of discontinued operation (1,686) - -
Net cash outflow from investing activities (3,071) (1,366) (2,550)
Financing activities
Bank interest paid (264) (141) (356)
Equity dividends paid (2,381) (2,233) (3,434)
Draw down of amounts borrowed - 1,000 7,000
Principal paid on lease liabilities (362) (352) (713)
Interest paid on lease liabilities (80) (83) (169)
Purchase of own shares (54) (430) (526)
Exercise of share based payments 12 70 -
Refinancing costs (262) - -
Net cash (outflow)/inflow from financing activities (3,391) (2,169) 1,802
Net (decrease)/increase in cash at bank and bank overdrafts (2,334) (2,131) 3,124
Net cash at bank and bank overdraft brought forward 8,284 4,999 4,999
Net (decrease)/increase in cash at bank and bank overdraft (2,334) (2,131) 3,124
Effect of foreign exchange rate changes 12 10 161
Net cash at bank and bank overdraft carried forward 12 5,962 2,878 8,284
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the half year to 31 December 2022
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
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 2021 4,517 445 (406) (217) 55 31,751 36,145
Profit for the period - - - - - 4,018 4,018
Exchange differences on retranslation of foreign operations - - - - 10 - 10
Net gain on cash flow hedges - - - 103 - - 103
Tax on derivative financial liability - - - (20) - - (20)
Share based payments - - - - - 50 50
Actuarial gain on defined benefit pension schemes, net of tax - - - - - 616 616
Own shares used to satisfy exercise of share awards - - 402 - - - 402
Acquisition of own shares - - (431) - - - (431)
Exercise of share based incentives - - - - - (331) (331)
Dividends - - - - - (2,233) (2,233)
At 31 December 2021 4,517 445 (435) (134) 65 33,871 38,329
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the half year to 31 December 2022
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 2022.
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 2022 and in accordance with AIM Rule 18, and the
same accounting policies will be adopted in the 2023 annual financial
statements.
The consolidated financial statements of the Group as at and for the year
ended 30 June 2022 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 2022 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 2022 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 2022.
These condensed consolidated interim financial statements were approved by the
Board of Directors on
7 February 2023.
The Group performed ahead of the Base Case trading scenario modelled as part
of the 30 June 2022 year end Going Concern review, and also compared to 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 2022, namely the valuation of
defined benefit pension obligations and the recognition of revenue and profit
on contracts with customers where revenue is recognised over time.
During the six months ended 31 December 2022, management reassessed and
updated its estimates in respect of retirement benefit obligations based on
market data available at 31 December 2022. The resulting impact was a £7.2
million pre-tax actuarial loss, calculated using IAS 19 conventions,
recognised in the six month period to 31 December 2022.
3. Risks and uncertainties
A summary of the Group's principal risks and uncertainties was provided on
pages 46 to 49 of Alumasc's Report and Accounts for the year ended 30 June
2022. 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:
- Continued inflation and interest increases, negatively impacting
the Group's construction markets;
- Prolonged period of bad weather impacting the Group's
construction markets; and
- Potential impact of the current geopolitical uncertainty
globally.
4. Underlying to statutory profit reconciliation
Profit before tax Half year to 31 December 2022 Half year to 31 December 2021 Year to 30 June
2022
£'000 £'000 £'000
Underlying profit before tax from continuing operations 5,586 6,271 12,725
Brand amortisation (35) (35) (70)
IAS 19 net pension scheme finance costs (24) (67) (60)
Restructuring costs (194) - (564)
Reported profit before tax from continuing operations 5,333 6,169 12,031
Operating profit Half year to 31 December 2022 Half year to 31 December 2021 Year to 30 June
2022
£'000 £'000 £'000
Underlying operating profit from continuing operations 6,005 6,536 13,333
Brand amortisation (35) (35) (70)
Restructuring costs (194) - (564)
Reported operating profit from continuing operations 5,776 6,501 12,699
In the presentation of underlying profits, management disclose the
amortisation of acquired brands and IAS 19 pension costs consistently as
non-underlying items because they are material non-cash and non-trading items
that would typically be excluded in assessing the value of the business.
In addition, management has presented certain items as non-underlying as they
are non-recurring items that are judged to be significant enough to affect the
understanding of the underlying trading performance of the business. In the
period to December 2022, these related to one-off professional fees incurred
in resolving a commercial dispute.
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 2022 Half year to 31 December 2021 Year to 30 June
2022
£'000 £'000 £'000
Water Management 19,581 22,783 47,564
Building Envelope 18,324 14,197 29,389
Housebuilding Products 7,048 5,669 12,428
Group Revenue 44,953 42,649 89,381
Operating profit Half year to 31 December 2022 Half year to 31 December 2021 Year to 30 June
2022
£'000 £'000 £'000
Water Management 2,510 4,118 8,753
Building Envelope 2,589 1,894 3,580
Housebuilding Products 1,622 1,096 2,447
Unallocated central costs (716) (572) (1,447)
Underlying operating profit from continuing operations 6,005 6,536 13,333
Non-underlying items (229) (35) (634)
Operating profit from continuing operations 5,776 6,501 12,699
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. At the year end the discontinued operation had liabilities of
£3,859,000. The assets held for resale were written down to a value
equivalent to the liabilities to reflect the sales proceeds of £1 received on
26 August 2022. In the period to 31 December 2022, a further loss on disposal
of £1,795,000 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 2022 Half year to 31 December 2021 Year to 30 June
2022
£'000 £'000 £'000
Revenue 436 3,620 7,820
Underlying operating loss - (1,013) (1,957)
Brand amortisation - (84) (168)
Write down of goodwill - - (10,179)
Write down of brand - - (874)
Write down of Assets held for sale - - (3,859)
Loss on disposal (1,795) - -
Loss before taxation (1,795) (1,097) (17,037)
Tax credit - 197 380
Loss after taxation (1,795) (900) (16,657)
7. Finance expenses
Half year to Half year to Year to
31 December 31 December 30 June
2022 2021 2022
£'000 £'000 £'000
Finance costs - Bank overdrafts 12 19 48
- Revolving credit facility 327 163 391
- Interest on lease 80 83 169
liabilities
419 265 608
- IAS 19 net pension scheme 24 67 60
finance costs
443 332 668
8. Tax expense
Half year to 31 December 2022 Half year to 31 December 2021 Year to 30 June
2022
£'000 £'000 £'000
Current tax:
UK corporation tax - continuing operations 438 868 1,094
- discontinued - (197) (380)
operations
Overseas tax 10 54 207
Amounts over provided in previous years - - (16)
Total current tax 448 725 905
Deferred tax:
Origination and reversal of temporary differences 399 329 833
Amounts under provided in previous years - - 78
Rate change adjustment - - 225
Total deferred tax 847 329 1,136
Total tax expense 847 1,054 2,041
Tax charge on continuing operations 847 1,251 2,421
Tax credit on discontinued operations - (197) (380)
Total tax expense 847 1,054 2,041
Deferred tax recognised in other comprehensive income:
Actuarial (losses)/gains on pension schemes (1,801) 205 (9)
Cash flow hedge 17 20 113
Tax (credited)/charged to other comprehensive income (1,784) 225 104
Total tax (credit)/charge in the statement of comprehensive income (937) 1,279 2,145
9. Dividends
The Directors have approved an interim dividend per share of 3.40 pence
(2021/22: 3.35 pence) which will be paid on 6 April 2023 to shareholders on
the register at the close of business on 24 February 2023. The cash cost of
the dividend is expected to be £1,217,000. In accordance with accounting
requirements, 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 6.65 pence in respect of the 2021/22
financial year was paid at a cash cost of £2,381,000 during the six months to
31 December 2022.
10. Share Based Payments
During the period the Group awarded 225,000 options (2021/22: 160,000) under
the Executive Share Option Scheme ("ESOS"). These options have an exercise
price of 150 pence and require certain criteria to be fulfilled before
vesting. 15,380 existing options were exercised during the period (2021/22:
78,810) and 104,620 existing options lapsed (2021/22: 41,190).
Total awards granted under the Group's Long Term Incentive Plans ("LTIP")
amounted to 307,264 (2021/22: 214,020). LTIP awards have no exercise price but
are dependent on certain vesting criteria being met. 22,175 existing LTIP
awards were exercised during the period (2021/22: 228,511) and 48,717 existing
LTIP awards lapsed (2021/22: 109,713).
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 2021 Year to
2022 30 June
2022
£'000 £'000 £'000
Net profit attributable to equity holders - continuing operations 4,486 4,918 9,610
Net profit attributable to equity holders - discontinued operations (1,795) (900) (16,657)
2,691 4,018 (7,047)
000s 000s 000s
Basic weighted average number of shares 35,806 35,821 35,825
Dilutive potential ordinary shares - employee share options 334 549 586
Diluted weighted average number of shares 36,140 36,370 36,411
Half year to 31 December Half year to 31 December 2021 Year to
2022 30 June
2022
Pence Pence Pence
Basic earnings per share:
Continuing operations 12.5 13.7 26.8
Discontinued operations (5.0) (2.5) (46.5)
7.5 11.2 (19.7)
Diluted earnings per share:
Continuing operations 12.4 13.5 26.4
Discontinued operations (5.0) (2.5) (46.5)
7.4 11.0 (20.1)
11. Earnings per share (continued)
Calculation of underlying earnings per share:
Half year to 31 December Half year to 31 December 2021 Year to
2022 30 June
2022
£'000 £'000 £'000
Reported profit before taxation from continuing operations 5,333 6,169 12,031
Brand amortisation 35 35 70
IAS 19 net pension scheme finance costs 24 67 60
Restructuring costs 194 - 564
Underlying profit before taxation from continuing operations 5,586 6,271 12,725
Tax at underlying Group tax rate of 21.2% (1,184) (1,217) (2,469)
(2021/22 first half year: 19.4%; full year: 19.4%)
Underlying earnings from continuing operations 4,402 5,054 10,256
Weighted average number of shares 35,806 35,821 35,825
Underlying earnings per share from continuing operations 12.3p 14.1p 28.6p
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 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)
Cash at
bank /bank overdrafts Bank loans Net bank cash/(debt) Lease liabilities Total borrowings
£'000 £'000 £'000 £'000 £'000
At 1 July 2021 4,999 (5,936) (937) (5,606) (6,543)
Cash flow movements (2,131) (1,000) (3,131) 352 (2,779)
Non-cash movements - (27) (27) (366) (393)
Effect of foreign exchange rates 10 - 10 - 10
At 31 December 2021 2,878 (6,963) (4,085) (5,620) (9,705)
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 29 of Alumasc's Report and
Accounts for the year ended 30 June 2022.
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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