Final Results

Alumasc Group PLC 5 September 2000 THE ALUMASC GROUP PLC PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 30 JUNE 2000 * Alumasc, the premium engineering and building products group, reports an increase in profits for its refocused business, with strong profit growth in precision engineering and building products. * Pre-tax profits from continuing activities rose by 12 per cent to £10.1 million (1999: £9.0 million). Earnings per share were 10 per cent higher at 18.6p (1999: 16.9p). * Turnover from continuing activities was 6 per cent ahead at £127.6 million (1999: £120.2 million) with operating profits 10 per cent higher at £10.2 million (1999: £9.3 million). * The Directors are recommending an unchanged final dividend of 6.05p per share, making an unchanged 8.5p per share for the full year, payable on 30 October 2000 to shareholders on the register at the close of business on 22 September 2000. * Five businesses were disposed of during the year in accordance with the restructuring programme commenced in 1999. * A profit before tax of £0.5 million was earned in relation to these discontinued activities. * Cash generated by the business of £1.2 million was augmented by cash from disposals of £4.6 million to give a net cash balance of £4.8 million at the year end. * The Board intends to pursue a more active policy on share buy- backs. * John McCall, Chairman, comments in his statement: 'The successful reorganisation of our business coupled with its strengthening performance and a responsible dividend policy places Alumasc in a very strong position from which to build future growth. Major investment opportunities are opening up for expanding our precision engineering business into growth markets such as telecommunications. Acquisition opportunities which build on our market strengths are also being reviewed. The Board is confident in the prospects for new business in our Engineering Division and the ability of our building products business to grow its range of premium building products.' Enquiries: The Alumasc Group plc 01536-383844 John McCall (Chairman & Chief Executive) Bankside Consultants Limited 020-7220 7477 Charles Ponsonby Chairman's Statement Overview The advance in pre-tax profit from continuing operations for the year ended 30 June 2000 from £9.0 million to £10.1 million is a positive result for the Group's refocused business. Strong profit growth in our restructured precision engineering and building product divisions resulted from new business initiatives, reviewed in the Operations section of this report, and the benefits of rationalisation. The performance of the Group's industrial product activities was less satisfactory. Operating profit from continuing activities was 10 per cent ahead at £10.2 million (1999 : £9.3 million), on turnover of £127.6 million, ahead by 6 per cent. Pre-tax profit from continuing activities rose by 12 per cent to £10.1 million while earnings per share were 10 per cent higher at 18.6p. A positive cash flow before financial transactions of £1.2 million was augmented by the proceeds from disposals of £4.6 million to give a net cash balance of £4.8 million at the year end. The refocusing of Alumasc during the year around its premium engineering and building products activities progressed according to plan. The financial impact of the restructuring programme, including disposals, was dealt with in last year's accounts and is reviewed in the Financial Review section of this report. A further disposal of a non-core business - Tate Access Floors - took place at the end of June 2000, after the business had been managed back to profit. The directors are recommending an unchanged final dividend of 6.05p per share, making a total of 8.5p per share for the year (1999 : 8.5p), covered 2.2 times by earnings from continuing activities. The Future The successful reorganisation of our business coupled with its strengthening performance and a responsible dividend policy places the Group in a very strong position from which to build future growth. The Board believes that, to date, there has been no reflection of this progress in the price at which the Company's shares have been traded, frustrating its objective of achieving a more realistic valuation of the Company relative to its performance and prospects. In this, we share the frustration of fellow shareholders and the Boards of many other smaller quoted companies and we have reviewed the options available to Alumasc for both the creation and the realisation of shareholder value. The Board has outlined three related routes for building shareholder value through business development: organic growth of the restructured core business; acquisitions which seek to leverage market strengths; and exploitation of the internet revolution Fundamental to all options for the future is the managed growth of the Group's business. The Board is in process of appointing a Group Managing Director to assume the primary responsibility for this activity in conjunction with the re-formed managements of our business units. The consistent success of our precision engineering business is beginning to open up major investment opportunities for expansion, particularly into growth markets such as the telecommunications industry. The Board is simultaneously reviewing with its advisors the opportunities which exist for acquisitions which build on Alumasc's market strengths and the substantial changes which are occurring within its markets. Leonardo Information Services Limited - the Group's 55 per cent owned venture for developing the Leonardo building products search engine - will shortly be relaunched to offer net services and web design to the building industry. In addition to reviewing the options for developing the business, the Board has considered, with its advisors, a range of structural issues, including its policy on buying-back its own shares. 1.25 million shares, equivalent to 3.1 per cent of issued capital, were bought and cancelled during the past year. The generation of cash from the sale of non-core assets has augmented the Group's resources and the Board intends to pursue a more active policy on share buy-back, without compromising the Group's ability to develop and invest in its business. Board Changes Debbie Howard (age 36), a board member at Lex Service Plc, was appointed a non-executive director of the Group in October 1999. Following the successful restructuring of Alumasc's building products activities, Martin Wood is now fully committed to the development of Leonardo Information Services Limited and, accordingly, resigned from the Board of Alumasc and his executive responsibilities on 31 August 2000. I would like to express my thanks to Martin on behalf of the Board for his significant contribution during his five years with Alumasc. When appointed, the Group Managing Director will continue to work with myself as Executive Chairman, with the support of Jon Pither, Deputy Chairman and senior independent director. Prospects The last financial year ended strongly, providing encouragement for further progress in the current year. In the short term, however, the Group will feel the effect of the changes taking place at Rover and it is too early to predict the on-going requirements for this major customer. This in no way diminishes the Board's confidence in the prospects for new business in our engineering division and the ability of our building products business to grow its range of premium building products. Financial Review Result Pre-tax profits from the Group's continuing businesses moved forward to £10.1 million (1999 : £9.0 million net of exceptional costs of £0.55 million). The result is net of a £0.3 million loss from Leonardo Information Services Limited, a building and construction products internet search engine in which the Group acquired a 55% interest at a cost of £0.8 million during the year. Disposals During the year ended 30 June 2000, the Group continued the process of restructuring begun in 1999. In total, five businesses were sold during the year and, in separate transactions, four vacant freehold properties were also sold. Because the profit impact of known and expected disposals was reflected as far as possible in the published accounts at 30 June 1999, the main profit effect of the disposals in 1999/2000 has been an overall pre-tax credit to discontinued activities of £0.5 million (1999 : loss of £18.3 million) arising primarily from the sale of Tate Access Floors in June 2000. Balance sheet Shareholders' funds increased to £38.8 million (1999 : £36.6 million), as a result of the retained profit for the year, reduced by the effect of the purchase of own shares, and the impact of negative goodwill of Tate Access Floors under FRS 10, credited within the results of discontinued activities. Earnings and tax Earnings per share from continuing activities increased to 18.6p (1999 : 16.9p after exceptional costs) after a tax charge up from 23.8 per cent to 27.3 per cent, in line with expectations. Dividend The directors are recommending an unchanged final dividend per share of 6.05 pence, after an unchanged interim dividend of 2.45 pence, bringing the year's total to 8.5 pence (1999 : 8.5 pence), covered 2.2 times by earnings from continuing activities. Net cash and cash flow At 30 June 2000, the Group had net cash of £4.8 million (1999 : net debt of £0.7 million). The improvement reflects continuing strong cash inflow from operating activities of £10.2 million (1999 : £12.8 million) and a cash inflow from disposals, including disposal of land and buildings, of £4.6 million (1999 : £1.1 million), reduced by capital expenditure, the purchase of own shares, tax and dividends. In addition to the normal corporation tax payment on 31 March 2000, the Group suffered a further cash outflow of £0.8 million as the government's new tax payment arrangements came into effect from January 2000 onwards. Within cash inflow from operations, working capital increased by £3.4 million primarily because of higher trading activity in the last quarter compared with 1999. Capital expenditure Capital expenditure during the year amounted to £4.0 million (1999 : £7.2 million) compared with depreciation of a virtually identical amount (1999 : £4.6 million). The capital expenditure total was the lowest for several years, partly because the discontinued businesses were amongst the most capital intensive in the Group, and partly because of delays in some expenditure planned for the last quarter. Purchase of own shares The Group purchased 500,000 shares for cancellation in October 1999 at a cost of £0.55 million followed by a further 750,000 shares in June 2000 at a cost of £0.83 million. Shares purchased amounted to 3.1 per cent of the issued share capital. Application of new accounting policies The principal new accounting policy to apply to the Group in 1999/2000 has been FRS 15 - Tangible Fixed Assets - which, inter alia, affects our policy on the revaluation of freehold and long leasehold buildings. The Group has elected to adopt the transitional provision of the FRS, under which previous valuations will be retained and will be treated as 'cost' for future accounting purposes. More details will be given in note 1(e) to the accounts. Adoption of this policy has not affected the results for the year. Operations Review Continuing Activities 1999/2000 1998/1999 £m £m Engineering Products Turnover 90.6 82.9 Division Operating Profit 6.6 6.7 Precision Components Turnover 44.3 39.5 Operating Profit 3.7 3.2 Alumasc Precision Limited, the Group's non-ferrous diecasting and machining specialists, made considerable progress, benefiting from business initiatives and investment in recent years. As a result, there was an encouraging level of new product and customer introductions which conform with the company's strategy to broaden the sectors into which its specialist services are sold. These results were achieved despite the major disruptions in the UK automotive sector which followed the receivership of Transtec - a significant competitor - in December 1999 and the break up of the Rover Group, the division's largest single customer. The closure of Rover's Longbridge assembly plant during the transfer of Cowley assembly facilities will have a considerable impact on the level of activity in the company in the short term. The continuing drive to raise standards and extend the service provided by Alumasc Precision was rewarded during the year by the achievement of QS 9000 at two of the company's three sites, and the prestigious VDA6 German approval. These are essential to the continued development of Alumasc Precision into alternative and expanding precision markets such as Telecommunications. Crossland, the Group's automotive stampings business, was successful in developing its first tier customer base despite intense competition and the uncertainties present in the UK automotive sector referred to above. 1999/2000 1998/1999 £m £m Industrial Products Turnover 46.3 43.4 Operating Profit 2.9 3.5 The headline growth in turnover reported for the year was contrary to underlying activity trends, and was principally due to the impact of rising metal prices on sales by Brock Metals. A G Standard and Alumasc Grundy are both suppliers to the UK brewing industry where structural changes accelerated at an unprecedented rate. The more remarkable events included the acquisition of the brewing activities of Whitbread and Bass, two of the UK's largest brewers, by the Belgian based Interbrew, and such rapid consolidation inevitably affected the Group's traditional activities. A G Standard made good progress introducing new brand support products for the soft drinks and retailing sectors, with a number of further initiatives in development. Alumasc Grundy again performed well in its confined market for aluminium beer containers although the take-up of the 'Non- Returnable' keg introduced during the previous year was disappointing. Brock Metal saw prices rise for its zinc and aluminium alloys reflecting movements in the primary metals. However, margins remained under pressure, reflecting customer and competitive conditions. The UK secondary metals sector has suffered in recent years from over capacity and Brock's strong relative performance reflects the efficiency of its operations and the commercial determination of management. Bissell's high export content is largely into non-US dollar markets which inevitably impacted its financial performance in the year. The business is re-positioning itself to counter this, focusing on value-adding manufacturing and the development of higher specification spring pin products. Continuing Activities 1999/2000 1998/1999 £m £m Building Products Turnover 37.0 37.3 Operating 4.1 3.2 Profit Alumasc Exterior Turnover 24.3 25.2 Building Products Operating 2.5 1.9 Profit Alumasc Exterior Building Products was established during the previous year by merging the four businesses of Alumasc Building Products, Euroroof, MR Swisspan and Corofil Morden into a single entity. The benefits of this merger began to show in the year under review with substantial cost savings enabling a more satisfactory profit to be achieved on a similar level of turnover. An element of disruption from re-structuring continued into the year from difficulties associated with the installation of new business systems. The short term impact on service levels which resulted was corrected during the second half year and the new management team coped well with a period of major change. New business initiatives during the year included the introduction of new roofing and wall coating systems which extend the range into new sectors of activity. The sales and marketing functions have also been re-organised to support the drive by AEBP to expand its business from the strong base now established. 1999/2000 1998/1999 £m £m Alumasc Interior Turnover 5.2 4.7 Building Products Operating 0.8 0.6 Profit Alumasc Interior Building Products performed well due to the strong performance of the Pendock brand of casing and enclosure systems. Pendock has been repositioned to lower its exposure to the local authority market and raise its presence in commercial and institutional applications. Turnover exceeded £5 million for the first time providing a base from which to seek new market and brand opportunities. Tate Access Floors was sold in June 2000 and is treated as discontinued in the Group's accounts. The product range was viewed as outside the Alumasc family of high specification building products and the opportunity to sell the business to its U.S. licensor was of mutual benefit. Alumasc Interior's management was successful in managing Tate back into modest profit making the sale possible on satisfactory terms. 1999/2000 1998/1999 £m £m Alumasc Construction Turnover 7.5 7.4 Products Operating 0.8 0.7 Profit Alumasc Construction Products earned a similar profit in the year under review on sales which moved significantly out of weak export markets into the firm UK market. This was assisted by the previous introduction by Elkington Gatic of new linear drainage and lightweight cover products which made good progress in the year. The gradual recovery in construction activity in the Far East will hopefully lead to stronger demand in those markets for Gatic's high performance access covers later in the current year. As part of a parallel initiative, SCP will shortly be sourcing components from the Far East in order to extend its range of structural support products by the most cost effective route. CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 30 June 2000 2000 1999 Contin Discont Contin Discont uing inued uing inued activi activit Total activi activit Total ties ies ties ies £000 £000 £000 £000 £000 £000 Turnover 127,638 8,402 136,040 120,157 27,140 147,297 Cost of sales 94,722 6,578 101,300 88,759 31,406 120,165 ------ ------- ------ ------ ------- ------- Gross profit/(loss) 32,916 1,824 34,740 31,398 (4,266) 27,132 Selling and 9,474 785 10,259 9,506 2,363 11,869 distribution costs Administrative 13,221 986 14,207 12,578 4,990 17,568 expenses ------ ------- ------ ------ ------- ------- Operating 10,221 53 10,274 9,314 (11,6190 (2,305) profit/(loss) Share of operating profit in associates 111 - 111 100 - 100 Profit/(loss) on sale of business - 426 426 - (6,659) (6,659) activities Interest receivable 58 - 58 697 - 697 Interest payable (329) - (329) (1,150) - (1,150) ------ ------- ------ ------ ------- ------- Profit/(loss) on ordinary activities 10,061 479 10,540 8,961 (18,278) (9,317) before taxation Taxation 2,746 211 2,957 2,132 (1,490) 642 charge/(credit) ------ ------- ------ ------ ------- ------- Profit/(loss) on ordinary activities 7,315 268 7,583 6,829 (16,788) (9,959) after taxation Equity minority 145 - 145 (21) - (21) interest ------ ------- ------ ------ ------- ------- Profit/(loss) for the financial year attributable to the members of the 7,460 268 7,728 6,808 (16,7880 (9,980) parent company Dividends 3,323 - 3,323 3,429 - 3,429 ------ ------- ------ ------ ------- ------- Retained profit/(loss) for 4,137 268 4,405 3,379 (16,788) (13,409) the financial year ===== ===== ===== ===== ===== ===== Earnings per share and diluted earnings per share - see note 18.6p 0.7p 19.3p 16.9p (41.6p) (24.7p) 1 ===== ===== ===== ===== ===== ===== Included in the operating profit/(loss) for continuing activities is £nil (1999: £552,000) and for discontinued activities is £nil (1999: £10,001,000) of exceptional costs. Included in continuing activities for the year is turnover of £33,000 and operating losses of £330,000 relating to the acquisition of Leonardo Information Services Limited. Statement of Total Recognised Gains and Losses There are no recognised gains or losses in the year ended 30 June 2000 other than the profits attributable to shareholders of the Company of £7,728,000 (1999: loss £9,980,000). CONSOLIDATED BALANCE SHEET at 30 June 2000 2000 1999 £000 £000 Fixed assets Intangible assets 356 88 Tangible assets 28,490 32,204 Investments 451 859 --------- --------- 29,297 33,151 ===== ===== Current assets Stocks 11,744 12,662 Debtors 28,821 28,755 Cash at bank and in hand 5,623 521 --------- --------- 46,188 41,938 ===== ===== Creditors: amounts falling due within one year Trade and other creditors 28,435 30,893 Taxation 1,899 1,496 Proposed dividend 2,358 2,440 --------- --------- 32,692 34,829 --------- --------- Net current assets 13,496 7,109 --------- --------- Total assets less current liabilities 42,793 40,260 Creditors: amounts falling due after more 3,525 3,349 than one year Provisions for liabilities and charges 228 282 Equity minority interest 224 35 --------- --------- Net assets 38,816 36,594 ===== ===== Capital and reserves Called up share capital 4,889 5,043 Share premium 26,907 26,891 Revaluation reserve 2,271 2,374 Capital redemption reserve 156 - Profit and loss account 4,593 2,286 --------- --------- Equity shareholders' funds 38,816 36,594 ===== ===== CONSOLIDATED CASH FLOW STATEMENT at 30 June 2000 2000 1999 £000 £000 Net cash inflow from operating activities 10,213 12,794 --------- --------- Returns on investments and servicing of finance Interest received 58 697 Interest paid (328) (1,129) Interest element of finance lease payments (1) (21) --------- --------- Net cash outflow from returns on investments and servicing of finance (271) (453) --------- --------- Taxation UK corporation tax paid (1,951) (2,450) --------- --------- Capital expenditure and financial investment Purchase of tangible fixed assets (3,919) (7,152) Proceeds from sale of tangible fixed assets 149 1,224 Proceeds from sale of investments 441 - --------- --------- (3,329) (5,928) --------- --------- Acquisitions and disposals Proceeds from sale of business activities 4,604 1,056 Purchase of subsidiary undertaking (802) - Net cash acquired with subsidiary 750 - undertaking Purchase of investments - (205) --------- --------- 4,552 851 --------- --------- Equity dividends paid (3,405) (3,428) --------- --------- Cash inflow before use of liquid resources 5,809 1,386 and financing --------- --------- Financing Issue of ordinary share capital 18 18 Repurchase of ordinary share capital (562) - Repayment of amounts borrowed (125) (3,342) Capital element of finance lease payments (38) (404) -------- ------- (707) (3,728) -------- --------- Increase/(decrease) in cash in the year 5,102 (2,342) ===== ===== NOTES 1 Earnings per share Both the earnings per share and the diluted earnings per share are based on the profit for the financial year of £7,728,000 (1999: loss £9,980,000) and on the weighted average number of ordinary shares in issue during the year ended 30 June 2000 of 40,008,259 (1999: 40,325,477). 2 Audited accounts The above financial information does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The comparative financial information is based on the statutory accounts for the financial year ended 30 June 1999. These accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Register of Companies. Statutory accounts for the year ended 30 June 2000 will be delivered to the Registrar.

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