Interim Results
Alumasc Group PLC
11 February 2003
THE ALUMASC GROUP plc - INTERIM ANNOUNCEMENT
• Alumasc, the high specification building and engineering group,
announces improved underlying turnover and profits for the half year to 31
December 2002, continuing the advances of the previous financial year.
• Operating profit increased by 4.2% to £3.6 m on turnover up 3.6% at
£58.2 m.
• The continuing business (which excludes Alumasc Grundy and Leonardo
Internet) increased turnover by 9.2% to £56.3 m, pre-tax profit by 57.6% to £3.8
m and EPS by 57.4% to 7.4p. This reflects both the strong performance of the
continuing business and the high profits earned by Alumasc Grundy in the
previous year.
• An unchanged interim dividend per share of 2.45p has been declared.
• Net borrowings of £2.4 m compare with £6.3 m a year previously, and
the Group's strong balance sheet places it in an excellent position for future
development.
• On continuing business, both Divisions increased their profit on
higher turnover. The expected increases in insurance and pension costs were
off-set by cost reductions elsewhere, generating higher margins.
• The Engineering Division's pre-tax profit from continuing business of
£1.9 m increased by 63.4% on turnover of £38.7 m, 11.7% ahead, with Precision
Components continuing to attract new business and the continuing Industrial
Products companies strongly ahead. These results exclude Alumasc Grundy
following the announcement in December 2002 of its planned closure.
• The Building Products Division increased turnover by 4.2% to £17.6 m,
with some signs emerging of the promised increase in public sector spending, and
pre-tax profit up 20.4% to £1.7 m, benefiting from the increased turnover and
operational improvements of the past year. These results exclude Leonardo
Internet, which was sold on 7 February 2003.
• John McCall, Chairman, stated "It would be unwise to make short term
predictions for our business given the market uncertainties that follow the
current economic and political turbulence. Alumasc continues to work on
improving its businesses by incremental steps and to build on its strengths
within the limits of its own capabilities and market realities. The improved
performance in the first half year and the previous year fuel our determination
for further progress."
Presentation:
A presentation to brokers' analysts and private client investment advisers will
be held at 11.00 a.m. today at Bankside Consultants, 123 Cannon Street, London,
EC4N 5AU.
Enquiries:
The Alumasc Group plc 01536-383844
John McCall (Chairman)
Paul Hooper (Group Managing Director)
Bankside Consultants Limited 020-7444 4167
Charles Ponsonby 07789-202 312
CHAIRMAN'S STATEMENT
Summary
It is pleasing to be able to report improved underlying turnover and profits for
the half year to 31 December 2002, continuing the advances of the previous
financial year.
The Group's operating profit of £3.6 million was 4.2% ahead of the previous
year, on turnover of £58.2 million, ahead by £2.0 million or 3.6%.
The improvement in the performance of the continuing business - which excludes
Alumasc Grundy and Leonardo Internet - was more striking, with turnover of
£56.3 million ahead by £4.7 million (+9.2%) and profit before tax 57.6% higher
at £3.8 million. This reflects both the stronger performance of our continuing
business and the high profits earned by Alumasc Grundy in the previous year. A
gain of £0.3 million was made on the sale of a surplus freehold property.
Earnings per share for the continuing business increased by 57.4% to 7.4p
(2001 : 4.7p).
The costs of closing Alumasc Grundy are estimated at £0.85 million. In
addition, goodwill of £2.4 million, originally written off to reserves in 1988,
is accounted for under FRS 2, reducing the Group's profit before tax to £0.6
million in the period and resulting in a loss after tax of £0.4 million. The
goodwill write off has no impact on cash or reserves.
The Board has declared an unchanged interim dividend of 2.45p per share which
will be payable on 7 April 2003 to shareholders on the register at close of
business on 14 March 2003.
Operations
The Group's continuing business moved ahead in the half year with both divisions
increasing their profit on higher sales. The expected increases in insurance
and pensions costs were offset by cost reductions elsewhere enabling higher
margins to be earned.
The Engineering Division's profit from continuing business of £1.9 million
increased by £0.75 million (63.4%) on turnover of £38.7 million, 11.7% ahead.
Within this division, Precision Components continued to attract new business in
the period; however, growth from new projects with customers such as BMW Mini,
Caterpillar and Orange Box was held back by weakness in some of the more
established accounts towards the end of 2002. Alumasc Precision's investment
programme was scaled back in response to these signs of market weakness. The
environmental accreditation ISO 14001 was achieved at the division's largest
facility with further audits to follow. Our Industrial Products companies,
excluding Alumasc Grundy, were strongly ahead, with Alumasc Dispense performing
particularly well on new work won during the previous year.
The Building Products Division showed further improvement, achieving sales of
£17.6 million (+4.2%) with some signs emerging of the promised increase in
public sector spending. Profit of £1.7 million (+20.4%) was a strong
performance in mixed market conditions and further demonstrated benefits from
the operational improvements of the past year.
Discontinued business
It was with great regret that the Board announced in December 2002 the February
2003 closure of Alumasc Grundy, the beer barrel manufacturing and repair
operation in Burton Upon Trent. This was for many years a core activity for
Alumasc and contributed strongly to the Group's results up until the last
financial year. However, a permanent downturn in business was flagged in
statements accompanying the 2002 report and accounts and the subsequent AGM.
The severity of this decline, brought about by permanent changes in the
structure of the UK brewing industry, has resulted in the decision to close.
The costs of closure have been taken into account in the half year results. It
is hoped that these costs will be recovered from the future development of the
site.
In keeping with its focus on premium engineering and building products, the
Group sold Leonardo Internet, its 71% owned web design business, to Eleco plc on
7 February 2003 for a total cash consideration of £200,000. The business is
treated as being discontinued for the half year to 31 December 2002.
Financial
Net borrowings rose by £0.5 million in the period, to £2.4 million, representing
gearing of 7 per cent, and compare with £6.3 million a year previously. This is
a good performance for the half year, taking normal annual cash flows into
account, and reflects a satisfactory generation of cash from operations, aided
by the sale for
£1 million of a surplus freehold property. The Group's strong balance sheet
places it in an excellent position for future development.
Board appointment
I am delighted to announce that Paul Hooper, who joined Alumasc as Group
Managing Director in April 2001, will become Chief Executive on 1 March 2003.
Prospects
It would be unwise to make short term predictions for our business given the
market uncertainties that follow the current economic and political turbulence.
Alumasc continues to work on improving its businesses by incremental steps, and
to build on its strengths within the limits of its own capabilities and market
realities.
The improved performance in the first half year and the previous year fuel our
determination for further progress.
John McCall
Chairman
11 February 2003
Unaudited Consolidated Balance Sheet
at 31 December 2002
31 December 31 December 30 June
2002 2001 2002
Notes £000 £000 £000
Fixed assets
Intangible assets 62 68 66
Tangible assets 29,931 30,850 31,425
Investments 524 452 468
_______ _______ _______
30,517 31,370 31,959
_______ _______ _______
Current assets
Stocks 12,530 12,654 11,997
Debtors 20,880 22,412 21,939
Cash at bank and in hand 989 - 2,231
_______ _______ _______
34,399 35,066 36,167
_______ _______ _______
Creditors: amounts falling due within one year
Trade and other creditors 22,024 26,195 24,572
Taxation 1,311 1,331 1,410
Proposed dividend 850 850 2,098
_______ _______ _______
24,185 28,376 28,080
_______ _______ _______
Net current assets 10,214 6,690 8,087
_______ _______ _______
Total assets less current 40,731 38,060 40,046
liabilities
Creditors: amounts falling due
after more than one year 4,161 3,952 4,831
Provisions for liabilities and 809 346 598
charges
Equity minority interest 102 92 112
_______ _______ _______
Net assets 35,659 33,670 34,505
======= ======= =======
Capital and reserves
Called up share capital 4,352 4,352 4,352
Share premium 26,907 26,907 26,907
Revaluation reserve 2,021 2,168 2,021
Capital redemption reserve 693 693 693
Profit and loss account 1,686 (450) 532
_______ _______ _______
Equity shareholders' funds 8 35,659 33,670 34,505
======= ======= =======
Unaudited Consolidated Profit and Loss Account
for the half year to 31 December 2002
Half year Half year Year
31 December 2002 31 December 2001 30 June 2002
Discontinued/ Discontinued/ Discontinued/
Continuing to be Continuing to be Continuing to be
Note activities discontinued Total activities discontinued Total activities discontinued Total
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
2 Turnover 56,272 1,976 58,248 51,527 4,673 56,200 110,526 7,121 117,647
2 Operating
profit 3,592 45 3,637 2,587 904 3,491 6,791 1,086 7,877
2 Share of
operating
profit in
associates 55 - 55 20 - 20 60 - 60
Profit on
fixed
asset
disposals 305 - 305 - - - - - -
Loss on
business
closure:
Business
closure
costs (854)
Goodwill
write
back - (2,388) (3,242) (3,242) - - - - - -
Net
interest
payable (199) - (199) (226) - (226) (460) - (460)
_____ ______ ______ ______ _____ ______ _____ _____ _____
Profit/
(loss)
on
ordinary
activities
before
taxation 3,753 (3,197) 556 2,381 904 3,285 6,391 1,086 7,477
4 Taxation
(charge)/
credit (1,170) 236 (934) (748) (272) (1,020) (1,925) (329) (2,254)
_____ ______ ______ ______ _____ ______ _____ _____ _____
Profit/
(loss) on
ordinary
activities
after
taxation 2,583 (2,961) (378) 1,633 632 2,265 4,466 757 5,223
Equity
minority
interest (6) - (6) (1) - (1) (24) - (24)
_____ ______ ______ ______ _____ ______ _____ _____ _____
Profit/
(loss) for
the
financial
period
attributable
to
shareholders 2,577 (2,961) (384) 1,632 632 2,264 4,442 757 5,199
Dividends (850) - (850) (850) - (850) (2,948) - (2,948)
_____ ______ ______ ______ _____ ______ _____ _____ _____
Retained
profit/(loss)
for the
financial
period 1,727 (2,961) (1,234) 782 632 1,414 1,494 757 2,251
_____ ______ ______ ______ _____ ______ _____ _____ _____
5 Earnings/
(loss)
per share
and
diluted
earnings/
(loss)
per share 7.4p (8.5)p (1.1)p 4.7p 1.8p 6.5p 12.7p 2.2p 14.9p
_____ ______ ______ ______ _____ ______ _____ _____ _____
6 Dividend
per share 2.45p 2.45p 8.5p
______ ______ _____
Statement of Total Recognised Gains and Losses
There are no recognised gains or losses other than the loss attributable to
shareholders of the Company of
£384,000 for the half year to 31 December 2002 (profit of £2,264,000 for the
half year to December 2001 and profit of £5,199,000 for the year to 30 June
2002).
Unaudited Consolidated Cash Flow Statement
for the half year to 31 December 2002
Half year Half year Year
31 December 31 December 30 June
2002 2001 2002
£000 £000 £000
Cash inflow from operating 2,892 3,376 12,271
activities*
_______ _______ _______
Returns on investments and servicing of finance
Net interest paid (199) (226) (460)
Dividends paid to minority shareholders (17) (23) -
_______ _______ _______
(216) (249) (460)
_______ _______ _______
Taxation
UK corporation tax paid (911) (56) (938)
_______ _______ _______
Capital expenditure and financial
investment
Purchase of tangible fixed assets (1,238) (3,687) (4,487)
Proceeds from sale of tangible fixed 1,060 132 226
assets
_______ _______ _______
(178) (3,555) (4,261)
_______ _______ _______
Acquisitions and disposals
Proceeds/ deferred consideration from
sale of business activities - 380 379
_______ _______ _______
Equity dividends paid (2,098) (2,098) (2,948)
_______ _______ _______
Financing
Increase in medium term secured borrowings and
lease financing - 1,558 2,054
Repayment of amounts borrowed (409) - (116)
_______ _______ _______
(409) 1,558 1,938
_______ _______ _______
(Decrease)/ increase in cash in the period (920) (644) 5,981
======= ======= =======
*Reconciliation of operating profit to net cash inflow from operating activities
Operating profit 3,637 3,491 7,877
Depreciation 1,979 1,820 3,811
Amortisation of goodwill 4 6 8
(Profit)/ loss on disposal of tangible fixed (2) 5 (33)
assets
(Increase)/ decrease in working capital (2,700) (1,753) 1,745
Decrease in warranty and other provisions (26) (193) (1,137)
_______ _______ _______
2,892 3,376 12,271
======= ======= =======
Notes on the Unaudited Accounts
at 31 December 2002
1 Basis of preparation
The interim financial statements for the half year ended 31 December 2002 have
been prepared in accordance with the accounting policies detailed in the 2002
Annual Report & Accounts. The financial information for the year ended 30 June
2002 is an abridged version of the financial statements filed with the Registrar
of Companies, on which the auditors gave an unqualified report. The financial
information for the half year ended 31 December 2001 and year ended 30 June 2002
is restated for business activities treated as discontinued and to be
discontinued as at 31 December 2002. The interim report is being posted to
shareholders and copies are available to the public at the registered office,
Burton Latimer, Kettering, Northamptonshire NN15 5JP.
2 Analysis of turnover and operating profit, including associates, on continuing
activities
Half year Half year
31 December 2002 31 December 2001
Turnover Profit Turnover Profit
£000 £000 £000 £000
Engineering products 38,661 1,930 34,621 1,181
Building products 17,611 1,717 16,906 1,426
_______ _______ _______ _______
56,272 3,647 51,527 2,607
======= ======= ======= =======
3 Activities discontinued/ to be discontinued
Activities discontinued comprise the results of Leonardo Internet Limited, a web
development business which was sold on 7 February 2003; activities to be
discontinued comprise the results of the Alumasc Grundy business, which
manufactures and repairs beer barrels for the brewing industry, and which is
expected to be closed in early March 2003.
Half year Half year Year
31 December 31 December 30 June
2002 2001 2002
£000 £000 £000
Discontinued:
Turnover 59 50 122
_______ _______ _______
Operating profit/ (loss) 13 (56) (76)
_______ _______ _______
To be discontinued:
Turnover 1,917 4,623 6,999
_______ _______ _______
Operating profit 32 960 1,162
_______ _______ _______
Total:
Turnover 1,976 4,673 7,121
_______ _______ _______
Operating profit 45 904 1,086
_______ _______ _______
Notes on the Unaudited Accounts
at 31 December 2002
4 Taxation
The taxation provided is based on an estimated effective rate for the year.
Half year Half year Year
31 December 31 December 30 June
2002 2001 2002
£000 £000 £000
Current tax - UK Corporation tax 812 891 1,877
Deferred tax 122 129 377
_______ _______ _______
934 1,020 2,254
======= ======= =======
5 Earnings per share
Earnings per share is based on the weighted average number of ordinary shares in
issue for the period of 34,816,788 (31 December 2001: 34,816,788; year ended 30
June 2002: 34,816,788).
6 Dividends
The directors have declared an interim dividend per share of 2.45p (2001: 2.45p)
which will be paid on 7 April 2003 to shareholders on the register at the close
of business on 14 March 2003.
7 Reconciliation of net cash flow to movement in net debt
Half year Half year Year
31 December 31 December 30 June
2002 2001 2002
£000 £000 £000
(Decrease)/ increase in cash in the period (920) (644) 5,981
Cash outflow/ (inflow) from change in debt
and lease financing 409 - (1,938)
_______ _______ _______
Change in net debt from cash flows in the (511) (644) 4,043
period
New medium term secured borrowings - (1,558) (1,822)
_______ _______ _______
Movement in net debt in the period (511) (2,202) 2,221
Net debt at start of period (1,851) (4,072) (4,072)
_______ _______ _______
Net debt at end of period (2,362) (6,274) (1,851)
======= ======= =======
Notes on the Unaudited Accounts
at 31 December 2002
8 Reconciliation of movement in shareholders' funds
Half year Half year Year
31 December 31 December 30 June
2002 2001 2002
£000 £000 £000
Retained (loss)/ profit for the financial (1,234) 1,414 2,251
period
Exchange difference - - (2)
Goodwill write back on disposal of 2,388 - -
business
_______ _______ _______
Net increase in shareholders' funds 1,154 1,414 2,249
Opening shareholders' funds 34,505 32,256 32,256
_______ _______ _______
Closing shareholders' funds 35,659 33,670 34,505
======= ======= =======
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