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 ======= ======= ======= This information is provided by RNS The company news service from the London Stock Exchange

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