Interim Results - 6 Months to December 1999

Alumasc Group PLC 22 February 2000 THE ALUMASC GROUP plc - INTERIM RESULTS * Alumasc, the premium engineering and building products group, announces that profit before tax for the half year to 31 December 1999 of £5.1 million compared with £3.9 million for the same period in the previous year and were £0.5 million (11.1%) ahead of the comparable figure for continuing businesses, with turnover 1.4% higher at £65.6 million. * Earnings per share were 9.3p compared with 7.0p (8.3p for the continuing business) for the first half of last year. * The Engineering Products Division achieved a profit for the continuing business down 6.8% at £3,133,000 (1998: £3,361,000) on turnover of £44.4 million (1998: £42.1 million). Within Engineering Products, Alumasc Precision Components, the Group's diecasting specialist, grew strongly despite the further surge in sterling, benefiting from projects coming on stream as planned. The group's Industrial Products businesses had mixed results, however, which were lower overall on reduced volume and tighter margins. * Building Products reported a profit up 25.4% for the continuing business at £2,069,000 (1998: £1,650,000) on a turnover of £21.2 million (1998: £22.6 million), benefiting from the restructuring of the previous year. * Net borrowings at 31 December 1999 of £1.9 million (gearing at 5%) compare favourably with £6.5 million at the same stage in the previous year. * The programme to restructure the Group, which dominated the previous financial year, was concluded during the period with disposals at Arnold Plastics, Crew Stainless, Thermex Industries and SPF Engineering. This has established Alumasc as a group of fewer, stronger businesses with greater focus, enabling management to redirect their efforts on capturing the opportunities to grow their businesses. * The Board now seeks to grow the Group by way of three related routes: organic growth, building on the strength of the Group's restructured business platform; utilising the Group's ungeared balance sheet to finance investment opportunities which leverage its market strengths; and exploiting the Internet revolution, both with the development of e-commerce to assist organic growth and through the development of a standalone Internet operation. * In pursuit of the latter opportunities, the Board announced on 15 February 2000 a joint venture with McDermott Publishing aimed at developing LeonardoUK.com into the UK's leading building industry search engine. * John McCall, Chairman, stated 'The satisfactory performance for the first half was achieved by strong performances from the Group's restructured businesses. While each of our businesses faces significant challenges and opportunities in common with all UK industrial companies, we believe we are better placed to manage these than for a number of years. With no significant changes in the immediate outlook for our markets, the Board views the management's task of growing their business as an equally real aspiration.' An analyst presentation will be held at Bankside Consultants, 123 Cannon Street, London EC4 at 9.30 am today. Enquiries: The Alumasc Group plc 01536-383844 John McCall (Chairman & Chief Executive) Bankside Consultants Limited 0171-220 7477 Charles Ponsonby CHAIRMAN'S STATEMENT OVERVIEW The group's profit before tax for the half year to 31 December 1999 was £5.1 million compared with £3.9 million for the same period in the previous year. Profits earned by the continuing business were £0.5 million (11.1 per cent) ahead of the comparable figure, with turnover 1.4 per cent higher at £65.6 million. Earnings per share of 9.3p compared with 7.0p (8.3p for the continuing business) in the first half of last year. The profit growth was generated by those businesses restructured during the previous year, with the Building Products division strongly ahead as a whole. The re- structuring programme, which commenced during the previous financial year, was concluded during the period as expected and no further charges were incurred. The directors have declared an unchanged interim dividend of 2.45p per share which will be payable on 10 April 2000 to shareholders on the register at close of business on 10 March 2000. TRADING 6 months to December 6 months to 1999 December 1998 Turnover Profit Turnover Profit £000 £000 £000 £000 Engineering 44,437 3,133 42,120 3,361 Products Building 21,211 2,069 22,616 1,650 Products ------ ------ ------ ------ 65,648 5,202 64,736 5,011 Discontinued 2,618 - 11,866 (688) ------ ------ ------ ------ 68,266 5,202 76,602 4,323 ====== ====== Interest (147) (235) Exceptional - (228) costs ------ ------ Profit before 5,055 3,860 tax ====== ====== Within Engineering Products, Alumasc Precision, the group's diecasting specialists, grew strongly despite the further surge in sterling, benefiting from new projects coming on stream as planned. Alumasc Precision Components was successful in achieving the prestigious German 'Verband der Automobilindustrie' accreditation during the period, the first UK diecasting group to have done so. The group's Industrial Products businesses had mixed results, however, which were lower overall on reduced volume and tighter margins. The group's Building Products activities were well ahead in the period, benefiting from the restructuring of the previous year. Growth in turnover was held back by the continued disruption of certain export markets, particularly in the Far East, and difficulties incurred on a major new systems installation which led to a period of poor product availability and service levels. There are some signs of recovery in Far Eastern demand, and the principal operational problems arising from the new systems implementation have been overcome. FINANCIAL The group's net borrowings at 31 December 1999 rose to £1.9 million (gearing of 5 per cent) from £0.7 million at the beginning of the period and compare favourably with £6.5 million at the same point in the previous year. The increase in borrowing regularly experienced in the group's first half year was reduced by the proceeds from disposals of £2.3 million. Interest expense fell compared with the previous year to £147,000, in line with the group's lower borrowings. The authority given by shareholders at the Annual General Meeting in October for the group to buy up to 10 per cent of its issued share capital was partially used by the purchase (and subsequent cancellation) of 500,000 shares (1.25 per cent) on 21 October 1999 at a price of 112.5p per share. The Board will continue to monitor the performance of the group's shares in considering whether to make further purchases. RESTRUCTURING The programme to restructure the group, which dominated the previous financial year, was concluded during the period to 31 December 1999 with the disposals of Arnold Plastics, Crew Stainless, Thermex Industries and SPF Engineering. This has re-established Alumasc as a group of fewer, stronger businesses with greater focus, enabling management to redirect their efforts on capturing the opportunities to grow their businesses. DEVELOPMENT The board now seeks to grow the group by way of three related routes: * organic growth, building on the strengths of the group's restructured business platforms; * utilising the group's ungeared balance sheet to finance investment opportunities which leverage its market strengths; * exploiting the internet revolution, both through the development of E-commerce to assist organic growth and through the development of a standalone internet operation. In pursuit of the latter opportunity, the board announced on 15 February 2000 a joint venture with McDermott Publishing aimed at developing LeonardoUK.com into the UK's leading building industry search engine. PROSPECTS The satisfactory performance in the first half was achieved by strong performances from the group's restructured businesses. While each of our businesses faces significant challenges and opportunities in common with all UK industrial companies, we believe we are better placed to manage these than for a number of years. With no significant changes in the immediate outlook for our markets, the Board views management's task of growing their business as an equally real aspiration. UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT for the half year to 31 December 1999 Half year to 31 December 1999 Contin Discont uing inued activities activities Total £000 £000 £000 Turnover 65,648 2,618 68,266 ====== ====== ====== Operating profit after exceptional costs (note 4) 5,171 - 5,171 Share of operating profit in associates 31 - 31 Loss on sale of business activities (note 4) - - - Interest (147) - (147) ------ ------ ------ Profit on ordinary activities before taxation 5,055 - 5,055 Taxation charge 1,314 - 1,314 ------ ------ ------ Profit on ordinary activities after taxation 3,741 - 3,741 Equity minority interest 9 - 9 ------ ------ ------ Profit for the financial period attributable to the members of the parent company 3,750 - 3,750 Dividends 965 - 965 ------ ------ ------ Retained profit for the financial period 2,785 - 2,785 ====== ====== ====== Earnings per share and diluted earnings per share (note 2) 9.3p - 9.3p ====== ====== ====== Dividend per share 2.45p ====== STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES There are no recognised gains or losses other than the profits attributable to shareholders of the company of £3,750,000 for the half year to 31 December 1999 (£2,832,000 for the half year to December 1998 and £9,980,000 loss for the year to 30 June 1999). UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT for the half year to 31 December 1999 Comparative figures - half year to 31 December 1998 Contin Discont uing inued activities activities Total £000 £000 £000 Turnover 64,736 11,866 76,602 ====== ====== ====== Operating profit/(loss) after exceptional costs (note 4) 4,714 (688) 4,026 Share of operating profit in associates 69 - 69 Loss on sale of business activities (note 4) - - - Interest (235) - (235) ------ ------ ------ Profit/(loss) on ordinary activities before taxation 4,548 (688) 3,860 Taxation charge/(credit) 1,190 (186) 1,004 ------ ------ ------ Profit/(loss) on ordinary activities after taxation 3,358 (502) 2,856 Equity minority interest (24) - (24) ------ ------ ------ Profit/(loss) for the financial period attributable to the members of the parent company 3,334 (502) 2,832 Dividends 989 - 989 ------ ------ ------ Retained profit/(loss) for the financial period 2,345 (502) 1,843 ====== ====== ====== Earnings per share and diluted earnings per share (note 2) 8.3p (1.3p) 7.0p ====== ====== ====== Dividend per share 2.45p ====== UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT for the half year to 31 December 1999 Comparative figures - year to 30 June 1999 Contin Discont uing inued activities activities Total £000 £000 £000 Turnover 126,849 20,448 147,297 ====== ====== ====== Operating profit/(loss) after exceptional costs (note 4) 9,235 (11,540) (2,305) Share of operating profit in associates 100 - 100 Loss on sale of business activities (note 4) - (6,659) (6,659) Interest (453) - (453) ------ ------ ------ Profit/(loss) on ordinary activities before taxation 8,882 (18,199) (9,317) Taxation charge/(credit) 2,132 (1,490) 642 ------ ------ ------ Profit/(loss) on ordinary activities after taxation 6,750 (16,709) (9,959) Equity minority interest (21) - (21) ------ ------ ------ Profit/(loss) for the financial period attributable to the members of the parent company 6,729 (16,709) (9,980) Dividends 3,429 - 3,429 ------ ------ ------ Retained profit/(loss) for the financial period 3,300 (16,709) (13,409) ====== ====== ====== Earnings per share and diluted earnings per share (note 2) 16.7p (41.4p) (24.7p) ====== ====== ====== Dividend per share 8.5p ====== UNAUDITED CONSOLIDATED BALANCE SHEET at 31 December 1999 31 31 30 June December December 1999 1999 1998 £000 £000 £000 Fixed assets Intangible assets 86 - 88 Tangible assets 30,374 38,485 32,204 Investments 891 744 859 ------ ------ ------ 31,351 39,229 33,151 ------ ------ ------ Current assets Stocks 11,961 16,653 12,662 Debtors 30,959 32,137 28,755 Cash at bank - - 521 ------ ------ ------ 42,920 48,790 41,938 ------ ------ ------ Creditors: amounts falling due within one year Trade and other creditors 28,053 33,743 30,893 Taxation 3,016 4,528 1,496 Proposed dividend 965 989 2,440 ------ ------ ------ 32,034 39,260 34,829 ------ ------ ------ Net current assets 10,886 9,530 7,109 ------ ------ ------ Total assets less current 42,237 48,759 40,260 liabilities Creditors: amounts falling due after more than one year 3,141 4,225 3,349 Provisions for liabilities 258 376 282 and charges Equity minority interest 5 38 35 ------ ------ ------ 38,833 44,120 36,594 ====== ====== ====== Capital and reserves Called up share capital 4,983 5,059 5,043 Share premium 26,908 26,875 26,891 Revaluation reserve 2,374 2,477 2,374 Capital redemption reserve 62 - - Profit and loss account 4,506 9,709 2,286 ------ ------ ------ Shareholders' funds (note 6) 38,833 44,120 36,594 ====== ====== ====== UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the half year to 31 December 1999 Half Year Half Year 31 Year 30 June December 31 1999 1999 December £000 £000 1998 £000 Cash flow from operating 1,291 3,546 12,794 activities * ------ ------ ------ Returns on investments and servicing of finance Net interest (147) (235) (453) ------ ------ ------ Taxation UK corporation tax 206 (628) (2,450) received/(paid) ------ ------ ------ Capital expenditure and financial investment Purchase of tangible fixed (2,028) (4,606) (7,152) assets Proceeds from sale of 153 164 1,224 tangible fixed assets ------ ------ ------ (1,875) (4,442) (5,928) ------ ------ ------ Acquisitions and disposals Proceeds from sale of 2,293 - 1,056 business activities Purchase of investments - (13) (205) ------ ------ ------ 2,293 (13) 851 ------ ------ ------ Equity dividends paid (2,440) (2,439) (3,428) ------ ------ ------ Financing Issue of ordinary share 19 18 18 capital Repurchase of shares (562) - - Repayment of debt (82) (1,800) (3,746) ------ ------ ------ (625) (1,782) (3,728) ------ ------ ------ Decrease in cash in the (1,297) (5,993) (2,342) period (note 5) ====== ====== ====== * Reconciliation of operating profit/(loss) to net cash inflow from operating activities Operating profit/(loss) 5,171 4,026 (2,305) Write back of impaired - - 2,695 goodwill Depreciation 1,967 2,236 4,631 Fixed asset impairment - - 4,424 Profit on disposal of tangible fixed (85) (39) (339) assets/investments (Increase)/decrease in (5,574) (2,800) 4,664 working capital Warranty and other provisions (188) 123 (976) ------ ------ ------ 1,291 3,546 12,794 ====== ====== ====== NOTES TO THE UNAUDITED ACCOUNTS at 31 December 1999 1. BASIS OF PREPARATION The interim financial statements for the half year ended 31 December 1999 have been prepared in accordance with the accounting policies detailed in the 1999 Annual Report & Accounts. The financial information for the year ended 30 June 1999 is an abridged version of the financial statements filed with the Registrar of Companies, on which the auditors gave an unqualified report, as restated for business activities discontinued during the six months to 31 December 1999. 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. EARNINGS PER SHARE Earnings per share is based on the weighted average number of ordinary shares in issue for the period of 40,161,131 (31 December 1998 40,344,130; year ended 30 June 1999 40,345,477). 3. DIVIDENDS The directors have declared an interim dividend of 2.45p per share (1998 2.45p) which will be paid on 10 April 2000 to shareholders on the register at the close of business on 10 March 2000. 4. EXCEPTIONAL AND DISCONTINUANCE COSTS Half Year Half Year 31 Year 30 June December 31 1999 1999 December £000 £000 1998 £000 Included in continuing - 228 552 operating profit Included in discontinued - - 10,001 operating profit Loss on sale of business - - 6,659 activities ------ ------ ------ - 228 17,212 ====== ====== ====== Comprising: Discontinuance costs - - 8,941 Impairment/write off of - - 7,719 goodwill Exceptional items: reorganisation costs included - 228 552 in operating profit/(loss) ------ ------ ------ - 228 17,212 ====== ====== ====== NOTES TO THE UNAUDITED ACCOUNTS at 31 December 1999 5. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Half Year Half Year 31 Year 30 June December 31 1999 1999 December £000 £000 1998 £000 Decrease in cash in period (1,297) (5,993) (2,342) Cash outflow from decrease 119 1,606 3,734 in debt and lease financing ------ ------ ------ Change in net debt resulting (1,178) (4,387) 1,392 from cash flows Issue of loan notes for non- - (263) (263) cash consideration ------ ------ ------ Movement in net debt in the (1,178) (4,650) 1,129 period Net debt at start of period (689) (1,818) (1,818) ------ ------ ------ Net debt at end of period (1,867) (6,468) (689) ====== ====== ====== 6. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS Half Year Half Year 31 Year 30 June December 31 1999 1999 December £000 £000 1998 £000 Retained profit/(loss) for 2,785 1,843 (13,409) the financial period Repurchase of shares (562) - - New share capital 19 18 18 Exchange difference (3) - 7 Goodwill written back - - 7,719 ------ ------ ------ Net addition to/(reduction in) shareholders' funds 2,239 1,861 (5,665) Opening shareholders' funds 36,594 42,259 42,259 ------ ------ ------ Closing shareholders' funds 38,833 44,120 36,594 ====== ====== ======

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