Interim Results

Alumasc Group PLC 07 February 2008 Thursday 7 February 2008 THE ALUMASC GROUP PLC - INTERIM ANNOUNCEMENT "Board confident in Alumasc's ability to perform well" Alumasc (ALU.L), which supplies premium building and engineering products, announces an increase in adjusted1 pre-tax profit of almost 50% from continuing operations in the half year to 31 December 2007. Financial Highlights • Revenue from continuing operations, which include Levolux acquired last May, increased by 26% to £59.9m. Excluding the acquisition, revenue rose by 7%, driven by strong growth in the Building Products division. • On continuing operations, including Levolux, the UK's leading supplier of solar shading systems for buildings, adjusted1 pre-tax profit increased by almost 50% to £4.5m and adjusted1 earnings per share were also nearly 50% ahead at 8.6p. • With Brock Metal, the producer of zinc and aluminium alloys sold in June 2007, included in the prior period comparator, adjusted1 pre-tax profit increased by 24% and operating margins improved by 3.3 percentage points. • Group pre-tax profit of £5.2m was ahead by 45% and group earnings per share were 47% ahead at 10.3p. • The interim dividend per share is increased by 4.8% to 3.25p, covered 2.6 times. • In the period, interest cover (on borrowings) exceeded nine times and gearing reduced to 35% from 40%. Commercial Highlights • Building Products divisional revenue grew by 51% to £40.2m (up 16%, excluding Levolux) and adjusted1 operating profit increased by 75% to £4.8m (26% ahead, excluding Levolux). • The group's sustainable building products activities continued to advance, with increasing demand for greater energy and water management in construction. • Engineering Products divisional revenue from continuing operations of £19.7m and adjusted1 operating profit of £1.2m were 5% and 13% lower than the prior year, respectively. This performance was largely as anticipated, as the move from traditional automotive work to the new product and market areas continued at Alumasc Precision. John McCall, Chairman, stated "Alumasc's trading results tend to be seasonally biased towards the second half. With order books ahead of those a year ago, we expect a similar pattern this year. Alumasc's recent performance has benefited from actions taken to improve the business and seek out opportunities for growth. These actions will continue to yield benefits in the second half year and beyond. The Board is fully aware of the uncertainties which dominate the broader economic outlook. However, the group's balance sheet and businesses remain strong and the Board is confident in Alumasc's ability to perform well in these circumstances." 1 Adjusted profits and earnings exclude property disposal gains of £1.0m, brand amortisation of £0.1m and one-off reorganisation costs at Alumasc Dispense of £0.2m (2006: £nil in each case). Presentation: Today, a presentation will be made to institutional broker's analysts and private client brokers by Paul Hooper (Chief Executive) and Andrew Magson (Group Finance Director), with John McCall (Chairman) in attendance. The meeting will commence at 9.30am and end at approximately 10.30am. It will be held at Bankside's offices, 1 Frederick's Place, London EC2R 8AE (which is off Old Jewry, which itself runs between Cheapside and Gresham Street, approximately 200 yards from the Bank of England). Enquiries: The Alumasc Group plc 01536 383844 Paul Hooper (Chief Executive) info@alumasc.co.uk Andrew Magson (Group Finance Director) Bankside Consultants Limited Charles Ponsonby 020 7367 8851 charles.ponsonby@bankside.com INTERIM ANNOUNCEMENT Chairman's Statement Overview Alumasc traded strongly in the half year to 31 December 2007, building further on the strategic re-alignment and improved performance achieved in the previous year, and benefiting from the growing demand for sustainable building products. Revenue from continuing operations, which include Levolux acquired last May, increased by 26% to £59.9 million. Excluding the acquisition, revenue rose by 7%, driven by strong growth in the Building Products division. Adjusted1 pre-tax profit from continuing operations, including Levolux, the UK's leading supplier of solar shading systems for buildings, increased by almost 50% to £4.5 million as a result of the higher revenue and improved operating margins of 8.8% (2006: 7.4%). When Brock Metal, the producer of zinc and aluminium alloys sold in June 2007, is included in the prior period comparator, total group revenue reduced by 20%, while adjusted1 profit before tax increased by 24% and operating margins improved by 3.3 percentage points. This illustrates the impact of the transformation in Alumasc's portfolio of businesses last year and the consequential improvement in quality of earnings arising from the group's increased focus on premium building and precision engineering product businesses. Total profit before tax of £5.2 million (including property disposal gains, brand amortisation and one-off reorganisation costs at Alumasc Dispense) was ahead by 45%, with Brock Metal included in the prior period comparator. Adjusted1 earnings per share from continuing activities of 8.6p were almost 50% ahead of the prior period and basic earnings per share were 47% ahead at 10.3p. The Board has declared a 4.8% increase in the interim dividend to 3.25p per share (2006: 3.1p), covered 2.6 times by continuing earnings (2006: 2.25 times). Building Products Divisional revenue grew by 51% to £40.2 million (up 16% excluding Levolux) and adjusted1 operating profit increased by 75% to £4.8 million (26% ahead, excluding Levolux). In particular, the division's sustainable building products activities continued to advance, with increasing demand for greater energy and water management in construction. Products that assist customers to manage energy consumption in buildings experienced buoyant first-half demand, spearheaded by Levolux's solar shading and control systems. Levolux is now integrated successfully into Alumasc's portfolio of businesses, and its order book has grown to record levels. Elsewhere, demand for green roofs continues to grow and the MR Facades business, which provides external insulation for solid walls, benefited from improved spend in the social housing refurbishment sector and increased penetration into new build applications. Building products associated with water management activities also performed strongly, with continued growth from both Gatic Slotdrain and Gatic access covers, particularly through direct sales into export markets, and improved sales of other drainage products driven by new contracts to supply hospitals and schools. Sales of rainwater goods remained buoyant, assisted by a widened distribution network. Alumasc Interior Building Products continued its transition to in-house manufacture of Pendock Profiles, providing a much improved cost base in an increasingly competitive market place. The two businesses acquired by Alumasc in 2004 continued to perform well. Timloc once again grew revenues and profits against the background of a more difficult housing market, whilst further improving operating efficiencies through investment in automation. Roof-Pro had an excellent first-half buoyed by a substantial contract at a retail development. The Building Products division contributed 67% and 82% respectively to the group's total revenue and operating profits (2006: 36% and 59% respectively). Engineering Products Revenue from continuing operations of £19.7 million and adjusted1 operating profit of £1.2 million in the Engineering Products division were 5% and 13% lower than the prior year. This performance was largely as anticipated, as the move from traditional automotive work to new product and market areas continued at Alumasc Precision. Activity levels at Alumasc Precision at the start of this financial year were lower than at the beginning of the prior year, which had benefited from the last deliveries of components to the Land Rover and Mini Cooper S projects. In the second quarter of this financial year, significant levels of new non-automotive diesel engine work for Caterpillar and Deutz, and a complex windshield surround and other components for Aston Martin, began to come on stream. Progress had meanwhile been made to reduce factory overhead costs at Alumasc Precision, through both the outsourcing of lower value-added casting work to the Far East and achievement of further operational efficiencies at our plants in the UK. First-half profitability at Alumasc Dispense benefited from a better product mix, although revenue was broadly unchanged. The decision was made in November to consolidate Alumasc Dispense's operations onto a single rented site near Kettering, enabling the sale of its facility at Borehamwood. Associated re-organisation costs were £150,000, and the simplified ongoing operation will be more cost efficient. Financial position There have been no significant changes in the overall shape of Alumasc's balance sheet compared with the last year end. Property, plant and equipment reduced by £1.8 million to £21.1 million, mainly as a result of the disposal of the former Copal Warehouse at book value of £0.7 million in September, and the sale in December of the Alumasc Dispense property at Borehamwood for net consideration of £1.6 million, a gain of almost £1 million on book value. The cash proceeds from this transaction were received in January. The assumptions relating to the IAS19 valuation of the group's defined benefit pension schemes remain unchanged from those at the year end. The draft actuarial valuation of the Benjamin Priest pension scheme at 30 April 2007 is currently being discussed with the Trustees, including an update of mortality assumptions. Shareholders' funds at 31 December 2007 increased by £1.6 million to £33.8 million from the year end position, reflecting post-tax profits of £3.7 million in the period, the payment of the prior year final dividend of £2.4 million, and other minor changes in equity of £0.3 million. Net borrowings reduced by £1.1 million to £11.8 million during the period, in line with the strong trading performance. Interest cover (on borrowings) exceeded nine times, and gearing at 31 December 2007 reduced to 35% (30 June 2007: 40%). Capital expenditure of £1.3 million was some £0.5 million lower than the six-month depreciation charge. Annualised post-tax return on average capital invested improved to 13.4% (2006: 12.4%) due to the improved operating margins and lower capital intensity of the Group's portfolio of businesses following the acquisition of Levolux and disposal of Brock towards the end of last year. Prospects Alumasc's trading results tend to be seasonally biased towards the second half. With order books ahead of those a year ago, we expect a similar pattern this year. The main factors anticipated to impact second-half performance are continuing growth in demand for sustainable building products; general levels of UK economic and construction activity; the extent to which increasing input cost inflation on ferrous and oil based materials can be mitigated through internal cost savings or selling price increases; and the speed of introduction of new work won at Alumasc Precision. Alumasc's recent performance has benefited from actions taken to improve the business and seek out opportunities for growth. These actions will continue to yield benefits in the second half year and beyond. The Board is fully aware of the uncertainties which dominate the broader economic outlook. However, the group's balance sheet and businesses remain strong and the Board is confident in Alumasc's ability to perform well in these circumstances. John McCall Chairman 7 February 2008 Note 1: Adjusted profits and earnings in 2007/08 are stated prior to property disposal gains of £1.0m, brand amortisation of £0.1m and one-off re-organisation costs at Alumasc Dispense of £0.2m (2006/07: £nil in each case) UNAUDITED CONSOLIDATED INCOME STATEMENT for the half year to 31 December 2007 Half year Half Year Year ended 31 December 31 December 30 June 2007 2006 2007 Notes £'000 £'000 £'000 Continuing operations Revenue 3 59,881 47,432 103,601 Cost of sales (42,035) (33,226) (71,800) -------- -------- -------- Gross profit 17,846 14,206 31,801 Net operating expenses (12,787) (10,682) (23,425) Profit on disposal of property 5 990 - 637 -------- -------- -------- Operating profit 3 6,049 3,524 9,013 Finance revenue 82 14 72 Finance costs (655) (335) (883) Other finance expense - pensions (249) (200) (400) -------- -------- -------- Profit before taxation 5,227 3,003 7,802 Tax expense 6 (1,511) (899) (2,248) -------- -------- -------- Profit for the period from continuing operations 3,716 2,104 5,554 Discontinued operations Profit after tax for the period from discontinued operations 4 - 374 1,370 -------- -------- -------- Profit for the period 3,716 2,478 6,924 -------- -------- -------- Profit for the period attributable to: Equity holders of the parent 3,706 2,455 6,889 Minority interest 10 23 35 -------- -------- -------- 3,716 2,478 6,924 -------- -------- -------- Pence Pence Pence Basic earnings per share - continuing operations 10.3 5.9 15.6 - discontinued operations - 1.1 3.9 -------- -------- -------- 8 10.3 7.0 19.5 -------- -------- -------- Diluted earnings per share - continuing operations 10.3 5.8 15.6 - discontinued operations - 1.1 3.8 -------- -------- -------- 8 10.3 6.9 19.4 -------- -------- -------- UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE for the half year to 31 December 2007 Half year Half year Year 31 December 31 December 30 June 2007 2006 2007 £'000 £'000 £'000 Income and expense recognised directly in equity Actuarial gain/(loss) on defined benefit pensions 61 (1,900) 4,676 Movement in cash flow hedging position (249) 7 99 Exchange differences on retranslation of foreign operations 8 - (6) Tax on items taken directly to or transferred (17) 569 (1,754) from equity --------- --------- ------- Net (expense)/ income recognised directly in equity (197) (1,324) 3,015 for the period Profit for the period 3,716 2,478 6,924 --------- --------- ------- Total recognised income for the period 3,519 1,154 9,939 --------- --------- ------- Attributable to: Equity holders of the parent 3,509 1,131 9,904 Minority interest 10 23 35 --------- --------- ------- 3,519 1,154 9,939 --------- --------- ------- UNAUDITED CONSOLIDATED BALANCE SHEET at 31 December 2007 31 December 31 December 30 June 2007 2006 2007 Notes £'000 £'000 £'000 Assets Non-current assets Property, plant and equipment 21,111 24,525 22,877 Goodwill 14,966 5,556 14,966 Other intangible assets 3,907 435 4,171 Financial assets 17 34 17 Deferred tax assets 4,560 7,570 4,917 ------- --------- -------- 44,561 38,120 46,948 Current assets Inventories 15,391 13,823 13,714 Trade and other receivables 27,404 29,612 28,916 Cash and short term deposits 3,126 - 4,814 Derivative financial assets - 295 106 ------- --------- -------- 45,921 43,730 47,550 Non-current assets classified as held for sale 734 2,377 678 ------- --------- -------- Total assets 91,216 84,227 95,176 ------- --------- -------- Liabilities Non-current liabilities Interest bearing loans and borrowings (14,863) - (14,873) Employee benefits payable (16,284) (25,232) (17,561) Provisions (1,253) (344) (1,125) Deferred tax liabilities (1,499) (1,320) (1,352) ------- --------- -------- (33,899) (26,896) (34,911) Current liabilities Bank overdraft - (5,650) (2,837) Interest bearing loans and borrowings (17) (289) (12) Trade and other payables (20,847) (26,136) (22,523) Provisions (220) (812) (214) Tax payable (2,285) (879) (2,468) Derivative financial liabilities (149) (288) - ------- --------- -------- (23,518) (34,054) (28,054) ------- --------- -------- Total liabilities (57,417) (60,950) (62,965) ------- --------- -------- ------- --------- -------- Net assets 33,799 23,277 32,211 ------- --------- -------- Equity Called up share capital 4,517 4,412 4,479 Share premium 383 27,406 - Other reserve 1,251 1,401 1,251 Capital redemption reserve - 693 - Capital reserve - own shares (133) (133) (133) Hedging reserve (149) 8 100 Foreign currency reserve 2 - (6) Retained earnings 27,880 (10,567) 26,482 ------- --------- -------- Equity attributable to equity holders of the parent 33,751 23,220 32,173 Minority interest 48 57 38 ------- --------- -------- Total equity 10 33,799 23,277 32,211 ------- --------- -------- UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the half year ended 31 December 2007 Half year Half year Year 31 December 31 December 30 June 2007 2006 2007 Notes £'000 £'000 £'000 Operating activities Operating profit from continuing operations 6,049 3,524 9,013 Adjustments for: Depreciation 1,676 1,438 3,433 Amortisation 179 81 207 Impairments - - 469 Gain on disposal of property, plant and equipment (981) (17) (1,039) Gain on sale of investments - (32) (32) (Increase) / decrease in inventories (1,677) 517 (228) Decrease / (increase) in receivables 2,523 3,684 (893) Decrease in trade and other payables (2,854) (5,249) (1,671) Movement in provisions 134 (236) (779) Movement in retirement benefit obligations (1,465) (1,175) (2,470) --------- --------- ------- Cash generated from continuing operations 3,584 2,535 6,010 Cash flow from discontinued operations 1,167 (956) (6,626) Tax paid (1,207) (413) (1,339) --------- --------- ------- Net cash inflow / (outflow) from operating activities 3,544 1,166 (1,955) --------- --------- ------- Investing activities Purchase of property, plant and equipment (1,209) (1,501) (2,716) Payments to acquire intangible fixed assets (80) (34) (353) Proceeds from sale of property, plant and equipment 674 29 2,424 Acquisition of subsidiary undertakings net of cash acquired - - (12,432) Proceeds from sale of business activities 747 - 8,150 Proceeds from sale of investments - 305 305 --------- --------- ------- Net cash inflow / (outflow) from investing activities 132 (1,201) (4,622) --------- --------- ------- Financing activities Net interest paid (573) (321) (811) Equity dividends paid (2,378) (2,218) (3,309) New borrowings (net of arrangement fees) - - 14,860 Loan charges and amortisation (1) - - Repayment of amounts borrowed 9 (4) (433) (725) Proceeds from issue of share capital 421 - 1,195 --------- --------- ------- Net cash (outflow) / inflow from financing activities (2,535) (2,972) 11,210 --------- --------- ------- Net increase / (decrease) in cash and cash equivalents 9 1,141 (3,007) 4,633 Cash and cash equivalents at beginning of period 1,977 (2,650) (2,650) Effect of foreign exchange rate changes 8 7 (6) --------- --------- ------- Cash and cash equivalents at end of period 3,126 (5,650) 1,977 --------- --------- ------- NOTES ON THE UNAUDITED ACCOUNTS for the half year to 31 December 2007 1. Basis of preparation The interim consolidated accounts of The Alumasc Group plc and its subsidiaries have been prepared on the basis of International Financial Reporting Standards (IFRS), as adopted by the European Union, that are effective at 31 December 2007. The interim consolidated accounts have been prepared using the accounting policies set out in the statutory accounts for the financial year to 30 June 2007 and in accordance with IAS 34 "Interim Financial Reporting". Comparative period information for the six months to 31 December 2006 has been restated to reflect the reclassification of Brock Metal as a discontinued operation following the sale of the business in June 2007. The interim consolidated accounts include comparative figures for the financial year ended 30 June 2007 which are an extract from the Group's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. The interim accounts for the half year ended 31 December 2007 are not statutory accounts and have been neither audited nor reviewed by the Group's auditors. 2. Risks & Uncertainties The principal risks and uncertainties affecting the business activities of the Group remain those detailed on page 16 of the 2007 Report and Accounts, a copy of which is available on the Company's website at www.alumasc.co.uk. The Chairman's Statement in this interim report includes comments on the prospects for the Group for the remaining six months of the financial year. 3. Analysis of revenue and trading profit Half year 31 December 2007 Building Engineering products products Total £'000 £'000 £'000 Revenue 40,168 19,713 59,881 Adjusted operating profit 4,833 1,157 5,990 Brand amortisation (85) - (85) Alumasc Dispense reorganisation costs - (150) (150) -------- -------- -------- Segment operating result 4,748 1,007 5,755 Unallocated costs (696) Profit on disposal of property 990 -------- -------- -------- Operating profit 6,049 -------- -------- -------- 3. Analysis of revenue and trading profit (continued) Half year 31 December 2006 Building Engineering Continuing Discontinued products products operations operations Total £'000 £'000 £'000 £'000 £'000 Revenue 26,651 20,781 47,432 27,626 75,058 Segment operating result 2,764 1,331 4,095 599 4,694 Unallocated costs (571) - (571) -------- -------- -------- --------- ------- Operating profit 3,524 599 4,123 -------- -------- -------- --------- ------- Year 30 June 2007 Building Engineering Continuing Discontinued products products operations operations Total £'000 £'000 £'000 £'000 £'000 Revenue 59,647 43,954 103,601 59,803 163,404 Adjusted operating profit 6,960 2,600 9,560 2,090 11,650 Acquisition accounting adjustment (320) - (320) - (320) Brand amortisation (50) - (50) - (50) -------- -------- -------- --------- ------- Segment operating result 6,590 2,600 9,190 2,090 11,280 Unallocated costs (814) - (814) Profit on disposal of property 637 - 637 -------- -------- -------- --------- ------- Operating profit 9,013 2,090 11,103 -------- -------- -------- --------- ------- Reportable segments now exclude central and other unallocated costs, and prior year comparatives have been restated accordingly. Following the recent significant changes in the composition of the group, management is currently reviewing the most appropriate way in which to analyse performance by business segments in future reporting periods. 4. Discontinued operations Discontinued operations in the prior year comprise the sale of the Brock Metal business, the leading UK supplier of zinc and aluminium diecasting alloys, on 30 June 2007. The results of discontinued operation included in the consolidated income statement of the prior periods are as follows: Half year Half year Year 31 December 31 December 30 June 2007 2006 2007 £'000 £'000 £'000 Revenue - 27,626 59,803 Cost of sales - (25,932) (55,574) ----------- --------- -------- Gross profit - 1,694 4,229 Net operating expenses - (1,095) (1,993) ----------- --------- -------- Operating profit - 599 2,236 Loss on disposal - - (146) ----------- --------- -------- Profit before tax - 599 2,090 Tax expense - (225) (720) ----------- --------- -------- Profit after taxation - 374 1,370 ----------- --------- -------- The net cash flows attributable to discontinued operations are as follows: Half year Half year Year 31 December 31 December 30 June 2007 2006 2007 £'000 £'000 £'000 Operating cash flows 1,167 (956) (6,626) Investing cash flows 747 - 8,150 ----------- --------- -------- Net cash inflow / (outflow) 1,914 (956) 1,524 ----------- --------- -------- 5. Profit on disposal of property Profit on disposal of property comprises: Half year Half year Year 31 December 31 December 30 June 2007 2006 2007 £'000 £'000 £'000 Profit on sale of Borehamwood freehold property 990 - - Profit on sale of Walsall freehold property - - 991 Impairment of Copal long leasehold property - - (354) -------- --------- ------- 990 - 637 -------- --------- ------- 6. Tax expense Half year Half year Year 31 December 31 December 30 June 2007 2006 2007 £'000 £'000 £'000 Current tax - UK Corporation tax - continuing operations 1,024 533 1,678 - discontinued - 225 720 operations ---------- ---------- -------- 1,024 758 2,398 Amounts overprovided in previous years - - (128) ---------- ---------- -------- Total current tax 1,024 758 2,270 Deferred tax - continuing 487 366 698 operations - discontinued - - - operations ---------- ---------- -------- Total deferred tax 487 366 698 ---------- ---------- -------- Tax charge in the income statement 1,511 1,124 2,968 ---------- ---------- -------- The tax charge in the income statement is disclosed as follows: Income tax expense on continuing operations 1,511 899 2,248 Income tax expense on discontinued operations - 225 720 ---------- ---------- -------- 1,511 1,124 2,968 ---------- ---------- -------- If the Finance Act is substantially enacted prior to 30 June 2008, and Industrial Buildings Allowances (IBAs) are to be phased out, the deferred tax liability currently recorded in respect of IBAs might need to be reversed in the full-year accounts. The impact would be a credit to the income statement of around £0.1m, decreasing the overall tax rate for the year by about 1%. 7. Dividends The directors have approved an interim dividend per share of 3.25p (2006: 3.1p) which will be paid on 7 April 2008 to shareholders on the register at the close of business on 12 March 2008. In accordance with IFRS accounting requirements, as the dividend was approved after the balance sheet date, it has not been accrued in the interim consolidated financial statements. A final dividend per equity share of 6.6p in respect of the 2006/07 financial year was paid during the period. 8. 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 adjusted earnings per share figure is based on profit adjusted for gains or losses on disposal of property, brand amortisation, reorganisation costs and, in the year to 30 June 2007, an acquisition accounting adjustment. The figure is also based on the same weighted average number of shares used in the basic earnings per share calculation above. Half year Half year Year 31 December 31 December 30 June 2007 2006 2007 £'000 £'000 £'000 Net Profit attributable to equity holders of the parent - continuing operations 3,706 2,081 5,519 Net profit attributable to equity holders of the parent - discontinued operations - 374 1,370 -------- -------- ------- Net profit attributable to equity holders of the parent 3,706 2,455 6,889 -------- -------- ------- 000s 000s 000s Basic weighted average number of shares 35,993 35,293 35,371 Dilutive potential ordinary shares - employee share options 92 66 118 -------- -------- ------- Diluted weighted average number of shares 36,085 35,359 35,489 -------- -------- ------- Reconciliation to adjusted earnings per share: Half year Half year Year 31 December 31 December 30 June 2007 2006 2007 Continuing operations: £'000 £'000 £'000 Profit before taxation 5,227 3,003 7,802 Less: profit on disposal of property (990) - (637) Add: Levolux acquisition & brand amortisation 85 - 370 Add: Alumasc Dispense reorganisation costs 150 - - -------- -------- ------- Adjusted profit before taxation 4,472 3,003 7,535 Tax at underlying group rate of 31% (2006: 32%) (1,386) (961) (2,411) -------- -------- ------- Adjusted earnings 3,086 2,042 5,124 -------- -------- ------- Adjusted earnings per share 8.6p 5.8p 14.5p -------- -------- ------- 9. Movement in net borrowings Finance leases Cash and bank and secured Net overdrafts Bank loans loans borrowings £'000 £'000 £'000 £'000 At 1 July 2007 1,977 (14,860) (25) (12,908) Cash flow movements 1,141 - 4 1,145 Effect of foreign exchange rate changes 8 - - 8 Loan charges and amortisation - 1 - 1 -------- -------- --------- -------- At 31 December 2007 3,126 (14,859) (21) (11,754) -------- -------- --------- -------- At 1 July 2006 (2,650) - (722) (3,372) Cash flow movements (3,007) - 433 (2,574) Effect of foreign exchange rate changes 7 - - 7 -------- -------- --------- -------- At 31 December 2006 (5,650) - (289) (5,939) -------- -------- --------- -------- At 1 July 2006 (2,650) - (722) (3,372) New borrowings (net of arrangement fees) - (14,860) (28) (14,888) Cash flow movements 4,633 - 725 5,358 Effect of foreign exchange rate changes (6) - - (6) -------- -------- --------- -------- At 30 June 2007 1,977 (14,860) (25) (12,908) -------- -------- --------- -------- 10. Reconciliation of changes in total equity For the half year to 31 December 2007 Half year Half year Year 31 December 31 December 30 June 2007 2006 2007 £'000 £'000 £'000 At beginning of period 32,211 24,319 24,319 Shares issued 421 - 1,195 Net (losses)/gains on cash flow hedges (249) 7 99 Exchange differences on retranslation of foreign operations 8 - (6) Actuarial gain/(loss) on defined benefit pensions net of tax 44 (1,331) 2,922 Dividends (2,378) (2,218) (3,340) Profit for the period 3,716 2,478 6,924 Share based payments 26 22 98 --------- --------- -------- At end of period 33,799 23,277 32,211 --------- --------- -------- 11. Post balance sheet events In connection with last year's capital re-organisation, the company agreed with the Pension Trustees to contribute £1.5 million into the group's defined benefit pension schemes. On 1 February 2008, the company contributed the freehold property being leased to Brock Metal, valued at £1.1 million, and £0.4 million in cash into the two pension schemes in equal shares. Responsibility Statement We confirm that to the best of our knowledge: a) The condensed set of financial statements has been prepared in accordance with IAS 34; b) The interim management report includes a fair review of the information required by the Financial Statements Disclosure and Transparency Rules (DTR 4.2.7R) - indication of important events during the first six months and their impact on the financial statements and description of principal risks and uncertainties for the remaining six months of the year; and c) The interim management report includes a fair review of the information required by DTR 4.2.8R - disclosure of related party transactions and changes therein. On behalf of the Board G P Hooper A Magson Chief Executive Group Finance Director This information is provided by RNS The company news service from the London Stock Exchange

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