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Alumasc Group Plc (ALU)

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Wednesday 12 September, 2007

Alumasc Group Plc

Final Results

Alumasc Group PLC
12 September 2007

Wednesday 12 September 2007


Alumasc (ALU.L), the premium building and engineering products group, announces
strong gains in performance and strategic development in the year to 30 June

Financial Highlights

   •Total group revenue increased by 22% to £163.4m.

   •Pre-tax profit increased by 74% to £9.9m and basic EPS increased by 76%
    to 19.5p reflecting good performances in the Building Products division, an
    exceptional profit from Brock Metal prior to its sale at the year end and a
    prior year result which included the closure costs of Copal Castings.

   •On continuing operations, revenue increased by 10% to £103.6m, pre-tax
    profit increased by 4% to £7.8m and basic EPS increased by 6% to 15.6p

   •The final dividend per share is increased by 4.8% to 6.6p, giving a total
    for the year of 9.7p, covered 2.0 times by earnings.

Commercial Highlights

• Building Products made an operating profit, adjusted to exclude property 
  disposal gains and acquisition accounting adjustments, of £6.6m (2006:
  £6.4m) on revenue up 7.9% at £59.6m (2006: £55.3m). In the two month period
  following acquisition, Levolux contributed an adjusted operating profit of 
  £0.4m from revenue of £3.0m.

• Five of the group's building products businesses reported record
  results. However, this profitable growth was largely offset by significantly
  lower social housing refurbishment activity after a buoyant prior year, and
  lower metal roofing sales on the Fjardaal project.

• Engineering Products made an operating profit of £2.2m (2006: £2.1m) on
  revenue up 12.3% at £44.0m (2006: £39.1m).

• Alumasc Precision had a strong start to the year, but a tougher second
  half, whilst Alumasc Dispense had a relatively quiet year.

• In May, Alumasc acquired Levolux, the UK's leading supplier of solar
  shading systems for buildings, for £13.5m (excluding cash acquired). Levolux
  falls squarely into the sustainable building products category where Alumasc 
  has a growing family of market leaders. Levolux is anticipated to be earnings
  enhancing in the current year.

• The sale of Brock Metal at the year end was a strategically important
  step for Alumasc, enabling management to focus further on growing the group's
  higher margin core premium building and precision engineering product

• The group entered the new financial year with stronger order books than
  a year ago, particularly in the Building Products division.

Paul Hooper, Chief Executive, stated, "2006/07 was a year of transformation for
Alumasc. The acquisition in May 2007 of Levolux and the disposal in June 2007 of
Brock Metal, a producer of zinc and aluminium alloys, were both major
transactions which demonstrate the group's commitment to increasing its
strategic focus on niche premium building product and precision engineering

John McCall, Chairman, added "The growth in total earnings in the past year sets
a new and challenging target for the current year, not least given the
exceptional contribution from Brock. The acquisition of Levolux towards the end
of the year, with its profitable record and growth prospects, will help in this
regard. Overall, the shape of the group is stronger than for many years and
provides a strong base for further development."


Today, from 09.30am to 10.30am, a presentation to broker's analysts and private
client brokers will be held at the offices of Bankside Consultants, 1
Frederick's Place, London EC2R 8AE.


The Alumasc Group plc                      01536 383844
Paul Hooper (Chief Executive)              [email protected]
Andrew Magson (Finance Director)

Bankside Consultants Limited
Charles Ponsonby                           020 7367 8851
                                           [email protected]

Chairman's Statement


Alumasc made strong gains in performance and strategic development during the
past year. Earnings per share were, in total, some 76 per cent ahead of the
prior year and corporate activity accelerated the focus on the group's core

The growth in earnings is set against a prior year figure depressed by closure
costs. Nevertheless, profit before tax for those businesses in the group at the
beginning of the financial year rose by over 25 per cent on a like-for-like
basis. Both of the group's divisions contributed to this profit growth and a
detailed review appears in the Chief Executive's Business Review following this

Brock Metal, the business sold on the final day of the financial year, was a
major contributor to this growth. The acquisition of Levolux two months earlier
is intended to replace the earnings from Brock with a profit stream much more
closely aligned with our company's strategy.

After two years during which the dividend was unchanged, the Directors were
pleased to increase the interim dividend by 3.3% in April 2007. The Directors
are now recommending an increase in the final dividend of 4.8% to 6.6p per
share, giving a total for the year of 9.7p per share (2006: 9.3p per share), an
increase of 4.3%.


The Board has, for a number of years, directed Alumasc's future towards high
performance building and engineering products. The growing demand for
sustainable building products, which contribute to environmentally responsible
solutions in building, has added focus to this direction. Brock Metal, while an
excellent business in the field of commodities, did not fit these criteria, and
we are delighted to have found a home where its skills and market position are
indeed mainstream.

Levolux, the UK's leading supplier of solar shading products, acquired in May
for £13.5 million, falls squarely into the sustainable building products
category. We are delighted to welcome Levolux into Alumasc's growing family of
market leaders in the sector.

The group's balance sheet has undergone a number of changes in the course of the
year. Most obviously, the acquisition of Levolux was financed largely by
additional borrowings of £12.3 million. The subsequent sale of Brock yielded
£8.9 million, much of which related to working capital. Shareholders approved a
restructuring of the parent company's capital in May 2007 - since approved by
the High Court and implemented - as part of the exercise to ensure that the
current dividend policy is maintained; and the group's combined pensions deficit
fell by £6.7 million during the year, in line with rising bond yields,
investment gains and company contributions.

The combination of these factors led to increased gearing of 40% at the year end
(2006: 14%) and interest cover of over 10 times1 (2006: 16 times).


There was one appointment to the Board during the year, with Andrew Magson
joining as Group Finance Director in October 2006. We welcome Andrew and wish
David Sowerby, his predecessor, a happy retirement along with our gratitude for
his considerable contribution during 15 years in that role.


The growth in total earnings in the past year sets a new and challenging target
for the current year, not least given the exceptional contribution from Brock.
The acquisition of Levolux towards the end of the year, with its profitable
record and growth prospects, will help in this regard. Overall, the shape of our
group is stronger than for many years and provides a strong base for further

J McCall


1: The interest cover calculation excludes profit on property disposals, Levolux
acquisition accounting adjustments and amortisation and notional pension
interest costs.

Business Review

Chief Executive's Operating Review


2006/07 was a year of transformation for Alumasc. The acquisition in May 2007 of
Levolux, the UK's leader in the provision of solar shading and control systems
for buildings, and the disposal in June 2007 of Brock Metal, a producer of zinc
and aluminium alloys, were both major transactions which demonstrate the group's
commitment to increasing its strategic focus on niche premium building product
and precision engineering businesses.

Following these transactions, Alumasc believes it has significantly strengthened
the overall portfolio of businesses within the group. This should facilitate a
higher quality of ongoing earnings due to the growth potential offered by
Levolux, and the increased proportion of the group's income derived from its
premium products which are, in many cases, market leaders in growing or stable

The group's overall financial results in the year were strong. Total group
revenue (including discontinued operations) increased by 21.8% to £163.4
million, and total group profit before tax increased by nearly 75% to
£9.9million. This significant increase in profit benefited from an excellent
performance at Brock Metal prior to its sale at the year end, and a prior year
result which was impacted by the closure costs of Copal Castings.

Revenue from continuing operations increased by 9.7% to £103.6 million, with
adjusted profit before tax from continuing operations (stated prior to property
disposal gains and one-off acquisition accounting adjustments) up 3.9% on last
year at £7.5 million. Unadjusted profit before tax, benefiting from gains on
property disposals, increased by 4.1% to £7.8 million. Growth in profits from
continuing businesses was restricted by the impact of lower social housing
refurbishment market activity, and lower levels of work on the major Fjardaal
metal roofing supply contract, mostly completed last year, which together
reduced profits by an estimated £1.7 million. This was largely recovered by some
excellent performances elsewhere within the Building Products division, where
five businesses (including the two businesses acquired in 2004) reported record
profits for the year.


The group's strategy is to focus on sustainable growth in earnings from its
premium building and engineering product businesses. Organic growth is
encouraged across Alumasc by empowering local management teams to focus on
serving their own individual niche markets and customers, supporting this by
investment in new product introductions, marketing and brand development,
quality people and capital equipment. The Building Products division will grow
further by selective acquisitions, but only in circumstances where the strategic
fit is good, the market position of the target is strong and where we believe
the post-acquisition returns generated will add value for shareholders.

Over the last five years, the impact of this strategy is illustrated by an
increase in the proportion of the group's revenue relating to core Building
Products and Precision Engineering activities from 56% to 89%. This proportion
increases from 77% to 98% at operating profit levels. In the same period, the
proportion of the group's adjusted operating profit from the Building Products
division increased from 50% to 75%, and grew from £4.0 million to £6.6 million,
at an average compound annual growth rate of 13%.

On a pro forma basis, including Levolux, over 60% of ongoing group revenue is
now being derived from Building Products, representing a clear evolution over
recent years from the group's origins as an Engineering Products business.

The group also seeks to grow export sales, particularly where there are
opportunities to repeat successes we have enjoyed in the UK. Exports as a
proportion of Group sales increased from 14.5% five years ago to 21% this year.
Particular successes this year have been increased sales of precision components
to non-automotive diesel engine manufacturers in Europe and the USA, the growth
in sales of Gatic Slotdrain in Europe and increased demand for Gatic access
covers in airport projects in the Middle East and Far East.

The group is increasingly well positioned, both through businesses that have
been owned for many years, and through more recent investments including
Levolux, to benefit from growing demand for environmentally sustainable
products. Over half of the group revenue is estimated to derive from products
that give particular benefits in the fields of insulation, energy reduction and
rainwater management. The group's major activities in this area are:

  • the number one position in the UK's intensive green roof market, which
    in turn "pulls-through" demand for Alumasc's associated roofing and
    waterproofing membranes;

  • leading market positions in the rainwater management and drainage
    markets, with Gatic Slotdrain systems, in particular, benefiting from
    software that enables engineers quickly to design bespoke solutions tailored
    to projections of rain and surface water flow in specific locations;

  • Levolux, the UK market leader in solar shading and control systems which
    reduce heat in buildings through either external or internal sun shading;

  • MR render systems, the UK market leading exterior wall insulation system
    used to refurbish social houses of solid wall construction; and

  • the manufacture of aluminium components by Alumasc Precision which, in
    addition to being recyclable, reduce weight, transfer heat quickly and
    thereby reduce energy use and carbon emissions from the engines and vehicles
    in which they are used.

Health, Safety & Environment

The group's number one priority is health and safety, and the first agenda item
on all operating company and group board meetings is a review of health and
safety performance in the month and of performance trends. The group holds
regular health and safety best practice days, and there are health and safety
committees in each of the group's operating businesses. In addition, each
operation is subject to an annual independant health and safety audit and the
implementation of action points arising is monitored in board meetings.

The key performance indicator used to measure the groups improvement in its
health and safety performance is the safety performance rate, which is an
improvement based measure weighing risks, hazard levels and events with
operational size of business unit.

The group's safety performance index for the 2006 calendar year was 68 and a 20%
improvement target was set for 2007. In the six months to 30 June 2007, this
target is being achieved with the safety performance index reduced to 45.

In line with its focus on environmentally sustainable building products, the
group manages its businesses within sound environmental principles. During the
year, a fourth facility, at St. Helens, achieved ISO 14001 accreditation. In
addition, businesses are encouraged to conserve energy and to use recycled and
recyclable materials from sustainable sources. Progress in this area is also

Acquisition of Levolux

Alumasc acquired Levolux, the UK's leading supplier of solar shading and control
systems for buildings, on 1 May 2007, for a total consideration of £13.5 million
(excluding cash acquired).

Levolux designs, manufactures and installs internal and external shading systems
which are used to control the impact of sunlight on a building's internal
environment. These systems, which include Brise Soleil, Aerofoil Fins, Louvres
and External and Internal Blinds, are increasingly specified in new buildings
and refurbishment projects in order to improve energy performance and the
comfort of occupants. As a result of working closely with architects and other
specifiers, Levolux systems are frequently an integral part of a building's
functional and aesthetic design.

The acquisition of Levolux fits right at the core of Alumasc's strategy,
described above, to develop the group's high performance building products
activities. Levolux will spearhead the group's growing presence in sustainable
"green" building products and will also grow the opportunity, believed to be
substantial, for developing markets for these products outside the UK.

With the introduction of the updated Document L building regulations aimed at
improving the energy efficiency and reducing the UK's carbon emissions in
commercial buildings, Levolux is in a strong position to assist architects in
meeting such important demands as well as contributing to external and internal
design aesthetics. In addition, the introduction in June 2007 of energy
performance certification (required for each building by 2009) will further
focus the construction industry on reducing energy consumption in buildings.

In the year prior to its acquisition by Alumasc, Levolux generated revenues of
£20.7 million. Levolux has made a good start in the group, contributing revenues
in the two months to 30 June 2007 of almost £3 million, and operating profit,
prior to acquisition accounting adjustments, of nearly £0.4 million, giving a
return on sales of 11.9%.

Detailed synergy reviews are currently underway that should result in benefits
to both Levolux and other group companies. In particular, opportunities to
combine aluminium purchases are being reviewed, whilst the sharing of market
information will undoubtedly benefit the division as a whole.

Operating Results: Continuing Operations

                                                                 2007                                    2006

                                     Building   Engineering     Group     Building     Engineering      Group
                                     Products      Products     Total     Products        Products      Total
                                         £000          £000      £000         £000            £000       £000


Continuing operations                  56,668        43,954   100,622       55,292          39,134     94,426

Acquisition of Levolux                  2,979             -     2,979            -               -          -

                                       59,647        43,954   103,601       55,292          39,134     94,426

Adjusted Operating Profit(1)

Continuing operations                   6,217         2,174     8,391        6,432           2,132      8,564

Acquisition of Levolux                    355(2)          -       355(2)         -               -          -

                                        6,572         2,174     8,746        6,432           2,132      8,564

Operating margin                         11.0%          4.9%      8.4%        11.6%            5.4%       9.1%

(1)  Operating profit excluding gains on disposal of properties, acquisition 
     accounting adjustments and brand amortisation 

(2)  The operating profit of Levolux is stated prior to deduction of one-off, 
     non-cash acquisition adjustments of £320,000 relating to valuation of 
     inventory, and a non-cash amortisation charge of £50,000 relating to the 
     Levolux brand.

Operating Review: Continuing Operations

Group revenue from continuing operations increased by 9.7% to £103.6 million, of
which approximately 2.3% was attributable to selling price increases, 3.2% arose
due to the acquisition of Levolux, and 4.2% was attributable to underlying
organic growth. The major contributors to organic growth were the group's
rainwater and drainage businesses, particularly Gatic Slotdrain, together with
increased export sales of Gatic access covers. This was offset by reduced
revenues from the MR renders and Pendock brands which suffered from
significantly lower social housing refurbishment activity after a buoyant prior
year. Despite a disappointing year in this market segment, government funds
remain committed to upgrading social housing under the Decent Homes Initiative
in the medium-term, from which Alumasc should derive future benefit.

Adjusted group operating profit (prior to gains on disposal of properties and
acquisition accounting adjustments) of £8.7 million was £0.2 million higher than
in the prior year, after benefiting from a £0.4 million post-acquisition profit
contribution from Levolux. However, non-cash acquisition accounting adjustments
eliminated most of Levolux's profit contribution and reduced reported operating
profit, prior to property disposal gains, to £8.4 million (2005/06: £8.6
million). Prior to these accounting adjustments, both Building Products' and
Engineering Products' divisional profits were each almost 2% ahead of prior year

Group operating margins in 2006/07 were slightly lower at 8.4% (2005/06: 9.1%)
due to the impact of continued cost inflation, particularly aluminium and energy
costs. Whilst much of this inflation was passed on to customers through selling
price increases, no incremental profit was made on the pass through.

The profit impact of organic volume growth during the year was offset by changes
in sales mix, with exports, in particular, having lower margins on average.
Whilst the group was not able to pass through all cost inflation to customers
due to market pressures, a good cost saving performance added £1.5 million (1.4%
of revenue), which more than recovered the shortfall. Capital expenditure in the
prior year contributed to the volume growth and cost savings, but added £0.4
million to the depreciation charge.

Building Products Division

Building Products' divisional revenues grew by 7.9% to £59.6 million. This
growth was assisted by two months of post-acquisition sales from Levolux which
added 5.4%, with average selling price increases of some 2% also contributing.
Underlying activity levels were marginally up overall, but varied significantly
by business, with rainwater and drainage activities growing strongly and Gatic
access covers benefiting from buoyant export demand, largely offset by
significantly lower sales of MR renders and Pendock profiles to the social
housing refurbishment market, and lower metal roofing sales to the Fjardaal
project. The modest increase in activity levels, taking the division as a whole,
is broadly consistent with the UK construction market, which grew by just over
1% in 2006, according to Experian.

Divisional operating profit increased by 2.2% to £6.6 million, prior to Levolux
acquisition accounting adjustments. Excluding Levolux, like-for-like divisional
operating profit was £0.2 million lower than the prior year, due to an estimated
profit reduction of £1.7 million arising from lower social housing refurbishment
activity and reduced Fjardaal sales. Excellent performances elsewhere in the
division, including five businesses which reported record profits, helped to
eliminate a substantial part of this shortfall. Divisional operating margins,
also prior to Levolux accounting adjustments, remained strong at 11.0% albeit a
little reduced from the previous year's 11.6%, mostly due to cost inflation.

Alumasc's building products activities span a number of end user markets giving
a portfolio effect which allows the group to absorb both rises and falls in the
activity of individual sub-segments. Relative to the UK construction market as a
whole, and consistent with the group's range of high quality specification
products, Alumasc has a greater weighting of sales (approximately 58% of the
divisional total) to major commercial property and public projects, both of
which have been buoyant sectors recently. Alumasc's income from these markets
has now further increased following the acquisition of Levolux. However, through
its MR Swisslab brand and Pendock pipe-boxing products, Alumasc also derives a
high proportion (currently approximately 11%, 2006 15%), relative to the UK
construction market as a whole, of its revenue from the social housing
refurbishment market.

Revenue growth rates in 2006/07 varied significantly by activity within the
Building Products division, as described in more detail below.

Revenues from rainwater and drainage activities grew by 15.1% to £17.8 million,
driven by strong demand and market share gains for Gatic Slotdrain in both the
UK and Europe, growth in soil and waste drainage sales which benefited from a
product launch and a number of large hospital projects, and a robust performance
from the rainwater business. Gatic Slotdrain has been a particular success for
the group. The relatively narrow throat to the drain reduces surface exposure
and helps prevent damage, thereby improving durability. The flexibility in sizes
of Gatic Slotdrain systems, combined with market-leading design software, mean
the product is adaptable to a variety of applications and weather conditions,
making it the increasingly popular choice for specifiers and engineers. Success
in the UK was repeated in a number of European export markets, and there are
further opportunities to grow export sales of this product. Investments have
recently been made to increase Gatic Slotdrain manufacturing capacity, which
also reduced the operational risk of over-dependence on key machines. Alumasc
has recently introduced an internal drainage system for use in wet environments,
Linearis, which is a similar product in style to Gatic Slotdrain. Initial
interest in this product is promising.

Roofing revenues reduced by 4.2% to £10.7 million, largely due to a £1.8 million
reduction in metal roof sales from lower activity this year in completing the
major Fjardaal roofing project in Iceland. This was mitigated by good
performances in other roofing activities, in particular waterproofing, where
revenues grew by 13.5% to £6.2 million. Growing demand for market-leading ZinCo
green roof systems had a "pull-through" effect on waterproofing membranes such
as Hydrotech or Derbigum. Green roofs are being increasingly specified by
architects because they provide thermal benefits, absorb rainwater, and reduce
run-off and have attractive aesthetic characteristics. Alumasc's "green product"
range within the roofing area was widened through the introduction of Derbigum
Brite, a white-coated waterproofing membrane, which reflects heat from flat
roofs. Roof-Pro, the business acquired by Alumasc in 2004, had a very good year.
Specifiers and building owners are increasingly recognising the benefits of
Roof-Pro's modern support systems that elevate building services such as air
conditioning and cooling units above the waterproofing layer on flat roofs,
thereby enabling lower maintenance and refurbishments costs over the lifespan of
the roof.

Revenues from businesses where products are sold mostly into the social housing
refurbishment sector fell by around £3.5 million to £11.8 million, due to delays
in funds being released by local government. Whilst the recovery in demand hoped
for in the second-half of 2006/07 did not materialise, there are signs of a
modest uplift in activity early in the new financial year. Demand weakness in
this sector led to increasing competitive pressure, particularly for Pendock
profiles, following the entry of new competitors into the market in recent
years. Alumasc has responded by re-focusing its sales activity and commencing
in-house production of profiles in order to reduce costs and to protect margins.

Revenues from Timloc products, which are sold primarily in the new house
building sector, showed good growth, increasing by more than 10% to over £5
million. This business, acquired by Alumasc in 2004, achieved its improved
revenue performance against a flat marketplace by expanding its product
distribution and increasing its market share. During the year Timloc was also
successful in broadening its product range, whilst improving cost efficiency
through investment in further automation.

Export demand for Elkington Gatic's access covers was exceptional, particularly
as a result of orders from a number of major airport projects in the Middle East
and the Far East. The latter benefited Elkington China, the marketing company
based in Hong Kong. Scaffold and Construction Products had a good year, with
strong underlying demand for core products such as props and jacks and
additional growth from products added to the product range such as ladders.

Engineering Products Division

Engineering Products' revenue grew by 12.3% to £44.0 million, of which some 4%
related to selling price inflation, principally the pass-through of increased
aluminium costs, and around 8% was underlying growth. Divisional operating
profit improved by 2.0% with both businesses in this division, Alumasc Precision
and Alumasc Dispense, ahead of the prior year. Operating margins reduced from
5.4% to 4.9%, mainly due to cost inflation, which it was not possible to recover
fully from customers.

Alumasc Precision had a strong start to the year, with first-half performance
resurgent following the ramp-up of new projects with non-automotive diesel
engine manufacturers that mitigated the impact of the collapse of MG Rover in
2005. With some older established projects, such as for Land Rover, coming to an
end during the year, and not being replaced at the same rate by new projects,
the second half-year was tougher. Management continued to focus on quality,
customer service and cost reduction, with encouraging progress on all three
measures in the second half. Some of the business transferred from Copal Casting
last year has proved not to be sufficiently profitable and this, along with
other lower valued added work, is being increasingly outsourced to the Far East

Nonetheless, some exciting new projects are coming on-stream, including a
complex windshield surround for Aston Martin and a number of aluminium and zinc
components for the same customer. New components for Caterpillar, which are
being shipped to the USA, are also due to come on-stream in 2007/08. Alumasc
continues to win work outside the diesel engine market. Examples include
high-performance hi-fi speaker components for Bowers & Wilkins, and components
for Siemens and Rotork. Investments have been made in new machines and cells,
where needed, to support new work and in equipment that will reduce overall
energy use in the foundry whilst also improving health and safety.

Alumasc Dispense, a supplier to the drinks industry, had a relatively quiet
year, albeit both revenue and operating profit improved despite no new major
bespoke projects. Sales of decorated glassware were much stronger, but this work
has less value added and has a lower margin. A particular highlight was the
winning of a decorated glass contract for the Magners cider brand. Alumasc
Dispense continues to be innovative in the design of new products, particularly
in wireless illumination of point of sale display and in high performance niche
beer coolers. There are plans to strengthen the sales team to ensure these new
products realise their potential.

Discontinued Operation: Disposal of Brock Metal

On 29 June 2007, Alumasc disposed of the Brock Metal business to Chelyabinsk
Zinc Plant ("CZP") for a final cash consideration of £8.9 million, higher than
originally envisaged due to a greater level of working capital at completion.
The consideration was equal to the net book value of the assets being
transferred. Alumasc retains ownership of Brock's freehold factory near Cannock,
which is being leased for a 15 year period to CZP. All of Brock's existing
management team and employees transferred with the business.

The disposal of Brock was a strategically important step for Alumasc, and
enables the group's management to focus further on growing higher margin core
premium building and precision engineering products businesses.

Whilst Brock was never loss making under Alumasc's ownership, operating margins
were low, and return on investment over the last few years had been at, or
below, the group's cost of capital on average.

Nonetheless, Brock had an exceptional final trading year in Alumasc, benefiting
from worldwide zinc prices that peaked at almost three times their levels in the
previous year. This, together with high volatility in market prices and
relatively high premiums for physical zinc supplies, allowed Brock to increase
its operating margins from 1% to 3.6% and to generate operating profit before
tax of £2.1 million (prior year £0.4 million). Towards the end of its period
under Alumasc's ownership, conditions in the zinc market were beginning to
become less favourable and, with it, Brock's profitability began to reduce from
levels experienced during the winter.

As Brock is fundamentally a commodity business, its operating margins were much
lower than those for the rest of the Alumasc Group. Consequentially the
classification of Brock as a discontinued operation in our accounts this year
increased the return on sales from the group's continuing operations in 2006
from the 6.7% published last year to 9.1% published in this year's comparative


The Group entered the new financial year with stronger order books than a year
ago. In particular, the Building Product companies are ahead of the prior year.

Rising interest rates globally and in the UK, and their impact particularly on
activity levels in the UK building and construction sector, are a key concern,
although demand does not appear to have been affected to date.

Whilst aluminium costs on the world markets have become more stable recently,
duties on imports of aluminium and steel from the Far East are on the rise, and
other material cost inflation, for example zinc, lead, polymers and insulation,
remains persistent. General inflation in the UK has also risen. However, the
group has largely locked in its energy costs for most of the current year at
lower rates than in 2007.

The market environment for the Engineering Products businesses is demanding,
with customers insisting on ever-increasing quality standards at lower cost. The
focus in the new financial year is on continued cost reduction and efficiency,
including outsourcing lower value added work to the Far East, whilst working
hard to ensure the successful introduction of new contracts, especially
components for Aston Martin and Caterpillar, and seeking to win further new
customer accounts and contracts.

Alumasc will benefit from a full year's Levolux profit contribution in 2008
although in the current financial year, after incremental financing costs, this
might not fully replace the exceptional level of profit generated by Brock in
2007. Nonetheless, the early signs from Levolux are encouraging, and order books
have strengthened since its acquisition in May. Levolux is anticipated to be
earnings enhancing in 2008.

The Building Products division more generally is well positioned to benefit from
a number of industry-specific and public policy factors in the UK which could
drive demand in the coming year and beyond, including:

   •A growing awareness of the importance of sustainability and life-cycle
    cost in building decision-making;

   •Building regulations, including Document L and energy performance
    certification requirements, which encourage the construction of more energy
    efficient buildings, including superior insulation and acoustic performance;

   •The government's Decent Homes and Building Schools for the Future
    initiatives. However, as we have seen this year, the timing of the release
    of funds to these initiatives can be unpredictable;

   •The government's objective to build more homes in the UK;

   •Extremes of weather, whilst disruptive to construction sites and leading
    to greater lumpiness or seasonality of sales in the short-term, could drive
    increasing demand for Alumasc's solar shading, rainwater, drainage and
    roofing products; and

   •Construction activity in London will increase ahead of the Olympics in


In the last few years the group has worked proactively to focus on higher added
value and sustainable niche markets. It will continue to move forward through
investment to achieve organic growth while supplementing this with the
acquisition of building product companies which have strong market positions.
Sustainable building products are of particular interest to the group. More
generally the characteristics of premium building products with high levels of
specification and the ability to differentiate through excellence in service and
technical support, combined with good cash generation and low levels of capital
requirement, are attractive features that fit the group's more clearly defined

Following the acquisition of Levolux, the sale of Brock, and developments
elsewhere in the group during 2007, Alumasc's current portfolio of businesses is
stronger and has greater medium and long-term potential than those of a year

G P Hooper

Chief Executive

Business Review

Group Finance Director's Financial Review

Profit before tax

A reconciliation of adjusted profit before tax from continuing operations to
total reported profit before tax is shown below. The main features are:

   •the year-on-year increase in overall reported profit before tax by 74.2%
    to £9.9 million, explained mainly by the exceptionally strong financial
    performance of Brock Metal prior to its sale at the end of the year, and a
    prior year comparator which included closure costs relating to Copal
    Casting, both of which are classified as discontinued activities in the
    table below

   •adjusted profit before tax from continuing operations increased by 3.9%
    to £7.5 million (2006: £7.3 million), with both the Building Products and
    Engineering Products divisions reporting increased profits, as described in
    the Chief Executive's Operating Review. Adjusted profit before tax is stated
    prior to property disposal gains, and prior to Levolux acquisition
    accounting adjustments and brand amortisation.

The results from continuing operations in 2006/07 include only two months of
post-acquisition revenue, £3.0 million, and adjusted operating profit, £0.4
million, from Levolux and therefore do not yet reflect the full year run-rate of
revenues and profits from the group's continuing operations.

Income statement summary and reconciliation of adjusted profit before tax

                                                           2007                        2006
                                                Discon-                      Discon-
                                     Continuing tinued    Total   Continuing tinued   Total
                                           £000    £000    £000         £000   £000    £000

Revenue                                 103,601  59,803 163,404       94,426  39,701 134,127
Increase in revenue                        9.7%   50.6%   21.8%

Adjusted profit before tax                7,535   2,090   9,625        7,255 (1,819)   5,436
Increase in adjusted profit before tax     3.9%           77.1%

Levolux fair value adjustment &           
amortisation                              (370)       -   (370)            -       -       -
Property disposal gains                     637       -     637          242       -     242

Reported profit before tax                7,802   2,090   9,892        7,497 (1,819)   5,678
Increase in reported profit before tax     4.1%           74.2%


The underlying group tax rate remains consistent with the prior year at
approximately 32%, slightly above the statutory rate of 30%, due to routine
expenditure disallowable for tax purposes where Alumasc takes a prudent stance
in estimating the level of disallowances in preparing the estimated tax charge
in the accounts.

After property disposal gains and discontinued activities, the group's overall
tax rate reduced to 30.0% (2006: 30.5%), mainly due to the higher profits from
property disposals in 2007, which are tax-free due to brought forward capital
losses, and adjustments to the deferred tax charge partly relating to the
forthcoming reduction in the UK corporation tax rate to 28%.

The group's cash tax charge for 2007 is significantly lower than the overall tax
rate due to capital allowances exceeding depreciation, pension payments
exceeding the pension expense, and the timing of payments, which in 2007
benefited from the lower level of profitability in 2006.

The benefit of the two percentage point reduction in the corporation tax rates
announced in the 2007 Budget, effective in the 2008/09 tax year, is expected to
be offset in cash tax terms by less favourable capital allowances. As a
consequence, Alumasc anticipates that the group's underlying cash tax rate will
increase marginally next year.

In overall rate terms, the 2007 Budget changes are likely to result in the
group's effective underlying tax rate on continuing activities reducing to
around 30% from the current 32%.

Earnings per share

Basic earnings per share increased by almost 76% to 19.5 pence (2006:11.1
pence), a greater increase than the growth in total profit before tax because of
the lower overall group tax rate. Adjusted earnings per share from continuing
activities increased by 3.6% to 14.5 pence.


The Board has proposed a final dividend of 6.6 pence per share (2006: 6.3
pence), an increase of 4.8%, giving a total dividend for the year of 9.7 pence
per share (2006: 9.3 pence) payable on 31 October 2007 to shareholders on the
register at 5 October 2007. The dividend is covered two times by earnings.

Property disposals

The total gain in the year arising from property disposals was a net £0.6
million (2005/06: £0.2 million), comprising the sale in April of a disused
industrial property in Walsall for net proceeds of £2.3 million at a profit of
£1.0 million; and a £0.4m impairment charge taken on the former Copal warehouse
in Birmingham following agreement reached after the year end to sell the
property for £0.7 million.

Capital structure and financing

The group financed the £13.5 million acquisition of Levolux (excluding cash
acquired) with £12.3 million of debt and £1.2 million of new share capital. By
funding the acquisition mostly with borrowings the group has achieved a more
efficient overall capital structure and lowered the weighted average group cost
of capital, now estimated to be in the range 8 - 9%.

Net borrowings at 30 June 2007 were £12.9 million (2006: £3.4 million). Interest
cover for the 2007 year was 10 times (2006 16 times), and net debt/EBITDA1 at 30
June 2006 was 0.8 times. Gearing at 30 June 2007 was 40% (2006: 14%).

In conjunction with the acquisition of Levolux, the group improved the quality
and term of its debt financing by entering into a committed 5-year, £15 million
revolving credit facility. The group has the option to cancel and repay elements
of this facility at short notice should it wish to do so. In addition, the group
retains some £19 million of overdraft facilities to cover working capital and
other corporate needs and therefore has total debt financing facilities
available of £34 million. The revolving credit facility is unsecured but subject
to interest cover being maintained at above three times and net debt/EBITDA
being below three times. As can be seen from the previous paragraph, the group
operated well within these covenant limits.

In order to manage the additional interest rate risk arising on the increased
levels of debt, the group has entered into interest rate swap and cap
transactions to hedge £10 million of group borrowings, with the objective of
ensuring that between a half and two-thirds of net debt at any time is protected
against rising interest rates. These transactions become effective when LIBOR is
above 6%. The group's overall pre-tax cost of debt finance at current interest
rates is just over 7%.

The net interest charge on borrowings for the year was £811,000 (2006:
£546,000), with the increase explained mainly by the increased levels of debt
for the final two months of the year following the acquisition of Levolux and
steadily increasing interest rates during the year as a whole.

Capital invested and return on investment

The group's average capital invested in the year increased to £51.1 million
largely due to the acquisition of Levolux. Post-tax return on average capital
invested improved from 13.0% in 2006 to 13.9% in 20072.

Shareholders' funds and return on shareholders' funds

Shareholders' funds grew from £24.3 million at 30 June 2006 to £32.2 million at
30 June 2007, due to the retained profit for the year of £3.6 million, post-tax
actuarial gains on defined benefit pension schemes of £2.9 million, new shares
issued with the acquisition of Levolux, £1.2 million and other movements of £0.2
million. Post-tax return on average shareholders' funds improved from 22.8% in
2006 to 25.0% in 20072.

Summarised cash flow statement

                                                             2007      2006
                                                               £m        £m

EBITDA                                                       15.3      10.3
Non-Cash items included in EBITDA                           (0.6)     (0.4)
Change in working capital                                   (3.7)     (0.9)
Operating cash flow                                          11.0       9.0

Capital expenditure                                         (3.0)     (5.3)
Interest                                                    (0.8)     (0.5)
Tax                                                         (1.3)     (1.3)
Pension deficit funding                                     (2.5)     (2.3)
Dividends                                                   (3.3)     (3.3)
Free cash flow                                                0.1     (3.7)

Property disposal proceeds                                    2.4       1.1
Acquisitions (net of equity financing)                     (11.2)     (0.1)
Disposals & other discontinued                              (0.8)       2.6
Increase in net debt                                        (9.5)     (0.1)

Cash flow, working capital and capital expenditure

A summary of the group cash flow statement is given above. EBITDA grew from
£10.3 million in the prior year to £15.3 million, but conversion of these
earnings into cash was restricted due to a £3.7 million increase in working
capital requirements from continuing operations. A number of factors explain
this increase, such as the introduction of new projects for industrial customers
at Alumasc Precision (including investment in tooling not yet fully recovered),
longer working capital cycles caused by increased levels of international
business (imports and exports), and acceptance of settlement discounts offered
by suppliers where economically attractive. Efficient use of working capital and
conversion of profit into cash is a key management focus throughout the group.

The increase in working capital, some of which is expected to reverse in the
2008 financial year, restricted the overall free cash inflow for the year to
£0.1 million (2006: outflow of £1.8 million), after lower capital expenditure of
£3.0 million (2006: £5.3 million).

The lower level of capital expenditure in 2007 was largely attributable to the
timing of capital projects. All major capital investment requests from operating
management teams were approved. The group's principal capital investments during
the year related to capacity enhancements in the Building Products division; and
cost efficiency, health and safety, and general asset replacement projects in
both the Building Products and Engineering Products divisions.


The group's overall pre-tax pension deficit measured under IAS19 reduced from
£24.3 million at 30 June 2006 to £17.6 million at 30 June 2007, due mainly to
improved investment returns, contributions made by the group to fund the
deficit, and the increase in bond yields which had the effect of reducing the
present value of scheme liabilities.

The triennial actuarial valuation as at 30 April 2007 of the Benjamin Priest
Group pension scheme is currently taking place, and an actuarial valuation of
the Alumasc Group pension scheme is due next year. A full review and update of
actuarial assumptions will be performed in conjunction with these valuations,
including an update of mortality assumptions used.

Capital reduction and distributable reserves

The company obtained approval from shareholders and the High Court during the
year to cancel its share premium account and capital redemption reserve,
together amounting to £29.2 million, in order to increase the reserves legally
available for making distributions to shareholders. The reason for this action
was to ensure that there remained sufficient headroom in the company's reserves
to allow the group to continue its existing dividend policy.

In return for agreement from the group's Pension Trustees to support the capital
reduction, the company agreed that, of the new £29.2 million profit and loss
account reserve arising in its balance sheet, £14.0 million would be retained as
a non-distributable reserve. This will be amortised as the group's pension
deficit is reduced. The remainder of the new reserve, amounting to £15.2
million, became a distributable reserve prior to the year end.

A Magson

Group Finance Director

1 EBITDA: Earnings before interest, tax, depreciation and amortisation-
including EBITDA of discontinued activities.

2 Return on investment and return on shareholders' funds are calculated using
total group post-tax operating profit and profit for the year figures,
respectively. Copal closure costs are excluded from the prior year comparative.
Net debt and the post-tax pension deficit are included in the calculation of
average capital invested.

Consolidated Income Statement

For the year ended 30 June 2007
                                                         2007       2006
                                            Notes       £'000      £'000
Continuing operations

Revenue                                       1       103,601     94,426
Cost of sales                                        (71,800)   (63,775)
Gross profit                                           31,801     30,651
Selling and distribution costs                       (11,927)   (11,203)
Administrative expenses                              (11,498)   (10,884)
                                                        8,376      8,564
Profit on disposal of property                            637        242
Operating profit                                        9,013      8,806

Finance revenue                                            72         22
Finance costs                                           (883)      (568)
Other finance expense - pensions                        (400)      (786)
Share of post tax profit in associates                      -         23
Profit before taxation                        1         7,802      7,497
Tax expense                                   4       (2,248)    (2,310)
Profit for the year from continuing                     5,554      5,187

Discontinued operations

Profit/(loss) for the year from               6         1,370    (1,243)
discontinued operations
Profit for the year                                     6,924      3,944

Profit for the year attributable to:
Equity holders of the parent                            6,889      3,928
Minority interest                                          35         16
                                                        6,924      3,944

                                                        Pence      Pence
Basic earnings per share
- continuing operations                                  15.6       14.7
- discontinued operations                                 3.9      (3.6)
                                              3          19.5       11.1

Diluted earnings per share
- continuing operations                                  15.6       14.6
- discontinued operations                                 3.8      (3.5)
                                              3          19.4       11.1

Consolidated Statement of Recognised Income and Expense

For the year ended 30 June 2007
                                                           2007      2006
                                                          £'000     £'000

Income and expense recognised directly in equity

Actuarial gain on defined benefit                         4,676     3,784
Movement in cash flow hedging position                       99         1
Exchange differences on retranslation of foreign            (6)         -
Tax on items taken directly to or transferred from      (1,754)   (1,135)
Net income recognised directly in equity for the year     3,015     2,650
Profit for the year                                       6,924     3,944
Total recognised income for the year
attributable to parent company equity                     9,939     6,594

Attributable to:
Equity holders of the parent                              9,904     6,578
Minority interest                                            35        16

                                                          9,939     6,594

Consolidated Balance Sheet
At 30 June 2007
                                                      2007      2006
Assets                                   Notes       £'000     £'000
Non-current assets
Property, plant and equipment                       22,877    25,407
Goodwill                                   5        14,966     5,556
Other intangible assets                              4,171       563
Financial assets                                        17        34
Deferred tax assets                                  4,917     7,292
                                                    46,948    38,852
Current assets
Inventories                                         13,714    14,626
Trade and other receivables                         28,916    31,744
Cash and short term deposits                         4,814       167
Derivative financial assets                            106     1,346
                                                    47,550    47,883
Non-current assets classified as held                  678     1,618
for sale
Total assets                                        95,176    88,353

Non-current liabilities
Interest bearing loans and                        (14,873)         -
Employee benefits payable                         (17,561)  (24,307)
Provisions                                         (1,125)     (430)
Deferred tax liabilities                   4       (1,352)   (1,245)
                                                  (34,911)  (25,982)
Current liabilities
Bank overdraft                                     (2,837)   (2,817)
Interest bearing loans and                            (12)     (722)
Trade and other payables                          (22,523)  (31,684)
Provisions                                           (214)     (962)
Income tax payable                                 (2,468)     (534)
Derivative financial liabilities                         -   (1,333)
                                                  (28,054)  (38,052)
Total liabilities                                 (62,965)  (64,034)

Net assets                                          32,211    24,319

Called up share capital                    7         4,479     4,412
Share premium                              7             -    27,406
Other reserve                              7         1,251     1,401
Capital redemption reserve                 7             -       693
Capital reserve - own shares               7         (133)     (133)
Hedging reserve                            7           100         1
Foreign currency reserve                   7           (6)         -
Profit and loss account reserve            7        26,482   (9,495)
Equity attributable to equity holders of the        32,173    24,285
Minority interest                          7            38        34
Total equity                                        32,211    24,319

Consolidated Cash Flow Statement

For the year ended 30 June 2007

                                                                 2007       2006
Operating activities                                Notes       £'000      £'000

Operating profit from continuing operations                     9,013      8,806
Adjustments for:
Depreciation                                                    3,433      2,887
Amortisation                                                      207        142
Impairments                                                       469          -
Gain on disposal of property, plant and                       (1,039)      (297)
Gain on sale of investments                                      (32)       (78)
Increase in inventories                                         (228)    (3,138)
Increase in receivables                                         (893)    (1,746)
(Decrease)/increase in trade and other                        (1,671)      3,906
Movement in provisions                                          (779)          9
Movement in retirement benefit obligations                    (2,470)    (2,272)
Cash generated from continuing operations                       6,010      8,219

Profit/(loss) before taxation from                              2,090    (1,819)
discontinued operations
Depreciation                                                      579        273
Movement in working capital from discontinued                 (9,295)      2,149
Cash flow from discontinued                             8     (6,626)        603

Tax paid                                                      (1,339)    (1,264)
Net cash (outflow)/ inflow from operating                     (1,955)      7,558

Investing activities

Purchase of property, plant and equipment                     (2,716)    (4,953)
Payments to acquire intangible fixed assets                     (353)      (390)
Proceeds from sale of property, plant and                       2,424      1,108
Acquisition of subsidiary undertakings net of cash           (12,432)       (50)
Proceeds from sale of business activities               8       8,150        201
Proceeds from sale of investments                       8         305        281
Net cash outflow from investing activities                    (4,622)    (3,803)

Financing activities

Interest paid                                                   (811)      (546)
Equity dividends paid                                   2     (3,309)    (3,271)
New borrowings (net of arrangement fees)                       14,860          -
Repayment of amounts borrowed                                   (725)      (831)
Proceeds from issue of share capital                            1,195         22
Net cash inflow/(outflow) from financing                       11,210    (4,626)

Net increase/(decrease) in cash and cash equivalents            4,633      (871)

Cash and cash equivalents at beginning of year                (2,650)    (1,780)
Effect of foreign exchange rate changes                           (6)          1
Cash and cash equivalents at end of year                8       1,977    (2,650)

Cash and cash equivalents comprise:
Cash and short term deposits                                    4,814        167
Bank overdrafts                                               (2,837)    (2,817)

                                                                1,977    (2,650)


1.       Segment information

Primary reporting format - business segments

The following tables present revenue and profit and certain asset and liability
information regarding the group's business segments for the years ended 30 June
2007 and 2006.

Segment revenue represents revenue from external customers arising from the sale
of goods, plus inter-segment revenue. Inter-segment transactions are priced on
an arm's length basis.

The type of products sold by each segment is detailed in the Business Review.

Segment results, assets and liabilities include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.
Unallocated assets comprise deferred tax assets and corporate assets that cannot
be allocated on a reasonable basis to a business segment. Unallocated
liabilities comprise borrowings, employee benefit obligations, deferred tax
liabilities, income tax payable and corporate liabilities that cannot be
allocated on a reasonable basis to a business segment.

Analysis by business segment 2007

                          Building    Building  Building
                          products    products  products Engineering    Elimi-   Continuing Discontinued  Elimi-
                           ongoing acquisition     total    products    nation   operations   operations  nation   Total
                             £'000       £'000     £'000       £'000     £'000        £'000        £'000   £'000   £'000

Sales to external           56,668       2,979    59,647      43,954         -      103,601       59,803       - 163,404
Inter-segment revenue           32           -        32       1,611   (1,643)            -        1,963 (1,963)       -
                            56,700       2,979    59,679      45,565   (1,643)      103,601       61,766 (1,963) 163,404

Adjusted operating           6,217         355     6,572       2,174                  8,746        2,236          10,982
Acquisition accounting           -       (370)     (370)           -                  (370)            -           (370)
adjustment and brand
Loss on sale                     -           -         -           -                      -        (146)           (146)
Segment operating            6,217        (15)     6,202       2,174                  8,376        2,090          10,466
Profit on disposal of property                                                          637            -             637
Operating profit                                                                      9,013        2,090          11,103
Finance revenue                                                                          72            -              72
Finance costs                                                                         (883)            -           (883)
Other finance expense -                                                               (400)            -           (400)
Profit before tax                                                                     7,802        2,090           9,892
Tax                                                                                 (2,248)        (720)         (2,968)
Profit after tax                                                                      5,554        1,370           6,924

1. Segment information (continued)

Analysis by business segment 2006

                                               Building  Engineering  Elimi-    Continuing  Discontinued Elimi-
                                               products   products    nation    operations   operations  nation   Total
                                                   £'000       £'000     £'000        £'000        £'000   £'000   £'000

Sales to external customers                       55,292      39,134         -       94,426       39,701       - 134,127
Inter-segment revenue                                 50       1,554   (1,604)            -        1,604 (1,604)       -
                                                  55,342      40,688   (1,604)       94,426       41,305 (1,604) 134,127

Segment operating result                           6,432       2,132                  8,564      (1,819)           6,745
Profit on disposal of property                                                          242            -             242
Operating profit                                                                      8,806      (1,819)           6,987
Finance revenue                                                                          22            -              22
Finance costs                                                                         (568)            -           (568)
Other finance expense - pensions                                                      (786)            -           (786)
Share of post tax profit of associate                                                    23            -              23
Profit before tax                                                                     7,497      (1,819)           5,678
Tax                                                                                 (2,310)          576         (1,734)
Profit after tax                                                                      5,187      (1,243)           3,944

Secondary reporting format - geographical segments

Analysis by geographical segment 2007
                                                 Rest of
                                       United    Europe -   Europe -   Rest of   Continuing Discontinued
                                      Kingdom         EU    Non EU       World   operations   operations   Total
                                        £'000      £'000     £'000       £'000        £'000        £'000   £'000

Sales to external customers             81,413    11,947       1,632     8,609      103,601       59,803 163,404
Segment assets                          85,505         -           -        56       85,561               85,561
Unallocated assets                                                                    9,615                9,615

                                                                                     95,176               95,176

1. Segment information (continued)

Analysis by geographical segment 2006
                                                  Rest of
                                         United    Europe -     Europe - Rest of     Continuing Discontinued
                                        Kingdom        EU       Non EU     World     operations   operations   Total
                                          £'000     £'000        £'000     £'000          £'000        £'000   £'000

Sales to external customers              76,591     8,867        2,930     6,038         94,426        39,701 134,127
Segment assets                           80,476         -            -       113         80,589                80,589
Unallocated assets                                                                        7,491                 7,491
Equity accounted investments                  -       273            -         -            273                   273
                                                                                         88,353                88,353

Segment revenue by geographical segment represents revenue from external
customers based upon the geographical location of the customer.

2. Dividends
                                                                                        2007      2006
                                                                                       £'000     £'000

Interim dividend for 2007 of 3.1p paid on 10 April 2007                                1,091         -
Final dividend for 2006 of 6.3p paid on 2 November 2006                                2,218         -
Interim dividend for 2006 of 3.0p paid on 6 April 2006                                     -     1,052
Final dividend for 2005 of 6.3p paid on 28 October 2005                                    -     2,219
                                                                                       3,309     3,271

A final dividend per equity share of 6.6p has been proposed for 2007, payable on
31 October 2007. In accordance with IFRS accounting requirements this dividend
has not been accrued in these consolidated financial statements.

3.       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 following sets out the income and share data used in the basic and diluted
earnings per share calculations:

                                                                                    2007    2006
                                                                                   £'000   £'000

Net profit attributable to equity holders of the parent - continuing operations    5,519   5,171
Profit/ (loss) attributable to equity holders of the parent - discontinued         
operations                                                                         1,370 (1,243)
Net profit attributable to equity holders of the parent                            6,889   3,928

                                                                                    000s    000s

Basic weighted average number of shares                                           35,371  35,291
Dilutive potential ordinary shares - employee share options                          118      59

                                                                                  35,489  35,350

Reconciliation to adjusted earnings per
                                                                                    2007    2006
                                                                                   £'000   £'000
Continuing operations:
Profit before taxation                                                             7,802   7,497
less profit on property sale                                                       (637)   (242)
add back Levolux acquisition adjustments and brand amortisation                      370       -

                                                                                   7,535   7,255

Tax at underlying group tax rate of 32% (2006: 32%)                              (2,411) (2,322)
Adjusted earnings                                                                  5,124   4,933
Adjusted earnings per share                                                        14.5p   14.0p

The adjusted earnings per share figure is based on profit adjusted for profit on
disposal of property and for the Levolux acquisition adjustments and
amortisation of brands, and on the same weighted average number of shares as
used in the basic earnings per share calculation above. The directors consider
that this measure provides an additional indicator of the underlying performance
of the group.

4.       Tax expense

a.       Tax on profit on ordinary activities

Tax charged in the income statement
                                                                                    2007    2006
                                                                                   £'000   £'000
Current tax:
UK corporation tax - continuing operations                                         1,678   1,711
- discontinued operations                                                            720   (576)
UK corporation tax                                                                 2,398   1,135
Amounts overprovided in previous years                                             (128)    (41)
Total current tax                                                                  2,270   1,094

Deferred tax:
Origination and reversal of temporary                                                721     676
Tax under/ (over) provided in previous years                                          74    (36)
Rate change adjustment                                                              (97)       -
Total deferred tax                                                                   698     640
Tax charge in the income statement                                                 2,968   1,734

The tax charge in the income statement is disclosed as follows:
Income tax expense on continuing activities                                        2,248   2,310
Income tax expense/ (credit) on discontinued activities                              720   (576)
                                                                                   2,968   1,734

Tax relating to items charged or credited to equity
Deferred tax:
Actuarial gains and losses on pension schemes                                      1,403   1,135
Rate change adjustment on above                                                      351       -
Tax charge in the statement of recognised income and expense                       1,754   1,135

The corporation tax rate in the UK will change in April 2008 from 30% to 28%.
The deferred tax balance has therefore been adjusted to reflect that deferred
tax should now be provided at 28% instead of 30%, as the relevant legislation
was substantively enacted at the balance sheet date.

4. Tax expense (continued)

b.       Reconciliation of the total tax charge

The tax expense in the income statement equates to (2006: is higher than) the standard rate of
corporation tax in the UK of 30% (2006 - 30%). The differences are reconciled below:

                                                                                    2007    2006
                                                                                   £'000   £'000

Profit from continuing operations before tax                                       7,802   7,497
Profit/(loss) before tax from discontinued operations                              2,090 (1,819)
Accounting profit before income tax                                                9,892   5,678

Accounting profit multiplied by the UK standard rate of corporation tax of         2,968   1,703
30% (2006: 30%)
Expenses not deductible for tax purposes                                             192     160
Impairment of long leasehold property                                                106       -
Other differences                                                                     71    (16)
Profit on disposal of property                                                     (297)    (73)
Profit on disposal of investment                                                    (10)       -
Tax overprovided in previous years - corporation tax                               (128)    (41)
Tax under/ (over) provided in previous years - deferred tax                           74    (36)
Sale of property - residue of IBAs                                                    89       -
Share of associate tax                                                                 -      37
Rate change adjustment                                                              (97)       -
                                                                                   2,968   1,734

Total tax expense is recorded in the income statement at an effective tax rate
of 30.0% (2006: 30.5%).

c.       Unrecognised tax losses

The group has agreed tax capital losses in the UK amounting to £21 million
(2006: £21 million) that relate to prior years, and under current legislation
these losses are available for offset against future chargeable gains. A
deferred tax asset has not been recognised in respect of these losses, as they
do not meet the criteria for recognition.

Deferred tax on revaluation gains on land and buildings that are available for
offset against capital losses amount to £6.5 million (2006: £6.5 million). After
this offset net capital losses carried forward amount to £14.5 million (2006:
£14.5 million). The capital losses are able to be carried forward indefinitely.

4. Tax expense (continued)

d.       Deferred tax

The deferred tax included in the balance sheet is as follows:
                                                                                   2007     2006
                                                                                  £'000    £'000
Deferred tax liability
Accelerated capital allowances                                                    1,505    1,469
Other temporary differences                                                       (153)    (224)
                                                                                  1,352    1,245

Deferred tax asset
Pensions                                                                        (4,917)  (7,292)

Deferred tax assets and liabilities are presented as non-current in the
consolidated balance sheet. Of the total deferred tax assets, £0.9 million
(2006: £0.9 million) are receivable within one year.

Deferred tax assets have been recognised where it is probable that they will be
recovered. Deferred tax assets of £6.3 million (2006: £6.3 million) have not
been recognised in respect of tax losses of £21 million (2006: £21 million).

5. Goodwill
                                                                                   2007     2006
                                                                                  £'000    £'000

At 1 July                                                                         5,556    5,556
Acquisition of Levolux                                                            9,508        -
At 30 June                                                                       15,064    5,556
At 1 July                                                                             -        -
Impairment of Armaseam goodwill                                                      98        -
At 30 June                                                                           98        -
Net book value at 30 June                                                        14,966    5,556
Net book value at 1 July                                                          5,556    5,556

5. Goodwill (continued)

Goodwill acquired through acquisitions has been allocated to cash generating units for
impairment testing as set out below:

                                                                                    2007    2006
                                                                                   £'000   £'000

Building products:
Roof-Pro                                                                           3,194   3,194
Timloc                                                                             2,264   2,264
Armaseam                                                                               -      98
Levolux                                                                            9,508       -
                                                                                  14,966   5,556


The group considers each of the operating businesses, which are those units for
which a separate cash flow is computed, to be a cash generating unit (CGU) and
each CGU is reviewed annually for indicators of impairment. In assessing whether
an asset has been impaired, the carrying amount of the CGU is compared to its
recoverable amount. The recoverable amount is the higher of its fair value less
costs to sell and its value in use. In the absence of any information about the
fair value of a CGU, the recoverable amount is deemed to be its value in use.

For the purpose of impairment testing, the recoverable amount of cash generating
units is based on value in use calculations. The value in use was derived from
discounted management cash flow forecasts for the businesses, based on budgets
and strategic plans. These budgets and strategic plans cover a four year period.
The growth rate used to extrapolate the cash flows beyond this period is 2%
which is in line with the medium term GDP forecasts.

Key assumptions included in the recoverable amount calculation relate to:

(i) Sales and gross margins

(ii) Overhead costs

(iii) Replacement capital expenditure levels

The pre-tax discount rate used for the cash generating units was 8.4% (2006: 9.2%).

The reduction in the discount rate is explained by a review of all inputs to the
group's weighted average cost of capital calculation during the year based on
external advice, together with the increased proportion of debt in the group's
2007 capital structure.

The surplus headroom above the carrying value of goodwill at 30 June 2007 was
significant in each case, except for Timloc. Timloc's goodwill would be at risk
of impairment based on current forecasts if the discount rate were increased to
above 10%, unless there was an improvement in the cash flow forecasts for the

5. Goodwill (continued)

Business combinations

Levolux Limited and Levolux A.T. Limited - "Levolux"

On 1 May 2007 the group acquired 100% of the ordinary shares of Levolux Limited
and Levolux A.T. Limited for a total consideration of £16,923,000 inclusive of
cash acquired.

The investment in Levolux Limited and Levolux A.T. Limited has been included in
the group's balance sheet at its fair value at the date of acquisition.

An analysis of the provisional fair value of the Levolux net assets acquired and
the fair value of the consideration paid is set out below:

Net assets at date of acquisition:
                                                                       Book   Fair value    Fair
                                                                      value  adjustments      to
                                                                      £'000        £'000   £'000

Property, plant and equipment                                           389        (204)     185
Intangible assets                                                        18            -      18
Inventories                                                             960          320   1,280
Trade and other receivables                                           3,624            -   3,624
Cash                                                                  4,491            -   4,491
Trade and other payables                                            (3,756)         (87) (3,843)
Obligations under lease/ hire purchase agreements                      (25)            -    (25)
Provisions                                                            (566)        (160)   (726)
Income tax payable                                                  (1,003)            - (1,003)
Deferred tax                                                           (30)            -    (30)
Net assets                                                            4,102        (131)   3,971
Goodwill arising on acquisition                                                            9,508
Brands acquired on acquisition                                                             3,444
Satisfied by:
Cash purchase consideration                                                               12,300
Fair value of shares issued (542,000 at £2.21 - market price at date of acquisition)       1,200
Enterprise value                                                                          13,500
Payment for cash acquired                                                                  3,076
Costs associated with the acquisition settled in cash                                        347
5. Goodwill (continued)

Fair value adjustments comprise unprovided amounts in relation to contractual
obligations at the acquisition date, £160,000, a revaluation to reflect the
profit in inventory at the acquisition date, £320,000, an accrual for holiday
pay under IAS 19, £87,000, and an adjustment to property, plant and equipment to
align depreciation policies with those of the group, amounting to additional
accumulated depreciation of £204,000.

The amount paid for cash acquired was less than the actual cash acquired due to
an agreement that Alumasc would settle Levolux's pre acquisition corporation tax
liability and certain other working capital balances after acquisition.

From the date of acquisition to 30 June 2007, (two months), Levolux reported a
profit of £355,000 which after the acquisition accounting adjustments related to
profit in inventory at the date of acquisition, £320,000, and brand
amortisation, £50,000, resulted in a net loss of £15,000.

If the combination had taken place at the beginning of the year, 1 July 2006,
the revenue for the group from continuing operations would have been £123.9
million. The annual operating profit of Levolux on which the acquisition
valuation was based was £2.5 million.

In the two month period since acquisition Levolux contributed £90,000 to the
group's net operating cash flows, utilised £3,000 for purchase of property,
plant and equipment, and utilised £4,000 for financing activities.

Its new financial year as part of the Alumasc Group began on 1 May 2007.

Included in the £9.5 million of goodwill recognised above are certain intangible
assets that cannot be individually, separately and reliably measured from the
acquiree due to their nature. These items include the value of the management
and workforce.

6. Discontinued operations

Discontinued operations in the year comprise the sale of the Brock Metal
business, the leading UK supplier of zinc and aluminium diecasting alloys, to
Chelyabinsk Zinc Plant ("CZP") for cash consideration of £8.9 million,
comprising £8.15 million received in cash at the year end and a receivable of
£0.75 million in respect of a completion accounts adjustment relating to working
capital. The consideration represented receipts for working capital and plant
and equipment sold. There was no gain or loss arising on sale, except for costs
of disposal of £146,000.

Discontinued operations in the prior year comprised the closure of Copal
Casting, a gravity aluminium diecasting manufacturer. The loss on closure
comprised redundancy and other closure costs. Production ceased by the end of
February 2006 and plant and equipment was either sold externally or transferred
into the other Alumasc Precision businesses.

6. Discontinued operations (continued)

The results of discontinued operations that have been included in the consolidated income
statement are as follows:

                                                            2007      2006         2006     2006
                                                           Brock     Brock        Copal    Total
                                                           £'000     £'000        £'000    £'000

Revenue                                                   59,803    38,043        1,658   39,701
Cost of sales                                           (55,574)  (35,395)      (2,695) (38,090)
Gross profit/(loss)                                        4,229     2,648      (1,037)    1,611
Selling and distribution costs                             (616)     (687)         (76)    (763)
Administrative expenses                                  (1,377)   (1,555)      (1,112)  (2,667)
Operating profit/(loss)                                    2,236       406      (2,225)  (1,819)
Loss on disposal                                           (146)         -            -        -
Profit/(loss) before taxation                              2,090       406      (2,225)  (1,819)
Income tax (charge)/credit                                 (720)      (98)          674      576
Profit/(loss) after taxation                               1,370       308      (1,551)  (1,243)

The net cash flows attributable to discontinued operations are as follows:
                                                                                   2007     2006
                                                                                  £'000    £'000
Operating cash flows                                                            (6,626)      603
Investing cash flows                                                              8,150      201
Net cash inflow                                                                   1,524      804

The operating outflow, relating to working capital in 2007, was recovered in
disposal proceeds from the sale of Brock.

The basic earnings per share on discontinued operations is 3.9 p (2006: loss per
share 3.6 p).

6. Discontinued operations (continued)

Details of the sale of Brock Metal are analysed as follows. Sale proceeds
comprise an amount for plant and equipment and an amount for working capital,
which is subject to completion accounts adjustment.

Sale proceeds                                                                              8,897

Net assets disposed of:
Plant and equipment                                                                        (350)
Working capital - stock, debtors and                                                     (8,547)

Costs of disposal                                                                          (146)
Loss on disposal                                                                           (146)

Sale proceeds are made up as follows:
Cash                                                                                       8,150
Receivable relating to completion accounts adjustment                                        747

7. Reconciliation of movements in equity

                    Share    Share   Other    Capital  Capital Hedging  Foreign  Profit  Minority   Total
                  capital  premium reserve redemption  reserve reserve currency     and interests  equity
                                              reserve      own          reserve    loss
                                                        shares                  account
                   £'000   £'000    £'000    £'000     £'000    £'000   £'000    £'000    £'000    £'000

At 1 July 2006      4,412   27,406   1,401        693    (133)       1        - (9,495)        34  24,319
New shares issued      67    1,128       -          -        -       -        -       -         -   1,195
Excess dep'n on         -        -   (150)          -        -       -        -     150         -       -
revalued assets
Capital                 - (28,534)       -      (693)        -       -        -  29,227         -       -
Net gains on cash       -        -       -          -        -      99        -       -         -      99
flow hedges
Exchange                -        -       -          -        -       -      (6)       -         -     (6)
differences on
retranslation of
Actuarial gain on       -        -       -          -        -       -        -   2,922         -   2,922
defined benefit
pensions net of
Dividends               -        -       -          -        -       -        - (3,309)      (31) (3,340)
Profit for the          -        -       -          -        -       -        -   6,889        35   6,924
Share based             -        -       -          -        -       -        -      98         -      98

At 30 June 2007     4,479        -   1,251          -    (133)     100      (6)  26,482        38  32,211

Share capital and share premium

The balances classified as share capital and share premium are the proceeds of
the nominal value and premium value respectively on issue of the company's
equity share capital net of issue costs.

7. Reconciliation of movements in equity (continued)

Capital reorganisation

During the year, the Alumasc Group plc (the company) obtained approval from
shareholders and the High Court to cancel its share premium account and capital
redemption reserve, together amounting to £29,227,000, in order to increase
reserves in the company legally available for making distributions to

In connection with the capital reorganisation the company reached agreement with
the Pension Trustees that £14.0 million of the profit and loss account reserve
shown above would be retained as a non-distributable reserve until the group's
pension deficits reduced further (as determined by full actuarial valuations).
Therefore the directors consider that £14.0 million of the company profit and
loss account reserve is non-distributable. In addition, the group committed to
make an exceptional contribution of assets and/or cash of £1.5 million to the
group's defined benefit pension schemes. After the year end it was agreed with
the Pension Trustees that a property with a value of £1.1 million and cash of
£0.4 million would be transferred to the pension schemes, anticipated to be
effective by the end of September 2007.

Other reserve

The other reserve is an asset revaluation reserve which was used in previous
years to record increases in the fair value of land and buildings, and decreases
to the extent that such decrease relates to an increase on the same asset
previously recognised in equity.

Capital reserve-own shares

The capital reserve-own shares relates to 91,000 (2006: 91,000) ordinary own
shares held by the company. The market value of shares at 30 June 2007 was
£207,000, (2006: £138,000). These are held to help satisfy the exercise of
awards under the company's Long Term Incentive Plan. A Trust holds the shares in
its name and shares are awarded to employees on request by the company. The
company bears the expenses of the Trust.

Hedging reserve

This reserve records the portion of the gain or loss on a hedging instrument in
a cash flow hedge that is determined to be an effective hedge.

Foreign currency reserve

This foreign currency reserve is used to record exchange differences arising
from the translation of the financial statements of foreign subsidiaries.

8. Notes to the cash flow statement

(i ) Cash flows relating to discontinued operations

                                                        2007     2006
                                                       £'000    £'000
Operating activities:
Profit/(loss) before taxation from discontinued        2,090  (1,819)
Depreciation                                             579      273
Working capital movements:
Inventories                                          (1,325)       86
Receivables                                          (4,035)  (1,348)
Trade and other payables                             (3,248)    3,637
                                                     (8,608)    2,375

Cash flows in relation to Copal costs of               (687)    (226)
Cash flows from operating activities                 (6,626)      603

Investing activities:
Gross proceeds on sale of business                     8,897      201
Receivable relating to completion accounts             (747)        -
Proceeds from sale of business                         8,150      201
Proceeds from sale of investments                        305      281
Cash flows from investing activities                   8,455      482
Cash flows from discontinued operations                1,829    1,085

8. Notes to the cash flow statement (continued)

(ii) Movement in net borrowings

                                                   Cash and    Bank    Finance     Net
                                                     bank     loans    leases   borrowings
                                                  overdrafts             and
                                                       £'000    £'000     £'000      £'000

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)

At 1 July 2005                                       (1,780)        -   (1,553)    (3,333)
Cash flow movements                                    (871)        -       831       (40)
Effect of foreign exchange rate changes                    1        -         -          1
At 30 June 2006                                      (2,650)        -     (722)    (3,372)

9. Post balance sheet events

On 4 September 2007 the group exchanged contracts to sell the Copal long
leasehold property, shown on the balance sheet as an asset held for sale, for
£0.7 million.

10. Basis of preparation

The preliminary results for the year ended 30 June 2007 have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted by
the EU.

The financial information in the preliminary statement of results does not
constitute statutory accounts within the meaning of Section 240 of the Companies
Act 1985 (the "Act"). The financial information for the year ended 30 June 2007
has been extracted from the statutory accounts on which an unqualified audit
opinion has been issued. Statutory accounts for the year ended 30 June 2006 will
be delivered to the Registrar of Companies following the Company's Annual
General Meeting.

The financial statements, and this preliminary statement, of The Alumasc Group
plc (the Group) for the year ended 30 June 2007 were authorised for issue by the
Board of Directors on 12 September 2007 and the balance sheet was signed on
behalf of the Board by Andrew Magson.

The statutory accounts have been delivered to the Registrar of Companies in
respect of the year ended 30 June 2006 and the Auditors of the Company made a
report thereon under Section 235 of the Act. That report was an unqualified
report and did not contain a statement under Section 237(2) or (3) of the Act.

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