13th Sep 2006 07:03
Alumasc Group PLC13 September 2006 THE ALUMASC GROUP PLC - PRELIMINARY ANNOUNCEMENT Alumasc (ALU.L), the premium building and engineering products group which sinceJanuary 2006 has been classified under Construction & Materials, announces agood result, ahead of expectations, in challenging conditions in the year to 30June 2006. Financial Highlights * Revenue from continuing activities increased by 16% to £132.7m, of which metal cost increases, which were passed on to customers in higher selling prices, accounted for growth of £12.9m or 11%. Exports increased to £37.2m from £21.4m. * Trading profit from continuing operations of £9.0m was a strong performance. The H2 figure of £5.7m was up 17% and the final quarter was particularly strong. * Pre-tax profit on continuing operations of £7.9m (2005: £7.7m) reflected continued growth in Building Products and a second half recovery in Engineering Products. * Basic earnings per share on continuing operations were 15.5p (2005:14.6p) and 11.1p including discontinued activities (2005: 6.2p). * Unchanged dividends per share of 9.3p are covered 1.7 times by earnings per share on continuing operations. Commercial Highlights * Building Products had a fifth successive year of profit growth, increasing to £6.5m (including associate) (2005: £6.0m), 72% (2005: 65%) of the Group total, on revenue of £55.5m (2005: £48.7m), much of the growth deriving from exports. The Building Products companies expanded ahead of underlying market trends. They introduced new products, extended into new markets, and launched innovative and product-differentiating software aimed at saving specifiers time and money. * Alumasc Precision Components' trading profit of £2.0m (2005: £2.1m) on revenue of £28.6m (2005: £27.4m) represented an achievement in its first year without sales to its former largest customer, MG Rover. The year was a record one for new project start-ups (around 70% of its business has changed across the last two years), the H2 performance showed a significant improvement, and the final quarter began to show the benefits of some of the new projects coming on stream. Revenue reliance on automotive companies further reduced (to 6% of the Group total from 20% in 2003). * Acquisitions are being sought, in particular in Building Products. John McCall, Chairman, stated: "Within our businesses, there has been solidprogress in the last year linked to the introduction of new products, investmentin manufacturing, and the development of our markets. We are optimistic thatthis will continue in the current financial year." Paul Hooper, Chief Executive, added: "The Group's strategy to move forwardthrough building niche, highly customer-focussed businesses, supported by strongtechnical service and marketing expertise and featuring higher added-value,should serve it well in the future. The resilience shown in the past year inovercoming rising costs outside its control give confidence that the Group cancontinue to manage the various challenges and deliver further progress in thecurrent year." Presentation: Today, from 09:30am to 10:30am, a presentation to analysts and private clientinvestment advisers will be held at the offices of KBC Peel Hunt, 4th Floor, 111Old Broad Street, London EC2N 1PH. Enquiries: The Alumasc Group plc 01536 383844 Paul Hooper (Chief Executive) John McCall (Chairman) Bankside Consultants Limited Charles Ponsonby 020 7367 8851 Ian Payne 020 7367 8853 CHAIRMAN'S STATEMENT Summary Alumasc's profit before tax on continuing operations for the year ended 30 June2006 of £7.9 million (2005: £7.7 million) was a good result, representing astrong recovery from the disappointing performance in the first half year. Therewas continued growth from our building products activities and a second halfrecovery in our engineering business. The contribution from building products to trading profit (including associate)on continuing operations grew from £6.0 million to £6.5 million and represented72% of the total (2005: 65%). The Group's borrowings ended the year at £3.4 million, virtually unchanged fromthe opening position of £3.3 million. This represents gearing of 14% onShareholders' Funds which, under IFRS, are now stated net of pensionliabilities. The directors are recommending an unchanged final dividend per share of 6.3p,giving a total for the year of 9.3p (2005: 9.3p), covered 1.7 times by earningsfrom the ongoing business. Trading Trading profit from continuing operations of £9.0 million was a strongperformance in the light of a number of negative factors set out in the ChiefExecutive's Review (2005: £9.3 million). In the second half, trading profit grewby 17% to £5.7 million, 63% of the total for the year. Our building products companies grew revenue to £55.5 million (2005: £48.7million) and trading profit (including associate) to £6.5 million (2005: £6.0million). Margins remained satisfactory despite rising material costs, and thegrowth must be seen against the background of a weaker construction marketplacein the UK. Revenue from Alumasc Precision's continuing operations grew by £1.1 million to£28.6 million in the year, having fallen in the first half year. Althoughtrading profit for the full year of £2.0 million was below the previous year(£2.1million), the second half performance showed a strong recovery as theexceptional level of new work began to bed down. The increase in revenue from our Industrial Products businesses (from £38.7million to £48.6 million) is misleading, since the value of metal includedwithin these sales grew by an even greater amount. While Brock Metal was able toimprove its performance in this period of rising metal prices, Alumasc Dispensecontinued to suffer from weak demand from its UK brewing base as it worked todevelop new products. Trading profit of £0.5 million was below the previousyear's £1.2 million as a result. It is encouraging that each division performed better as the year progressed,finishing on a positive note. Board David Sowerby will retire in October this year, after 15 years as Alumasc'sGroup Finance Director. David's contribution in both the financial arena andmore generally has been major and I take this opportunity to express my personalgratitude. His replacement will be Andrew Magson, who joins Alumasc from BPBplc, where he held the position of Group Financial Controller prior to thatcompany's acquisition by Saint-Gobain. I welcome Andrew on your behalf. Development The past year has been remarkable for the violent movements - nearly all upwards- in commodity prices, energy included. Alumasc's ability to cope with these, ata time of generally low inflation, is a credit to the business. It is alsorelevant to our future development plans, where a number of our businesses arewell placed to exploit the underlying imperatives of greater efficiency in thegeneration of power and in the utilisation of energy. This theme is discussedfurther in the Chief Executive's Review. We have invested strongly in our manufacturing base during the past year, notleast in pursuit of energy efficiency and energy-efficient end products. We are also seeking acquisition opportunities, to build on our base of leadingbuilding product businesses and to enhance our ability to exploit theopportunities presented by our markets. Prospects A number of factors, which have influenced the past year, continue to affect ourbusiness going forward. The costs of energy and materials are significant toeach business and largely outside its control. However, by working closely withsuppliers and customers, we have to a large extent mitigated their impact on ourperformance and we will continue to minimise and pass on such increases whereverpossible. Within our businesses, there has been solid progress in the last year linked tothe introduction of new products, investment in manufacturing and thedevelopment of our markets. We are optimistic that this will continue in thecurrent financial year. John McCall 13 September 2006Chairman CHIEF EXECUTIVE'S REVIEW Overview The Group's profit before tax from continuing operations came in at £7.9m (2005:£7.7m), with a substantial improvement in the second half year as forecast inthe Interim Announcement and, in particular, during the final quarter. Indelivering the increase in profit the Group has shown considerable resilience inovercoming a number of challenges including sharply higher metal and energyprices (substantially passed on to customers), recovering from the collapse inApril 2005 of one of the Group's former largest customers (MG Rover), resultingin subsequent closure of a subsidiary, and the funding of pension deficits. Revenue from continuing operations grew by £17.8m, 16%, compared with theprevious year, to £132.7m. Metal cost increases, which were passed on tocustomers in higher selling prices, accounted for growth of £12.9m, or 11%. Alldivisions contributed to a rise in exports to £37.2m (28% of revenue) versus aprior year of £21.4m (19% of revenue). The Group responded well in replacing theloss of MG Rover, which had benefited the prior year. It also had to offsetenergy cost increases of around £0.8m. The Building Product businesses expanded ahead of underlying market trends. Theyintroduced new products, extended into new markets, and launched innovative andproduct differentiating software aimed at saving specifiers time and money.Exports have played an increasing part in this division's revenue. Meanwhile, Alumasc Precision Components has created a firm platform during achallenging year which included an unprecedented level of new projectintroductions in the areas targeted for development such as non-automotivediesel engine components. Several new projects commenced with Caterpillar,Perkins, Deutz and JCB. There were also good developments in niche componentareas for Mercury Marine, via Honeywell, and for Aston Martin on its new V8Vantage and DB9 models. A third consecutive year of improvements in the Health and Safety performance ofour companies saw a halving of the number of days lost due to accidents in theworkplace. Two months of the year had no days lost linked to an accident. Healthand Safety data are among our most important KPIs and this topic is the firstitem on the agenda of all executive and board meetings. There has been a welcomereduction in insurance costs, as a side benefit, from the significantimprovements that have been made in this area. Capital expenditure of £5.3m compared with the deprecation charge of £3.3m. Theformer was predominantly linked to expansion requirements, particularly at ourtwo core businesses of Building Products and Precision Components. In severalcases, these investments also gave energy cost savings and made primary orsecondary Health and Safety improvements. As previously announced, the Group closed its loss making gravity diecastingsbusiness, Copal Casting, in February 2006 following abortive efforts to sell itas a going concern. This move has allowed the Precision Components division tofocus on more complex, and higher value activity, while selectively transferringgravity die castings business, with the support of its customers, to lower costeconomies. The Group's strategy remains one of activity focus towards premium productsrequiring high quality technical support and service. Bolt-on acquisitions forour Building Product businesses will continue to complement the Group's organicexpansion plans. Building Products The Building Products division had a fifth successive year of profit growth,improving by £0.4m (7%) on revenue which was £6.9m (14%) ahead of the prior yearat £55.5m. An estimated £0.4m of the sales growth related to metal costincreases which were passed on to customers. The importance of our BuildingProducts division is apparent in its profit growth to £6.5m (includingassociate), now accounting for 72% of the Group's total profit. In the prioryear the equivalent figure was £6.0m, 65% of Group profit. Alumasc Exterior Building Products made a significant contribution to thedivision's revenue increase. A large Armaseam standing seam roof supply contractwas made for an Alcoa aluminium smelter in Iceland, contributing £2.6m to thisincrease. Each of AEBP's other areas of activity grew also. In particular, bothwaterproofing and external walling insulation enjoyed a significant increase inrevenue against the prior year. Potential capacity constraints were overcomethrough investment in a new, industry-leading, powder paint plant, along withnew production equipment for walling render. Both plants have also contributedto Health and Safety, along with environmental, benefits. The growth in socialhousing refurbishment and new commercial build have all contributed to theincreased sales activity. Roof-Pro delivered a robust revenue performance despite a slowdown insupermarket and retail expansion. This is being countered by the launch of newsystems to move the business forwards. Sustainability and energy conservation are topics which seem to feature more andmore in the news, affecting everybody's quality of life. With its leadingposition in the Green Roof market AEBP is well positioned to benefit from thisgrowing area of activity which is being driven by both legislation andenvironmental/sustainability pressures. Green Roof enquiries have increasedsubstantially for AEBP. Sustainability is a growing area of interest to theGroup. AEBP's growth has been made against a UK background of a 1.1% reduction inconstruction activity during calendar year 2005, and recent 2006 forecasts of anoverall construction growth of 0.6% (Source: Construction Products Association)and 2.9% (Source: Experian). The business will continue to invest in salesresource, marketing, technical support and new products to keep ahead of theunderlying market forecasts. Alumasc Interior Building Products grew its revenue despite the introduction ofnew competition in the UK. It widened its distribution in the UK and launchedtwo new products, Boxing Pak and a washroom product range under the joint brandof PendockShires. Both have been well received in their respective marketplaces. Its recent product launches put it in a good position to move forward in theforthcoming year while continuing to respond to market pressures. Within Alumasc Construction Products, Elkington Gatic had another outstandingyear of growth driven by sales of its well-established Gatic specialist accesscovers and the more recently launched Gatic Slotdrain in both the UK and exportmarkets. Of particular note was the 23% revenue growth for Gatic Slotdraindriven by export sales and the success in the UK of its innovative software thathas been estimated to reduce a drainage system design time from two days to 20minutes. This has been a major benefit for customers. The agreement with Saint-Gobain to distribute Gatic engineered access covers onthe Continent resulted in a first full year of satisfactory growth in sales toEurope. This has led to a further distribution agreement, announced in March2006, for Saint-Gobain to distribute the Gatic Slotdrain product into certainEuropean markets which should benefit the current year. A product trial hasalready commenced at Charles de Gaulle Airport in Paris. To meet the increased demand for Gatic Slotdrain a further investment was madein laser cutting equipment. Additional shift work also commenced in the secondhalf year. Elkington China, the marketing arm based in Hong Kong, had an encouraging yearwith good growth. It is well positioned in a part of the world where economicactivity is increasing. Following two years of good progress, Scaffold and Construction Products' salesperformance was impacted by increased competition in the UK and Ireland. Itmoved fast to contain sourcing costs, to meet price expectations, in a marketwhere metal prices were moving upwards, performing creditably as a result. Overall, ACP had a good year where it had to overcome several hurdles includinghigh cost increases, particularly for raw materials. Timloc successfully renewed its main customer contracts and won additionalbusiness which contributed to a good sales increase. While seeking to mitigatesome raw material cost increases through an aggressive sourcing exercise, itinvested into sales and marketing resource. It launched several new products,including the Acoustray, which reduces flanking noise transmission betweenfloors in apartments with the unique benefit of integrating a preformedadjustable cavity tray and an insulation panel, and it has been specified bymany leading housebuilders. Timloc also invested during the year in automaticsilo polymer equipment to increase efficiency within manufacturing whileimproving Health and Safety by eliminating manual handling and reducing thepotential for slips from loose polymer granules. Precision Components Alumasc Precision Components had a record year for new project start-ups (around70% of its business has changed across the last two years). It grew its revenueby £1.1m (4%) to £28.6m, albeit slightly more than half of this growth wasattributable to the passing on of metal cost increases. In its first yearwithout sales to the APC's former largest customer, MG Rover, this was anachievement. While the full year trading profit was marginally below last year'slevel at £2.0m (2005 : £2.1m), the final quarter of the year began to show thebenefits of some of the new projects coming on-stream. The division's strategy to focus on non-automotive diesel engine componentsupply combined with niche automotive work is moving forward satisfactorily. Inthe last three years there has been a significant reduction in APC's sales toautomotive companies which accounted for 20% of Group revenue in 2003. In 2006the equivalent revenue reduced to 6%. Outside the automotive area sales haveaccelerated to Caterpillar, a company that has recently posted record quarterlyresults, with five major engine plants now being supplied in North America. APCalso expanded its range of components supplied to Caterpillar's UK subsidiary,Perkins Engines, to become the principal supplier for both cast and machinedaluminium engine components. APC moved forward at a rapid pace with Deutz, acompany which has itself had encouraging sales growth. JCB's new engine rangecreated additional demand for the division. Mercury Marine, in North America,increased its demand for components on its new 4 cylinder and 6 cylinder engineswith components being sourced from Precision Components via Honeywell ThermalSystems. Supporting this customer in its relocation to production facilities inMexico helped to secure the continuation of the contract. A complex, multifaceted, component project, won at the niche automotivecustomer, Aston Martin, will benefit the current financial year. It will be usedin the manufacture of both the DB9 and the V8 Vantage models. APC was alsosuccessful in attracting Siemens back as a customer. APC has had to handle a major transformation in its business during the year.Its reputation for the timely supply of components, supported byindustry-leading engineering and technical support, is appreciated, especiallyby those customers that have built strong brand names. This should put APC in agood position to grow further both with its current customers and with new onesattracted by APC's strengths and reputation. Industrial Products The Industrial Products businesses grew their total revenue by £9.8m (25%)against the prior year. A higher figure of £11.8m was associated with metal costincreases which were passed on by Brock Metal to its customers. AlumascDispense's sales reduced following an exceptionally strong prior year in whichit had record countermount and tap sales. Brock Metal had a much improved year on the basis of a strategy in which it wasmore selective in seeking new business, some of which was achieved in nicheautomotive markets. It also increased its exports to offset a decline in itstraditional UK business. The massive second half year movements in aluminium andzinc prices created both challenges and opportunities. Alumasc Dispense supplied new countermounts for InBev Becks, Cobra andCarlsberg. Its tap sales were also assisted by a significant stainless steel taporder from Wetherspoons and its glassware sales by a major new sales contractwith Magners Cider. Alumasc Dispense continued the development of new products. Its launch of aninnovative beer cooler, ABC Trimcool, has been successful with several brewers,such as SAB/Miller, InBev and Thwaites, either trialling the product or placingorders. Its Wireless Energy Transfer (WET) technology will lead to opportunitiesin the current financial year for illuminating point of sale equipment. Prospects The Group had to move fast and resolutely during the year to offsetunprecedented rises in raw material costs, in particular for zinc and aluminium.It has had to pass on £12.9m metal cost increases to its customers. Increasedenergy costs of around £0.8m have also been contended with. It is difficult to forecast what the metal cost movements will be in the currentyear. It is, however, encouraging that the Group has proven the efficacy of itsmetal cost escalation agreements, which are in place with many of its customers,along with the resolve, where these are not in place, to ensure that any impactsare limited. Energy costs are likely to rise further. The Group has joined an innovativegrouping arrangement with several other companies to seek some flexibility forpart of its electricity purchase arrangements. This should limit further costincreases while giving the ability to benefit from downward price movements. TheGroup's higher energy use companies have been investing in more energy efficientequipment. This programme, along with other initiatives, will continue to reduceits energy consumption. Forecasts for the UK building product market place show the likelihood oflimited growth across the next year. The Building Products division will,therefore, be working hard to build on its success to date. New products andmarket extensions will be key ingredients for future success. In particular, thedivision will augment its expertise and knowledge to capitalise fully on itspresence in those areas which show good growth potential such as sustainablegreen roofs. The opportunity will be taken to accelerate further the success ofGatic Slotdrain, especially for additional exports. Bolt-on acquisitions inniche areas will be sought to assist the targeted organic growth. Following its very busy year of replacing old projects with new ones, APC willcontinue to build on its success which is in most cases now closely linked tosuccessful customers with strong brand names and reputations. APC has anambitious programme to grow further outside the volume automotive area, whilebuilding its expertise in complex low volume work and, in particular,non-automotive diesel business. The Group's strategy to move forward though building niche, highlycustomer-focused businesses supported by strong technical service and marketingexpertise, and featuring higher added-value, should serve it well in the future.The resilience shown in the past year in overcoming rising costs outside itscontrol gives confidence that the Group can continue to manage the variouschallenges and deliver further progress in the current year. Paul HooperChief Executive 13 September 2006 FINANCIAL REVIEW The financial statements for the year to 30 June 2006 are presented inaccordance with the Group's accounting policies based on International FinancialReporting Standards (IFRS), and comparative figures for the year to 30 June 2005have been restated on the same basis. The major impact of the new standardsderives from the inclusion of IAS 19 pension deficits in the balance sheet andan IAS19-driven pension charge in the income statement. Continuing operations During the year, the Group saw growth in its building product and precisioncomponent activities; the latter substantially recovered from the loss of Roverbusiness in April 2005, with second half profits before tax substantially aheadof the first half, and the same period in the previous year. H1 H2 2006 2005 Total Total ------ ------ ------ ------- £million £million £million £million Building Products * 2.6 3.9 6.5 6.0 Precision Components 0.6 1.4 2.0 2.1 Industrial Products 0.1 0.4 0.5 1.2 ------ ------ ------ -------Trading profit 3.3 5.7 9.0 9.3 Interest (0.2) (0.3) (0.5) (0.4) Pension interest (0.4) (0.4) (0.8) (1.2) ------ ------ ------ ------- 2.7 5.0 7.7 7.7 Profit on sale of property 0.2 - 0.2 - ------ ------ ------ ------- 2.9 5.0 7.9 7.7 ====== ====== ====== ======= Prior year 3.7 4.0 7.7 ====== ====== ====== * including associate. Discontinued operations The loss of the Rover business at the Group's gravity diecast operation atHandsworth, Birmingham, and the inability to reach an acceptable agreement witha buyer, led to the closure of this business during the year. This activity istreated as discontinued in these accounts (and was shown as "to be discontinued"last year). Trading - continuing operations Revenue grew by £17.8 million to £132.7 million (2005: £114.9 million). Thegrowth comprised approximately £12.9 million arising from increases in aluminiumand zinc prices, substantially passed on to customers, a minor additionalcontribution from a full year's sales for the two businesses acquired in thefirst two months of the previous year, and organic growth, primarily in theGroup's core building product businesses. There was little or no change in underlying gross margin percentages once theimpact of commodity price changes is eliminated. Net finance costs increased from £0.4 million to £0.5 million reflecting a fullyear impact of £6.5 million increased borrowings made to finance acquisitions inthe previous year, capital expenditure in excess of depreciation, and other cashflows. Earnings, tax and dividend Earnings per share on continuing operations were15.5p (2005: 14.6p), and 11.1pper share including discontinued activities (2005: 6.2p). The effective tax rateon profit from continuing activities excluding profit on sale of property was31.4% (2005: 33.6%). Profits on sale of property are tax-free because the Grouphas capital tax losses available. The Board is recommending an unchanged total dividend per share of 9.3p covered1.7 times by the profit from continuing operations. The directors propose anunchanged final dividend per share of 6.3p payable on 2 November 2006 toshareholders on the register at 13 October 2006. Equity attributable to shareholders increased by 15.8% to £24.3 million (2005:£21.0 million). Cash flow and borrowings Net borrowings at 30 June 2006 were virtually unchanged from the previous yearat £3.4 million (2005: £3.3 million) despite the impact of capital expenditureof £5.3 million (2005: £3.7 million) compared with depreciation and amortisationof £3.3 million (2005: £3.7 million) and the impact of the closure of theGroup's gravity diecasting business. Year end borrowings benefited from strong final quarter cash inflows as well ascontinued good underlying cash control. Pensions Final salary pension costs, measured under IAS 19, fell by £0.5 million to £1.6million. The overall funding position of the Group's two final salary pensionschemes improved by £5.3 million during the year, the result of a £6.0 millionincrease in the market value of the schemes' assets including £2.0 million ofcash payments (2005: £1.5 million) made to reduce the deficit less a £0.7million increase in the schemes' liabilities. Net of deferred tax, the overalldeficit reduced to £17.0 million at 30 June 2006 (2005: £20.7 million). Key Performance Indicators Set out below are five KPIs against which the Group judges its performance: 2006 2005 Change £m £m % Revenue: - Total 132.7 114.9 +15.5 - Building Products 55.5 48.7 +14.1 - Precision Components 28.6 27.4 +4.1 - Industrial Products 48.6 38.7 +25.4 Trading profit (incl. associate) - Total 9.0 9.3 -3.2 - Building Products 6.5 6.0 +7.0 - Precision Components 2.0 2.1 -3.5 - Industrial Products 0.5 1.2 -54.3 Net borrowings - year end 3.4 3.3 +1.2 Gearing - year end 13.9% 15.9% +2.0 Capital expenditure and investment 5.3 3.7 +44.0 The Group remains committed to expanding its operations by acquisition in thebuilding products sector as well as overall organic growth supported byappropriate capital investment. D R SowerbyGroup Finance Director 13 September 2006 CONSOLIDATED INCOME STATEMENT for the year ended 30 June 2006 2006 2005 Notes £'000 £'000 Continuing operations Revenue 1 132,706 114,869 Cost of sales (99,757) (83,642) -------- ---------Gross profit 32,949 31,227 Selling and distribution costs (11,540) (10,615) Administrative expenses (12,439) (11,343) -------- ---------Trading profit 1 8,970 9,269 Profit on disposal of property 1 242 - -------- ---------Operating profit 9,212 9,269 Finance revenue 22 24 Finance costs (568) (419) Other finance expense - pensions (786) (1,201) Share of post-tax profit in associates 23 24 -------- ---------Profit before taxation 7,903 7,697 Income tax expense 4 (2,408) (2,586) -------- ---------Profit for the year from continuing operations 5,495 5,111 Discontinued operations Loss for the year from discontinued operations (1,551) (2,946) -------- ---------Profit for the year 3,944 2,165 ======== ========= Profit for the year attributable to: Equity holders of the parent 3,928 2,165 Minority interest 16 - -------- --------- 3,944 2,165 ======== ========= Pence Pence Basic earnings per share - continuing operations 15.5 14.6 - discontinued operations (4.4) (8.4) -------- --------- 3 11.1 6.2 ======== ========= Diluted earnings per share - continuing operations 15.5 14.5 - discontinued operations (4.4) (8.3) -------- --------- 3 11.1 6.2 ======== ========= CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE for the year ended 30 June 2006 2006 2005 £'000 £'000 Income and expense recognised directly in equity Actuarial gain on defined benefit pensions 3,784 961 Movement in cash flow hedging position 1 - Tax on items taken directly to or transferred from (1,135) (288) equity -------- ---------Net income recognised directly in equity 2,650 673 for the year Profit for the year 3,944 2,165 Total recognised income for the year -------- ---------attributable to parent company equity holders 6,594 2,838 ======== ========= Attributable to: Equity holders of the parent 6,578 2,838 Minority interest 16 - -------- --------- 6,594 2,838 ======== ========= CONSOLIDATED BALANCE SHEET at 30 June 2006 Notes 2006 2005 £'000 £'000 Assets Non-current assets Property, plant and equipment 25,407 25,780 Goodwill 5,556 5,556 Other intangible assets 563 319 Investments in associates - 250 Financial assets 34 237 Deferred tax assets 7,292 8,873 --------- --------- 38,852 41,015 Current assets Inventories 14,626 12,248 Trade and other receivables 31,744 30,209 Cash and short term deposits 167 - Derivative financial assets 1,346 - --------- --------- 47,883 42,457 Non-current assets classified as held for sale 1,618 - --------- ---------Total assets 88,353 83,472 ========= =========Liabilities Non-current liabilities Interest bearing loans and borrowings - (722) Employee benefits payable (21,283) (27,325) Provisions (430) (457) Deferred tax liabilities (1,245) (1,051) --------- --------- (22,958) (29,555) Current liabilities Bank overdraft (2,817) (1,780) Interest bearing loans and borrowings (722) (831) Employee benefits payable (3,024) (2,252) Trade and other payables (31,684) (26,422) Provisions (962) (926) Income tax payable (534) (704) Derivative financial liabilities (1,333) - --------- --------- (41,076) (32,915) --------- ---------Total liabilities (64,034) (62,470) --------- --------- --------- ---------Net assets 24,319 21,002 ========= =========Equity Called up share capital 5 4,412 4,409 Share premium 5 27,406 27,387 Other reserve 5 1,401 1,551 Capital redemption reserve 5 693 693 Capital reserve - own shares 5 (133) (165) Hedging reserve 5 1 - Retained earnings 5 (9,495) (12,901) --------- ---------Equity attributable to equity holders of the 24,285 20,974 parent Minority interest 5 34 28 --------- ---------Total equity 24,319 21,002 ========= ========= CONSOLIDATED CASH FLOW STATEMENT for the year ended 30 June 2006 2006 2005 £'000 £'000 Operating activities Operating profit from continuing operations 9,212 9,269 Adjustments for: Loss before taxation from discontinued operations (2,225) (4,063) Depreciation 3,160 3,461 Amortisation 142 194 Impairments of property, plant and equipment - 1,040 Gain on disposal of property, plant and equipment (297) (14) Gain on sale of investments (78) - Increase in inventories (2,602) (245) Increase in receivables (1,559) (4,518) Decrease in trade and other payables 5,332 1,088 Movement in provisions 9 1,161 Movement in retirement benefit obligations (2,272) (1,300) Other items - 151 --------- ---------Cash generated from operations 8,822 6,224 Tax paid (1,264) (2,082) --------- ---------Net cash inflow from operating activities 7,558 4,142 --------- ---------Investing activities Purchase of property, plant and equipment (4,953) (3,511) Payments to acquire intangible fixed assets (390) (198) Proceeds from sale of property, plant and equipment 1,108 2,043 Acquisition of subsidiary undertakings net of cash acquired (50) (6,490) Proceeds from sale of business activities 201 449 Proceeds from sale of investments 281 - Return of capital from associate - 52 --------- ---------Net cash outflow from investing activities (3,803) (7,655) --------- --------- Financing activities Interest paid (546) (395) Equity dividends paid (3,271) (3,248) Repayment of amounts borrowed (831) (784) Proceeds from issue of share capital 22 535 --------- ---------Net cash outflow from financing activities (4,626) (3,892) --------- --------- Net decrease in cash and cash equivalents (871) (7,405) --------- --------- Cash and cash equivalents at beginning of period (1,780) 5,625 Effect of foreign exchange rate changes 1 - --------- ---------Cash and cash equivalents at end of period (2,650) (1,780) ========= =========Cash and cash equivalents comprise: Cash and short term deposits 167 - Bank overdrafts (2,817) (1,780) --------- --------- (2,650) (1,780) ========= ========= NOTES 1. Segment information Primary reporting format - business segments The following tables present revenue and profit and certain asset and liabilityinformation regarding the Group's business segments for the years ended 30 June2006 and 2005. Segment revenue represents revenue from external customers arising from the saleof goods, plus inter-segment revenue. Inter-segment transactions are priced onan arm's length basis. The type of products sold by each segment are detailed in the Chief Executive'sReview. Segment results, assets and liabilities include items directly attributable to asegment as well as those that can be allocated on a reasonable basis. Unallocated assets comprise deferred tax assets and corporate assets that cannotbe 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 thatcannot be allocated on a reasonable basis to a business segment. Analysis by business segment 2006 Engineering products Building Precision Industrial Continuing Discontinued 2006 products components products Elimination operations operations Elimination Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Sales to external customers 55,529 28,587 48,590 - 132,706 1,658 - 134,364 Inter-segment revenue 50 1,554 1,300 (2,904) - 304 (304) - ------ ------- ------ ------- ------ -------- ------- ------- 55,579 30,141 49,890 (2,904) 132,706 1,962 (304) 134,364 ====== ======= ====== ======= ====== ======== ======= ======= Segment result 6,432 1,991 547 8,970 (2,225) 6,745 Share of post-tax profit of associate 23 - - 23 - 23 ------ ------- ------ ------- ------ -------- ------- ------- 6,455 1,991 547 8,993 (2,225) 6,768 Profit on fixed asset disposals 242 - 242 Finance revenue 22 - 22 Finance (568) - (568) costs Other finance expense - pensions (786) - (786) ------ -------- ------- -------- -------Profit before tax 7,903 (2,225) 5,678 Tax (2,408) 674 (1,734) ------ -------- -------Profit after tax 5,495 (1,551) 3,944 ====== ======== =======Segment assets 28,307 23,765 22,664 74,736 297 75,033 Unallocated assets 13,047 13,047 Equity accounted investments 273 - - 273 273 ------ -------Total Group assets 88,056 88,353 Segment liabilities (12,283) (6,313) (13,469) (32,065) (193) (32,258) Unallocated liabilities (31,776) (31,776) ------ -------Total Group liabilities (63,841) (64,034) Other segment information Capital expenditure: Property, plant and equipment 2,549 2,131 273 4,953 - 4,953 Other intangible assets 386 3 1 390 - 390 Depreciation 977 1,721 383 3,081 79 3,160 Amortisation of intangible assets 98 23 18 139 3 142 Analysis by business segment 2005 Engineering products Building Precision Industrial Continuing Discontinued 2005 products components products Elimination operations operations Elimination Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Sales to external customers 48,674 27,449 38,746 - 114,869 6,728 - 121,597 Inter-segment revenue 20 1,320 1,452 (2,792) - 1,624 (1,624) - ------ ------- ------ ------- ------ -------- ------- ------- 48,694 28,769 40,198 (2,792) 114,869 8,352 (1,624) 121,597 ====== ======= ====== ======= ====== ======== ======= ======= Segment result 6,008 2,064 1,197 9,269 (3,239) 6,030 Loss on sale - - - - (824) (824) Share of post tax profit of associate 24 - - 24 - 24 ------ ------- ------ ------ -------- ------- 6,032 2,064 1,197 9,293 (4,063) 5,230 Finance revenue 24 - 24 Finance (419) - (419) costs Other finance expense - pensions (1,201) - (1,201) ------ -------- -------Profit before tax 7,697 (4,063) 3,634 Tax (2,586) 1,117 (1,469) ------ -------- -------Profit after tax 5,111 (2,946) 2,165 ====== ======== ======= Segment assets 26,611 20,101 16,902 63,614 4,245 67,859 Unallocated assets 15,363 - 15,363 Equity accounted investments 250 - - 250 - 250 ------ -------- -------Total Group assets 79.227 - 83,472 Segment liabilities (12,796) (5,535) (6,884) (25,215) (1,090) (26,305) Unallocated liabilities (36,165) (36,165) ------ -------Total Group liabilities (61,380) (62,470) Other segment information Capital expenditure: Property, plant and equipment 743 2,171 327 3,241 270 3,511 Goodwill 5,506 - - 5,506 - 5,506 Other intangible assets 132 9 39 180 20 200 Depreciation 894 1,656 482 3,032 429 3,461 Amortisation of intangible assets 148 26 14 188 6 194 Impairment losses - - - - 1,040 1,040 Secondary reporting format - geographical segments Analysis by geographical segment 2006 United Europe Europe Rest Continuing Discontinued Total - - of Kingdom EU Non World operations operations Group EU £'000 £'000 £'000 £'000 £'000 £'000 £'000 Sales to external customers 95,535 23,975 6,443 6,753 132,706 1,658 134,364 ====== ====== ====== ====== ======== ======= ======= Segment assets 74,920 113 75,033 75,033 Unallocated assets 13,047 13,047 Equity accounted investments 273 273 273 -------- ------- 88,353 88,353 ======== =======Capital expenditure: Property, plant and equipment 4,952 1 4,953 4,953 Other intangible assets 390 390 390 Analysis by geographical segment 2005 United Europe Europe Rest Continuing Discontinued Total - - of Kingdom EU Non World operations operations Group EU £'000 £'000 £'000 £'000 £'000 £'000 £'000 Sales to external customers 93,453 14,448 1,619 5,349 114,869 6,728 121,597 ------ ------ ------ ------ -------- ------- ------- Segment assets 67,831 28 67,859 67,859 Unallocated assets 15,363 15,363 Equity accounted investments 250 250 250 -------- ------- 83,472 83,472 ======== =======Capital expenditure: Property, plant and equipment 3,511 - - - 3,511 3,511 Goodwill 5,506 - - - 5,506 5,506 Other intangible assets 200 - - - 200 200 Segment revenue by geographical segment represents revenue from externalcustomers based upon the geographical location of the customer. Revenue from discontinued operations relates substantially to the United Kingdom. The analyses of segment assets and capital expenditure are based upon location of the assets. 2. Dividends 2006 2005 £'000 £'000 Interim dividend for 2006 of 3.0p paid on 6 1,052 - April 2006 Final dividend for 2005 of 6.3p paid on 28 2,219 - October 2005 Interim dividend for 2005 of 3.0p paid on 6 - 1,063 April 2005 Final dividend for 2004 of 6.3p paid on 29 - 2,185 October 2004 ----------- ----------- 3,271 3,248 ----------- ----------- A final dividend per equity share of 6.3p has been proposed for 2006, payable on2 November 2006. 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 periodattributable 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 attributableto ordinary equity shareholders of the parent by the weighted average number ofordinary shares in issue during the period, after allowing for the exercise ofoutstanding share options. The following sets out the income and share data used in the basic and dilutedearnings per share calculations: 2006 2005 £'000 £'000 Net profit attributable to equity holders of the parent - continuing operations 5,479 5,111 Loss attributable to equity holders of the parent - discontinued operations (1,551) (2,946) -------- --------Net profit attributable to equity holders of the parent 3,928 2,165 000s 000s Basic weighted average number of shares 35,291 35,040 Dilutive potential ordinary shares - employee share options 59 146 -------- -------- 35,350 35,186 -------- -------- 4. Income tax costs 2006 2005 £'000 £'000 Total current tax 1,094 1,248 Total deferred tax 640 221 ------- -------Tax charge in the income statement 1,734 1,469 ======= ======= The tax charge in the income statement is disclosed as follows: Income tax expense on continuing activities 2,408 2,586 Income tax credit on discontinued activities (674) (1,117) ------- ------- 1,734 1,469 ======= ======= 5. Reconciliation of movements in equity Capital Capital Share Share Other redemption reserve Hedging Retained Minority Total capital premium reserve reserve own reserve earnings interests equity shares £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 July 4,352 26,909 1,727 693 (164) - (12,654) 28 20,891 2004 Shares 57 478 - - - - - - 535 issued Excess depreciation on previously revalued assets - - (150) - - - 150 - - Released on disposal of property - - (26) - - - 26 - - Vesting of own - - - - 82 - (82) - - shares Increase in capital reserve - own - - - - (83) - - - (83) shares Actuarial gain on defined benefit pensions net of tax - - - - - - 673 - 673 Dividends - - - - - - (3,248) - (3,248) Profit for the - - - - - - 2,165 - 2,165 period Share based payments - - - - - - 69 - 69 ------ ------ ------ ------- -------- ------ ------ ------ ------At 1 July 4,409 27,387 1,551 693 (165) - (12,901) 28 21,002 2005 Shares 3 19 - - - - - - 22 issued Excess depreciation on previously revalued assets - - (150) - - - 150 - - Net gains on cash flow hedges - - - - - 1 - - 1 Vesting of own - - - - 32 - (32) - - shares Actuarial gain on defined benefit pensions net of tax - - - - - - 2,649 - 2,649 Dividends - - - - - - (3,271) (10) (3,281) Profit for the - - - - - - 3,928 16 3,944 period Share based payments - - - - - - (18) - (18) ------ ------ ------ ------- -------- ------ ------ ------ ------At 30 June 2006 4,412 27,406 1,401 693 (133) 1 (9,495) 34 24,319 ------ ------ ------ ------- -------- ------ ------ ------ ------ Share capital and share premium The balances classified as share capital and share premium are the proceeds ofthe nominal value and premium value respectively on issue of the Company'sequity share capital. Other reserve The other reserve is an asset revaluation reserve which was used in previousyears to record increases in the fair value of land and buildings, and decreasesto the extent that such decrease relates to an increase on the same assetpreviously recognised in equity. Capital redemption reserve The capital redemption reserve is a non-distributable reserve. Capital reserve own shares The capital reserve own shares relates to 91,000 (2005: 116,000) ordinary ownshares held by the parent company.The market value of shares at 30 June 2006 was £138,000, (2005: £177,000).These are held to help satisfy the exercise of awards under the Company's LongTerm Incentive Plan.A Trust holds the shares in its name and shares are awarded to employees onrequest 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 ina cash flow hedge that is determined to be an effective hedge. 6 Change of accounting policy From 1 July 2005 the Group has adopted IAS 32 - Financial Instruments:Presentation and IAS 39 - Financial Instruments: Recognition and Measurement. From 1 July 2005 derivative financial instruments are initially recognised atfair value on the date on which a derivative contract is entered into and aresubsequently re-measured at fair value. The gain or loss on re-measurement tofair value is recognised immediately in profit or loss. However wherederivatives qualify for hedge accounting recognition of any resultant gain orloss depends on the nature of the item being hedged. The fair value of forward currency contracts is calculated by reference tocurrent forward exchange rates for contracts with similar maturity profiles. For the purpose of hedge accounting, the hedges used by the Group are classifiedas: - Fair value hedges when hedging the exposure to changes in the fairvalue of a recognised asset or liability or firm commitment; or - Cash flow hedges when hedging exposure to variability in cash flowsthat is either attributable to a particular risk associated with a recognisedasset or liability or a highly probable forecast transaction. As permitted under IFRS 1, First Time Adoption of International FinancialReporting Standards, the Group has elected not to restate comparativeinformation for the Financial Instruments Standards IAS 32 and IAS 39. 7 Post balance sheet events The Group disposed of its investment in its associate, Xiloform Profili srl, inAugust 2006 for gross proceeds of £335,000, a value in excess of its carryingvalue. 8 Audited Accounts The above financial information is derived from the statutory accounts for theyears ended 30 June 2006 and 30 June 2005, on both of which the auditors haveissued an unqualified opinion. This is the first year in which the Group has prepared its financial statementsunder IFRS. The comparatives have been restated from UK Generally AcceptedAccounting Practice (UK GAAP) to comply with IFRS. The impact of thisrestatement is available as a separate document to be viewed onwww.alumasc.co.uk The information does not constitute statutory accounts as defined in Section 240(1) of the Companies Act 1985. The accounts for the year ended 30 June 2005 have been filed with the Registrarof Companies and the accounts for the year ended 30 June 2006 will be filed indue course. Copies of the Annual Report and Accounts will be posted to all shareholders indue course. Copies will be available from the Company Secretary, The AlumascGroup plc, Burton Latimer, Kettering, Northamptonshire, NN15 5JP, and will beable to be viewed on www.alumasc.co.uk. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Alumasc Group