Alumasc (ALU.L) the sustainable building products, systems and solutions Group today announces results for the six months ended 31 December 2020.
Commenting on the interim results, Paul Hooper, Chief Executive of Alumasc said:
“The Group’s substantially strong performance of an 11% increase in revenues, 23% increase in export sales and more than 100% increase in underlying pre-tax profit during the period, reflects the successful execution of our repositioning strategy launched in 2019. This has been achieved by the hard work of the employees, for which I would like to thank them.
Alongside an increasingly strong financial performance, the Group has undertaken a significant number of internal initiatives to act in an environmentally sustainable manner, including sourcing 50% of the Group’s electricity from sustainable sources. We are also in the process of setting internal metrics to monitor performance and aligning our ESG programme to TCFD and the UN Sustainability Goals. Many of our products contribute to carbon and water efficiency in the built environment and our internal initiatives contribute further to helping our customers mitigate their environmental impact.
Reflecting the Board’s confidence in the year ahead, the underlying strength of the business and the strategic growth opportunities available to us, we have today proposed an interim dividend of 3.25 pence per share.
Our long-term strategy remains to continue to deliver profitable growth through our strategic positions in sustainable building products, while growing our export market. In spite of some potential industry headwinds, we will focus on delivering this to generate sustainable returns for all our stakeholders.”
Against a background of the continuing presence of COVID-19 and uncertainty surrounding the likelihood of a Trade Agreement being secured with the UK’s exit from the EU, Alumasc’s performance in H1 was outstanding.
– Group revenues were up by 11% to £45.6 million (2019: £41.1 million), with UK revenues 9% ahead and exports (representing 13% of Group revenues) 23% ahead
– Underlying operating margins were ahead by 7.5 percentage points to 13.6% (2019: 6.1%) reflecting increased sales, improved margins and the benefit of the prior year cost reduction programme in lower overheads
– Underlying profit before tax was £6.0 million (2019: £2.3 million)
– EBITDA was £7.4 million (2019: £3.5 million)
– Statutory profit before tax was £5.5 million (2019: £2.1 million)
– Underlying earnings per share were 13.4 pence (2019: 5.1 pence) and basic earnings per share 12.2 pence (2019: 5.0 pence)
– Net bank debt at 31 December was £0.2 million (30 June 2020: £4.3 million), benefitting from strong focus on working capital management
– Pension deficit at 31 December was £12.8 million (30 June 2020: £19.3 million), benefitting from a strong investment performance
– An interim dividend of 3.25 pence per share is planned for payment in April 2021, reflecting the Board’s confidence in the underlying strength of the business and strategic growth opportunities available to it. This would be an increase from the 2.95 pence per share interim dividend that was planned for April 2020 but which was cancelled in light of the Pandemic’s onset.
The Water Management Division, representing 42% of Group revenues, made a profit of £3.5 million (18% operating margin), £1.1 million (44%) ahead of the prior year first half, driven by £1.6 million (9%) volume increases, gross margin improvements and cost savings.
The Building Envelope Division, representing 46% of Group revenues, delivered a record performance, returning to profit of £2.5 million (12% operating margin), £2.8 million ahead of the prior year. This benefitted both from market share gains at Roofing and from a much improved performance at Levolux, where more disciplined opportunity qualification, project management and reduced overheads led to a profit in every month of H1.
Housebuilding Products Division, representing 12% of Group revenues, grew profit by 29% to £1.2 million (22% operating margin), testament to the success of new product introductions, outstanding service and stringent cost controls. The achievement of 100% On Time In Full delivery performance in H1 was clearly appreciated by its customers.
The Levolux restructuring and turnaround performance created a much improved performance in which it achieved a profit in each month of H1. As anticipated, revenues have fallen in line with our decision to strategically position it as a specialist provider of solar shading, architectural screening and modular balconies, with an increasing bias towards design and supply work. Its performance was largely driven by the growth of export sales to the US in this design and supply category. Improved opportunity qualification, and project management along with higher than budgeted cost reductions also contributed to the turnaround as the business continues to operate with a more professional approach to tender opportunity selection. The new approach is beginning to show a healthy pipeline of targeted projects for the future.
In addition, following a search using consultants we have identified a new Group Finance Director, who will join us on 1 March 2021, and have issued a separate RNS on this today.
Underlying profit before tax at 13% of sales demonstrates what Alumasc can achieve in its chosen marketplace. The Group has a strong balance sheet, with a healthy cash position, and a well defined growth path. One mark of our confidence in the future is the resumption of the interim dividend today.
While it is encouraging that an EU Free Trade Agreement has been agreed, we wait to see how frictionless this is in practice and what the impact of the proposed cessation of the Help to Buy and Stamp Duty government initiatives in our Q3 might be. In spite of COVID-19 and its mutations which have put the UK into a third lockdown construction, at least at this stage, is being allowed to continue to operate. It is hoped that the roll-out of vaccines should result in a more stable situation in our Q4. Nevertheless, despite the above risks and uncertainties, the Group is now in a very strong position to move further forward.