Alumasc : 2021/22 Interim Report

Tuesday 8 February 2022

The Alumasc Group plc

Interim results

On track to deliver Full Year expectations

Alumasc (ALU.L) the sustainable building products, systems and solutions Group today announces results for the six months ended 31 December 2021.

Commenting on the interim results, Paul Hooper, Chief Executive of Alumasc said:

"The Alumasc Group reported a solid performance during the first half and is on track to deliver its expectations for the full year. Although there were some headwinds experienced due to Covid-19 driven contract delays and cost inflation across the industry during the period, the business performed well and has good momentum going into the second half.

Alumasc is at the forefront of providing high-quality, low carbon, sustainable products, systems and solutions, the majority of which manage the scarce resources of water and energy and improve quality of life for the owner/occupier in the built environment. Our commitment to sustainable business is evidenced by Timloc, our housebuilding products business, becoming the first building products manufacturer in the UK to be carbon neutral across its operations.

I am therefore delighted that Alumasc's green credentials have been recognised by the award of the London Stock Exchange Green Economy Mark in November 2021 and that we are well on the way to becoming a market leader in the provision of sustainable building products."

Financial Overview: Solid underlying performance

A reconciliation of underlying to statutory profit is provided in note 4 to the interim financial statements.

1. Underlying operating margin: Underlying operating profit as a percentage of revenue.
2. EBITDA: Underlying operating profit before interest, tax, depreciation and amortisation.
3. • Group revenues of £46.3m, were 1.6% (£0.7m) ahead of H1 FY21 (£45.6m, which benefited from some £2.5m of business delayed from FY20 by Covid-19). Excluding this, sales growth was 7.5%.
   • Export sales grew by 41% to £8.7 million and represented 19% of total Group revenue (H1 FY21: 13%).
   • The strength of our brand positioning and customer relationships allowed the successful pass- through of input cost inflation. As a result, gross margin was only slightly diluted at 34.6% (H1 FY21: 36.7%).
   • Underlying operating margin remained strong at 11.9% (H1 FY21: 13.6%), with statutory operating
     margin of 11.7% (H1 FY21: 12.9%), after absorbing the lower gross margin as well as the resumption of business development costs which had been curtailed by the Covid-19 restrictions. Structural cost savings of £3.1m p.a., achieved over the previous two years, remain.
   • The Group is selectively investing in opportunities to accelerate growth.

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The Building Envelope Division had a reduced revenue in both parts of its division and produced a profit of £0.9m (5% operating margin), £1.6m below H1 FY21, largely reflecting the result at Levolux, discussed below.

The Roofing business performed ahead of internal expectations in both its newbuild and refurbishment markets, against a comparative that included a large one-off contract as well as significant sales delayed from the prior year. It has benefited significantly from the recruitment of high quality sales people who have improved sales in regions that had been weaker in the past. The Covid-19 impact also meant that there was more external work carried out on roofing than on internal refurbishment for Academies. The Roofing business continues to focus on high end specification offers supported by the highest standards, with a customer focused service level which delivers low carbon systems combined with safety in installation; all supported by long-term warranties. This has allowed the business to increase market share in its core sectors.

Covid-19 also played a part in slowing down newbuild commercial market projects, which particularly affected Levolux. This depressed the order intake in the first half to a position significantly lower than was anticipated, and led to a £1.0m loss at the half year, compared to a £0.2m profit in H1 FY21.

However, levels of customer enquiries are increasing and the business is actively pursuing several significant opportunities. With its streamlined operating structure and improved capability, Levolux is well positioned to benefit as market activity resumes.

Specification sales opportunities are growing from the new integrated Building Envelope sales approach with an increasing number of combined project wins taking place.

Housebuilding Products

Timloc, our Housebuilding Products business, continued to perform well. Its industry leading next day delivery service and continued introduction of new products underpins this performance.

This Division, representing 12% of Group's revenues, grew its revenue by £0.4m (6.4%). This was a very commendable performance in a challenging environment in which housebuilding activity on sites was frequently interrupted by commodity product and labour shortages and inflationary pressures. Despite these, Housebuilding Products maintained its strong returns with a 19% (H1 FY21: 22%) operating margin. New product introductions, outstanding service and rigorous cost controls contributed significantly to this performance. The achievement of 100% On Time In Full ('OTIF') delivery performance was, once again, appreciated by its customers.

New products such as meter boxes, fire rated stop socks, non-combustible InvisiWeep, and the relaunch of the Cavity Closer range all had a positive impact on the business. Ongoing investment in new equipment with much improved energy efficiency, delivering excellent pay-backs, has made a significant contribution in the reduction of the Group's carbon footprint. Timloc became the first building products manufacturer in the UK to source all its energy from renewable sources. In addition, it has become the first building products manufacturer in the UK to become carbon neutral across its operations.

Strategic Overview

The significant improvement in the Group's performance across the last two years emanate from the execution of the Group's strategy which includes the stated objectives of:

Short-term:

• Continuing to simplify, streamline and reduce fixed costs across the Group.
• Recovery of Levolux's financial performance.

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