Alumasc : Annual Results Announcement 2021

THE ALUMASC GROUP PLC

7 September 2021

IMMEDIATE RELEASE

THE ALUMASC GROUP PLC

("ALUMASC")

FULL YEAR RESULTS ANNOUNCEMENT

STRONG PERFORMANCE ACROSS ALL DIVISIONS; WELL-POSITIONED TO BENEFIT FROM

LONG-TERM GROWTH DRIVERS

Alumasc (ALU.L), the premium sustainable building products, systems and solutions Group, announces results for the year ended 30 June 2021.

Commenting on the results reported today, Paul Hooper, Chief Executive, said:

"After a record first half performance, in which volume growth was supplemented by around £2.5m of sales delayed from 2020 by the initial Covid-19 lockdown, the numbers today reflect the determined efforts by Alumasc employees across the Group to ensure the underlying momentum was maintained throughout the second half.

I am delighted to report this excellent set of results to our shareholders and believe Alumasc is well-positioned to benefit from the long-term growth drivers in our market."

Financial Highlights:

• Double-digitgrowth in revenues from continuing operations: £90.5m (2019/20: £76.0m): +19.0%
• Group underlying operating profit £11.0m (2019/20: £4.2m): +162% reflecting both strong growth and the benefit of structural cost and efficiency gains
• Underlying operating margin: 12.2% (2019/20: 5.5%)
• Reported PBT £9.8 million (2019/20: £2.7 million)
• Robust balance sheet with net bank debt of £0.9m (2020: £4.3m). Headroom c.£23m
• Underlying EPS: 23.7p (2019/20: 8.2p): +189%
• Basic EPS: 21.2p (2019/20: 6.3p)
• Final dividend: 6.25p (2019/20: nil)

1. Full year dividend 9.5p (2019/20: 2.0p)

Operational Highlights: Strong performance in all divisions

• Water Management Division delivered an excellent performance with operating profit of £6.1m (2019/20: £4.8m), indicative of the potential for the business as market conditions normalise
• Building Envelope Division saw a significant revenue increase of £7.8m (+24%) and a £5.2m operating profit improvement, including a £1.4m turnaround at Levolux, resulting in the division achieving a double- digit underlying margin of 10.4%
• Housebuilding Products (Timloc) had an outstanding year growing its revenue by 22% and operating profit by 105% versus a Covid affected prior year
  o Operating margin 23% (2019/20: 13.7%) o Long-term growth drivers remain strong
• The Alumasc portfolio is aligned to environmental growth drivers, with c.80% of sales derived from environmental solution products

THE ALUMASC GROUP PLC

Outlook:

• Alumasc remains well-positioned to deliver sustainable growth, underpinned by a clear strategy and strong market positions:
  o Water Management is benefitting from both its UK and export-focussed strategy
  o Building Envelope entered the new year with a strong order book, supported by the benefits of the recent restructuring
  o Housebuilding Products (Timloc) continues to innovate and develop new products, against a favourable UK housebuilding backdrop
• The Group's cost savings programme, liquidity management, strong balance sheet and improved commercial positioning underpin a robust platform that positions Alumasc to benefit from the long-term growth drivers in our markets
• The Board is cognisant of the potential for short-term disruption to our customers' operations from shortages of building materials, labour and road haulage, and delays in the global container shipping industry
• Notwithstanding these risks, the Board believes Alumasc's strong platform provides confidence for another year of progress

Enquiries:
The Alumasc Group plc	+44	(0)1536 383844
Paul Hooper (Chief Executive)
Simon Dray (Group Finance Director)
Peel Hunt (Broker)	+44	(0)207 418 8831
Mike Bell
Ed Allsopp
finnCap (NOMAD)	+44	(0)207 220 0561
Julian Blunt
Camarco (Financial PR)	[e-mail]
Ginny Pulbrook	+44	(0)203 757 4992
Daniel Sherwen	+44	(0)203 781 9241

LEI: 2138002MV11VKZFJ4359

Notes to Editors:

Alumasc is a UK-based supplier of premium sustainable building products, systems and solutions. Almost 80% of Group sales are driven by building regulations and specifications (architects and structural engineers) because of the performance characteristics offered.

The Group has three business segments with strong positions and brands in their individual markets. The three segments are: Water Management; Building Envelope; and Housebuilding Products.

THE ALUMASC GROUP PLC

Strategic Report

Chairman's Statement

This has been an extremely successful year for Alumasc.

There have been several reasons for this:

• Our industry -principally UK construction - was fortunate to be able, indeed encouraged, to continue operating, despite the presence of the Covid pandemic throughout the year. We pursued this opportunity enthusiastically while abiding by, and in many cases exceeding, the stringent rules introduced to manage the attendant risks.
• Following the temporary closures that did occur, both of our own operations and of those of our customers, during the latter part of the prior financial year, a number of projects resumed during the year under review, creating demand arguably above the underlying level. This demand was not easy to accommodate, particularly within the Covid rulebook and with Brexit looming. However, the combination of prudent stock building and magnificent co-operation from our workforce enabled us to sustain a high level of service in response. We believe that gains in market share were won as a result.
• During the year prior to that under review, Alumasc had significantly streamlined its business, reducing the number of operating/manufacturing sites from ten to six and taking costs out of the business amounting to some £2.4 million per annum in the process. As a result, a higher proportion of the margins earned on healthy sales was converted to profit and profit margins rose as a result.
• Finally, and perhaps most significantly, our management teams and their colleagues throughout the company responded with calmness and determination to the very uncertain conditions brought about by the pandemic and made this outcome possible. I thank them all on behalf of fellow Shareholders and Directors.

Performance

Revenues of £90.5 million were £14.5 million (19.0%) ahead of the prior year, which was badly affected by Covid. They were very slightly ahead of the previous "pre-pandemic" year. Roofing Products grew by a remarkable 62% year on year and Housebuilding Products by 22%, both arguably benefitting from the demand that was building during the interruptions suffered in the prior year. Levolux was the only business that saw a reduction in sales, reflecting both the weakness in commercial activity in the period and the intentional focusing of that business to a narrower, more selective market.

Profit, however, was well ahead, not just of the depressed prior year but also of the earlier year, not so affected. Trading Profit of £12.9 million, hence trading margins, were double that of the earlier year, reflecting the reduction in costs referred to above and further efficiencies achieved during the intervening period. See note 4.

Similar improvements in the group's profit have benefitted cash and more than recovered the group's capacity to pay dividends.

Alumasc's focus on the prudent management of cash has reduced net bank debt from £5.1 million two years ago to £4.3 million one year ago at the height of the Pandemic's impact, and further to £0.9 million at 30 June 2021. With debt facilities in excess of £20 million, this places the group in a strong position for further development.

THE ALUMASC GROUP PLC

Dividend

The unpredictable consequences of Covid led your Board to suspend dividend payments in the conservation of cash during the first half of last year; and payments were only resumed, albeit at a low level by historical standards, as the year progressed. It is enormously gratifying to be able to recover this year's dividend payment above pre-pandemic levels and your Board is recommending an increase in the final dividend to 6.25p per share (2020: 2p per share), making a total for the year of 9.5p. This compares with a total of 2p in 2019/20, and 7.35p in the earlier "pre-pandemic" year.

Strategy and Corporate Activity

The principal focus has been operational during the year, always within the strategic framework set out in this and previous reports. Hence, it has been a quiet year in the corporate sphere. There has, however, been progress on the twin fronts of outperforming our sector and evolving our sustainable credentials, illustrated by the ESG Statement in the full Annual report and accounts.

Pensions

There has been significant progress also in reducing the pensions legacy, partly due to the impact of rising gilt yields on our liabilities, and partly to an excellent investment performance.

The Boardroom

Following six years in the post, David Armfield resigned his non-executive directorship during the year in order to concentrate on his other activities. I am grateful to David for his wise support during his time with Alumasc and wish him every success.

In March this year, Simon Dray was appointed to the vacant position of Group Finance Director and is a welcome addition to our team. His broad experience is well matched to our strategic targets and public company responsibilities.

Prospects

It is never easy to follow such success, particularly when an element of that success was due to an abnormal carry over of demand from the prior year. However, demand from our markets remains buoyant, including an anticipated partial recovery from the much depressed commercial sector, which unsurprisingly was most affected by the events of the past year and a half.

The principal area of concern, therefore, relates to the availability of materials and human resources to meet this demand and the cost implications of shortages, which may dampen demand in certain areas, possibly permanently delaying some projects already in the pipeline. At present, the industry understands and is absorbing these rising costs and additional capacity has a way of soon following on the heels of unsatisfied demand.

It is therefore reasonable to anticipate another strong performance from Alumasc in the coming year, as the UK economy recovers from its recent misfortunes.

John McCall

Chairman

THE ALUMASC GROUP PLC

Chief Executive's Review

Financial Highlights and Overview

	2020/21	2019/20	% change
Group performance:
Revenue (£m) *	90.5	76.0	+19%
Underlying profit before tax (£m) *	10.5	3.7	+187%
Statutory profit before tax (£m)	9.8	2.7	+263%
Underlying earnings per share (pence) *	23.7	8.2	+189%
Basic earnings per share (pence)	21.2	6.3	+237%
Dividends per share (pence)	9.5	2.0	+375%

* A reconciliation of underlying to statutory profit before tax is provided in note 5

Covid-19

The response of our employees to the challenges faced this year has been exceptional. Covid-19 has brought many difficult challenges but our number one priority is always the health, safety and wellbeing of our people and visitors to sites. The actions taken to comply, as a minimum, with government advice has resulted in several unannounced HSE visits that have confirmed the actions taken with very positive feedback being received. During the year we had one small Covid-19 outbreak involving less than 20 people. Swift management action contained this with a full return to work within 10 days. Our new norm allowed us to adapt our working practices to have more people working from home while maintaining a good premium customer service. I am immensely proud of our incredible people and all that they have achieved.

Overview of performance

Following an outstanding and record performance in H1, which included around £2.5 million of pent-up demand revenue carried forward from the prior year Covid affected lockdown, Alumasc's underlying momentum was maintained throughout H2, despite the effects of Brexit. Growth was achieved in all three divisions against a backdrop of resilient building and construction activity along with market share gains. In addition, raw material and shipping cost increases to date have been successfully recovered through sales price increases.

Close control of costs and the benefit of the restructuring implemented in FY 2020 have also contributed to the improved profitability. Levolux delivered a substantially improved performance during the financial year, returning to consistent profitability on improved tendering and contract management disciplines and a streamlined cost base.

The star performer of the year was undoubtedly the Building Envelope Division which turned a prior year loss of £0.9 million into a £4.3 million profit. This was a testament to several factors, but both parts of this division, Roofing and Levolux, contributed significantly. As you will see in the section on this division it was really a volume/market share increase that improved Roofing's performance while Levolux had a significant turnaround into profit from a prior year loss assisted by significant cost reductions and efficiency improvements.

The remaining two divisions had record performances, both driven by volume/market share gains and operational efficiencies. New products were also important and, in particular, for the Housebuilding Products Division which launched a record number, supported by its industry leading service, with some considerable success.