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 activities.

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 Statement.

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%.

Development

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).

Board
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.

Prospects
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 development.

J S McCall
Chairman

Published Wednesday 12th September 2007