The Alumasc Group Plc – Interim Management Statement
Alumasc (ALU.L), the premium building and engineering products company, is publishing its second Interim Management Statement for the year ending 30 June 2008, as required by the UK Listing Authority’s Disclosure and Transparency Rules.
Authority’s Disclosure and Transparency Rules.
Following a strong first-half, Alumasc has continued to trade well in the third quarter and subsequently, driven by further double-digit growth in like-for-like revenues from sustainable building products that assist customers to manage energy and water in the built environment.In the nine months to 31 March 2008:
• Group revenues from continuing operations increased by 26%, despite a prolonged Easter break which impacted the third quarter this year, compared with the fourth quarter in 2006/07. Excluding Levolux, the UK’s leading supplier of solar shading systems which was acquired on 1 May 2007, group revenues from continuing operations rose by around 6%.
• Building Products’ divisional revenues increased by almost 50% to nearly £60 million. Excluding Levolux, divisional revenues grew by over 10%, driven by a good recovery in the MR Facades business which benefited from improved demand from both the social refurbishment and new build markets; by record revenues from Timloc; and by export-led growth earlier in the year for Gatic access covers and Gatic Slotdrain. Levolux continues to perform in line with expectations despite delays to a couple of major projects which will now complete in Alumasc’s next financial year. Levolux’s order books have continued to rise since the half-year end and have since reached new record levels.
• Engineering Products’ divisional revenues from continuing operations reduced by 7% to almost £32 million, reflecting a slower start to the financial year at Alumasc Precision. Divisional revenues in the third quarter were marginally up on the prior period, due to improved activity levels at Alumasc Dispense and new work for Aston Martin and Caterpillar coming on stream at Alumasc Precision, albeit the commencement of some of the anticipated new work has been delayed due to factors outside our control.
The positive trading momentum described above has continued into the fourth quarter to date.An internal audit in April revealed a number of matters of concern at Alumasc Precision, particularly relating to inventories. Management immediately commissioned a further investigation by Ernst & Young. This work is largely complete and revealed an overstatement in the accounting records of inventories and other assets, which now need to be written off, in the range £2.0 to £2.5 million. There is no indication of theft or any personal gain. The group’s consolidated net assets reported at 31 December 2007 were £33.8 million. It is estimated that approximately £1 million of the overstatement in assets relates to the current financial year, with the remainder relating to prior years. Whilst cash generation is not affected, the profitability of Alumasc Precision will be some £1 million lower than previously anticipated for the current financial year, and the run rate of profitability into the next financial year will be lower by a similar amount. The Board is taking the necessary vigorous action to prevent recurrence, strengthen management and processes, and to improve profitability.The acquisition of Blackdown Horticultural Consultants, for an initial cash consideration of £1.75 million on 1 April 2008, complements the group’s existing green roof business and puts Alumasc in a leadership position in the rapidly expanding market for living roofs whilst further increasing our presence in the sustainable building products arena.
Group net debt at 31 March 2008, prior to the acquisition of Blackdown, had reduced to £10.6 million, in line with the good trading performance and lower than anticipated capital expenditure requirements. Following the acquisition of Blackdown, and the payment in April of the interim dividend o