Alumasc : Annual Results Announcement 2020

8 September 2020

IMMEDIATE RELEASE

THE ALUMASC GROUP PLC

("ALUMASC")

FULL YEAR RESULTS ANNOUNCEMENT

RESILIENT PERFORMANCE DELIVERS RETURN TO DIVIDEND PAYMENTS

Alumasc (ALU.L), the premium sustainable building products, systems and solutions Group, announces results for the year ended 30 June 2020.

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

"The Group responded quickly to the COVID-19 outbreak to protect the business, its employees and all our stakeholders. The result of this swift action led to the Group reporting a strong recovery from June onwards, with July 2020 being a record performance for the month and August 2020 performance also being very strong at both revenue and profits level. Management remains appropriately cautious given the limited visibility as to how the wider economic situation will evolve but is cautiously confident in its ability to deliver operationally in the uncertain macroeconomic climate."

Financial Highlights: Strong cash generation

• • Group revenues £76.0m (2018/19: £90.1m) reflecting the impact of COVID-19 on the final quarter

• • Underlying* PBT £3.7m (2018/19: £5.6m), also reflecting the impact of COVID-19

• • Group's underlying* operating margins reduced from 6.5% to 5.5% representing a creditable result against such a sharp decline in revenue

• • Underlying* earnings per share 8.2p (2018/19:12.4p)

• • Final dividend of 2 pence per share (2018/19: 4.4 pence) - return to dividend payments reflects the Group's resilience, strong cash position and underlying strength

• • Focus on cash management has resulted in a lower level of net bank debt of £4.3 million (30 June 2019: £5.1 million).

Operational Highlights: Well positioned post COVID-19

• • Water management division delivered an exceptional performance with higher profits than the prior year as a result of a strong portfolio management and cost reductions

• • Building envelope division successfully restructured Levolux taking significant cost out of the business, Roofing enters new financial year with a significant order book and strong sales

• • Housebuilding products saw a strong performance including many product leaders in H1 until the well documented slow down as a result of COVID-19; business well positioned in current financial year due to latent housebuilding demand

• • Total annualised cost savings of £2.4m achieved in the year versus a target of £2.0m with the move from ten properties to six and targeted cost reductions.

Outlook:

• • Looking ahead the Board is cautiously optimistic given the strong start to the new financial year across the Group. The Board believes that Alumasc's strong strategic and market positions, which underpin its established track record over many years of outperforming the UK construction market, will enable the Group to deliver solid returns in the medium term.

*A summary of non-underlying items and a reconciliation to reported operating profit and profit before tax is provided in note 5

Enquiries:

The Alumasc Group plc	[phone]
Paul Hooper (Chief Executive)
Helen Ashton (Company Secretary)
Peel Hunt (Broker)	[phone]
Mike Bell
Ed Allsopp
finnCap (NOMAD)	[phone]
Julian Blunt
Camarco	[e-mail]
Ginny Pulbrook	[phone]
Tom Huddart	[phone]
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.

Strategic Report

Chairman's Statement

Build Back Better

Build Back Greener

Build Back Faster

These words, deployed by the Prime Minister on 30 June 2020 as a central theme to his New Deal for the Nation, might have been devised as a strapline for Alumasc.

Summary

The wide range of actions taken in recent years to reposition Alumasc as a supplier of sustainable building products from a tighter, service oriented operating base, was proceeding well in the first 8 months of the past financial year: the assimilation of Wade, the restructuring of operations, the cost reduction programme, product innovation, corporate simplification, relisting on AIM, were all making good progress when the unforeseen asteroid of COVID-19 struck us all in the Spring of this year.

The Construction Industry was affected as severely as most, with widespread closures in response to the Government's lockdown request in March and minimal activity on sites that were able to remain open despite the blanket call.

Fortunately, Alumasc was already well advanced in a well-publicised programme to reduce its cost base by £2 million per annum but responded swiftly to combat this unprecedented threat, temporarily closing several of its businesses and requiring the large majority of employees either to work from home or to furlough pending developments. Action to conserve cash included an intense focus on debt collection and working capital controls more generally, the deferral of VAT payments and the cancellation of the interim dividend that would otherwise have been paid in April 2020.

The result of this broad range of policy and mitigation actions has been outstanding: The loss of £14 million of revenues, mainly as a direct result of retrenchment by the industry in the face of COVID-19, resulted in a year on year fall of £1.4 million in trading profit, confirming the effectiveness of the reduction in the cost base and the squeeze on discretionary expenditure that followed; and the Group's net bank borrowings of £4.3 million at 30 June 2020, against total facilities of £24 million, were £0.8 million lower than at the previous year end.

While disappointing given our expectations after the first 8 months of the year, this is a highly creditable and reassuring outcome in the circumstances.

The encouraging news is that by May, there were signs that the industry was keen to resume activity within the health guidelines being applied and, by the end of June, all construction sites were again active and Alumasc operations fully operational.

While it is impossible for COVID-19 not to take centre stage in any report on the past 12 months, the long term redirecting of Alumasc towards the supply of premium, sustainable building products proceeds methodically and with considerable effect. We remain genuinely excited at the prospects for our Group and its positioning in the sustainable environment that continues to evolve.

The year under review

This year more than most, I refer you to the Chief Executive's report that follows for a detailed review of our activities.

I would like to highlight just three achievements which have relevance for the future: firstly, the significant reduction in our cost base which underpins future performance without diminishing opportunity. Secondly, the continuing drive towards sustainable operations and a sustainable, or "green", product range. Thirdly, the immediate and determined response by all our employees, for which I unhesitatingly offer the gratitude of all stakeholders, in the face of an existential threat.

Not only have we come through that test but we have done so in a manner that demonstrates our resilience and our strengths and enables the Board to recommend a return to dividend payments in respect of the full year. The Board is recommending a final dividend payment in respect of the Financial Year ending on 30 June 2020 of 2p per share (2019: 4.4p), making a total for the year of 2p per share (2019: 7.35p), payable to shareholders on the Register on 25 September 2020.

Strategic Developments

Fortunately as it turned out, the focus of the past year was always to be on the delivery of results from previous policy and actions. Hence, there were no major projects that might have diverted from the total commitment required to counter COVID-19.

It would be wrong, however, to downplay the progress towards outperformance and sustainability, our twin strategic goals, now solidly embedded in in our strategy, business model and year on year targets.

Corporate Actions

Following the high activity level of recent years, the only Corporate Action of significance in the year took place in April with the reset of the Group's capital base for the purpose of greater flexibility. Shareholders voted overwhelmingly in favour of this action, with 99.9% of votes cast in favour.

The Boardroom

The appointment of two Non-executive Directors earlier in 2019 was followed by the appointment of two Executives as Directors in September 2019 and we thank Gilbert Jackson and Michael Leaf for their contribution and support in a turbulent first year.

In February this year, Andrew Magson, our long-serving Finance Director, notified his intention to leave Alumasc to develop the next stage of his career outside the Group and the exercise to fill this vacancy is well advanced, with a shortlist established. When the imposition of COVID-19 controls inevitably interrupted this process, we swiftly moved to provide full and effective cover and support to the Finance team, in particular through the input of Vijay Thakrar, our Non-Executive Director with 33 years experience in major accounting firms, 22 years as a Partner. While this is no long term solution, we are fortunate to have been able to draw on Vijay's ideal experience and background to assist in these unusual circumstances.

Prospects

Managing the unpredicted and unpredictable effects of the COVID-19 pandemic has required a combination of very short term - daily almost - assessment of market conditions, up and down, with a firm eye on longer term and, hopefully, more permanent goals. While some things will undoubtedly change for ever, greater investment in many of the projects targeted by Alumasc - schools, hospitals, prisons, infrastructure - is seen both as part of the solution to the "problem" and as meriting much greater emphasis in their own right. This can only encourage the Board to believe that the changes of recent years have been right for Alumasc and will position it well in coming years.

John McCall

Chairman