Afternoon. Welcome to the Alumasc Group PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. I would now like to hand you over to Paul Hooper, CEO. Good afternoon, sir.
Thank you very much, Lily, and thank you all for attending the Alumasc interim results presentation for the half year to December 2025. Introductions. My name is Paul Hooper. I am the Chief Executive of the group, and I am joined today by Simon Dray, the Group Finance Director. This is my 50th and last results presentation for the Alumasc Group. If we may, I suggest that we go on to page four. This is really an overview of our divisions. Sustainability drives our future growth. We have three divisions, and I will give you a quick description of each of those. We start with the Water Management division, which is involved in water and stormwater management. Many of our systems are specified. We manufacture circa 70% of our products and 70% are sold to merchants with 30% direct to contractors.
Our second division, shown in the middle here, is the Building Envelope division, which consists of our roofing systems company, which gives technical advice, for instance, by taking core samples from current roofs and then advising what the solution is. We supply premium roofing systems from Derbigum, Hydrotech, both global leaders, and we also have our own brand, Euroroof, plus other brands. We are also involved in other niche areas such as blue roofs, green roofs and bio solar roofs. This division does not manufacture, and it imports its products from Canada and Europe, from suppliers who it has had a 35- 40 year relationship with. It supplies its systems directly to contractors, so no merchants involved here, directly to contractors only. Our third division is the Housebuilding Products.
It operates under the Timloc brand, which has really developed by giving an outstanding next day service and a 100% record for on time and full delivery. If an order is received by midday, it will be delivered often in small quantities the next day. Above a GBP 100 delivery is free of charge and GBP 150 to site. We bought it for just over GBP 3 million around 20 years ago, and it makes more than that in profit now with a circa 26% operating margin. It manufactures 95% of its products and again, around 95% of sales are through builders merchants. If I may, I will ask Simon to continue on our clear and well-established growth strategy, please.
Thank you, Paul. We have a clear and well-established growth strategy, which we organized under four separate pillars. Just briefly, because we will touch on many of these during the presentation, we are a champion for sustainable building products. We use environmentally efficient materials to create durable, high quality, low maintenance products that help address the environmental challenges facing the built environment. We look to accelerate our organic sales growth. We sell into markets that will grow faster than the general construction market, and we have international opportunities for parts of our product range. We therefore look to outperform general construction growth. We look to drive our margin improvement through efficiency, automation and volume growth. We look to use our strong balance sheet and cash generation to make value enhancing investments in the business.
Capital invest and revenue investments that enhance future growth, but also selective bolt-on acquisitions to accelerate our ambitions. I pass back to Paul there for the overview of our half year performance.
Yeah. This is on page seven. These are the highlights of this half year, where we have had a resilient performance and we are on track for delivering on our full year expectations. It has been challenging, though, the market, and we are against a strong prior half year comparator. The revenue in the period under review was GBP 50.4 million. That really, if we take the Chek Lap Kok business out of there, which was into the Hong Kong airport, which accounted for around GBP 5.5 million of revenue, we were actually, as Simon will show shortly, 3% down on the prior year. There were headwinds that we encountered, and particularly with the Building Safety Act delaying larger projects.
Let me just tell you that in construction news, it was commented on in the House of Lords Industry and Regulators Committee on the 2nd of September 2025 that the local authority building control CEO commented that there had been anticipated to be 20,000 starts of projects in London in the last year, but only 900 started. That is a 95% reduction in anticipated starts. In The Sunday Times just two days ago, it commented on a 75-year low of concrete sales in London, 27% reduction versus the prior year, 39% versus 2023. There have been 310,000 houses built in 18 months since the government came into power. Matthew Pennycook, the housing minister, indicated, and this is according to The Sunday Times, that live discussions were in government right now, and there was a reference in that article to the government looking at help to buy scheme.
This has all been stunningly unhelpful to our industry. We have been battling against all of this and at the same time, affordability concerns, planning delays have affected house building. We then had the autumn budget, which had a one-month delay into November, and that did not really help either. We had a bit of a pickup right at the end of the year, which I come on to. I touched on the CLK revenue in the prior year, and we had minimum in our H1, but we have got GBP 2 million of orders. Those are with us. We have got payments all up to date, and we expect to be able to ship those in our H2. The underlying PBT was GBP 4 million, and actions have been taken to drive efficiency and margins.
We took GBP 1.1 million of annualized costs out, which will benefit H2, and those are all in the Water Management division. We have a strong balance sheet with a net debt of GBP 7.7 million. We have conservative leverage ratio of 0.5 times, and we maintain the interim dividend at 3.5p. Moving on to the next page. It was a resilient performance, and we are on track to deliver the full-year expectations, and this is evidenced amongst other things by a healthy and growing order book and a robust pipeline of opportunities.
We have not referred to those opportunities in the pipeline much in the past, but we are going to today. If we start with the order book, which has a growing momentum. At the end of December, that was GBP 14.5 million. If we take out Chek Lap Kok, that is 27% ahead of December 2024, 50% ahead of December 2023.
Some good growth there. We have had several overseas projects won, and I will touch on some of those that have already been supplied into H1 later. We have had a GBP 2 million order from Changi Airport in Singapore. This is a really important win because there is further business there, which we believe could be worth GBP 10 million to GBP 15 million. That will have to be won, but having won the first part of this, GBP 2 million, puts, I think, us into a strong position for a further win. In terms of our pipeline here, the opportunity is robust. We have GBP 190 million of near and medium term U.K. and export opportunities, and these are largely Alumasc or Alumasc brand specifications. Around 75% are specified, and that reflects our investment in sales resource, technical sales resource, and customer relationships management.
In other words, the CRM tools that we are now using more fully. We have announced my succession, and I will be succeeded as chief executive, starting really at the end of March, early April. Pamela Bingham joins us as CEO designate at the start of March, and she has a PLC background. She was a non-exec director at Tyman PLC, and also Weir, CRH, and Rotork. I am sure she will do a fantastic job. She will bring a new level of energy, and I am sure she is going to be a great success. We have also taken the opportunity of strengthening our Water Management division with two MD appointments. One, Peter Blanchard, formerly of EJ, a competitor going back a few years ago, to Gatic. He has taken over and is running Gatic Wade.
Then we have Steve Dann, who came with our ARP acquisition a couple of years ago and now takes responsibility for AWMS, our water management solutions, part of the water management side. Our full year expectations are unchanged, and we are well-positioned for medium-term market recovery. Actually, at the end, coming end of this period, coming into December, there was an interesting review by RICS on the residential market survey that indicated improving near term 12-month indicators for improvements really here in confidence. That was encouraging. We have identified opportunities to outperform in our target markets, and we are confident of achieving our FY 2026 expectations. Over time, we are well-positioned to deliver substantial shareholder value as these markets recover. Now I will ask Simon to continue please, with the financial review.
Thank you, Paul. As Paul mentioned, first half group revenue was down by 12%, or 3% if you exclude the contribution from Chek Lap Kok Airport in each period. U.K. revenues were down 5% on the strong headwinds that Paul mentioned that intensified in Q2 in the run up to the Autumn budget. Export revenues in the prior period benefited from GBP 5.5 million of sales to CLK Airport. There was only a small contribution of around about GBP 100,000 this half year. Excluding this, export sales grew by 30% on growing demand, especially outside of our traditionally strong territories in Asia and the Middle East. Our contribution margin, which is revenues less variable cost of sales, was level with the prior period. So product pricing and product material costs were good.
But due to a small element of fixed cost of sale, our gross margin was 140 basis points lower than the prior year at 36.2% due to the revenue decrease in the period. Similarly, our operating margin at 8.9% was impacted by the lower revenues. We took action in the period, reducing operating costs at our water management division by an annualized GBP 1.1 million, which will benefit the second half of the year. Our medium-term margin target remains in the 15%-20% range. Reflecting its confidence in the group's full-year outlook, the board has maintained the interim dividend at 3.5p per share.
The revenue and profit bridges illustrate the impacts of the challenging U.K. market on our water management and building envelope divisions, where the effect of the delays from the Building Safety Act implementation and the uncertainty caused by the Autumn budget were felt, particularly in their core markets of larger mid to high rise projects. Housebuilding Products was more resilient and it grew both revenue and profit. They were less affected by the Building Safety Act delays, but still faced strong headwinds from the low housebuilding volumes, yet managed to gain further share in their markets. Margins were affected by the lower volumes, but the cost reductions together with our operational gearing, so the incremental impact that increased revenues, less variable cost of sale has on covering the fixed cost of the business, will drive improvement in the second half.
As well as the lower volumes, cash flows in the period were also reduced by a GBP 2 million cash outflow into working capital. Our average working capital as a percentage of revenue over the period was 18%, compared to 15% in the prior half year. We carried a significant level of debtors into the beginning of this half year from the Chek Lap Kok project, which have now cleared. But in the second quarter, there was a temporary stock build to service the growing order intake for the second half. This we expect to unwind as the second half progresses. Payments into our pension scheme reduced from GBP 1.2 million per year to GBP 700,000 per year, midway through the half from September 2025, following the funding plan agreed with the trustees at the April 2025 triennial review.
Capital expenditure totaled GBP 1.2 million versus GBP 2 million in the prior year, and the prior year included our spend to complete the access covers automation project at our Halstead plant. Current period spend included an upgraded injection molding machine at Timloc to improve the flexibility of their manufacturing process, and a new CNC lathe at Halstead to in-house some component manufacture to reduce cost and inventory holdings. Net debt at the end of the period closed at GBP 7.7 million, which represents a conservative leverage ratio of 0.5 times, giving us substantial headroom against our debt coverage leverage of less than 2.5 times. Those bank facilities total GBP 25 million plus a GBP 20 million accordion facility, which gives us good headroom. These expire in August 2027, so we will begin the process of negotiating a replacement facility in the second half of this financial year.
We have a good relationship with our partner banks and expect good appetite for the new facility. Our IAS 19 pension surplus improved again, and is now at GBP 7.1 million on outperformance from the scheme's growth asset investments. The scheme is now largely hedged against bond yield movements, and we're on target to reach a self-sufficient position where the scheme will have a low expectation of requiring further payments from the sponsor employer from Alumasc on or before 2030. I will pass back to Paul now for the divisional review.
Thanks, Simon. I will start with water management, which is our biggest division. The revenue declined here by GBP 6.9 million, of which the CLK project represented GBP 5.5 million. So if we take that out, the decline was in the order of about 5%. We haven't been helped by the Building Safety Act that I've gone on a bit about today. The budget didn't really help us, especially when it was delayed by a month, because U.K. market as a result, was subdued. On the more positive side, our exports, excluding CLK, were encouraging. We had a 24% increase in those. To give you some examples, we supplied into a Slovakian NATO airfield, with Slotdrain at Sliač Airfield, Huelva Port in Spain for Slotdrain, Bangalore Airport in India, Suape Port in Brazil.
Those who follow us may know that we won that Brazilian project around a year ago, and it was worth around half a million GBP. These are further products going in. Those are actually separators. We also had Western Sydney Airport in Australia for Slotdrain. So encompassing quite a few parts of the world there, and there is more potential, which I will come on to. The underlying profit was GBP 1.5 million, and we took the opportunity of taking GBP 1.1 million of annualized cost savings out, where we made cost savings and took those costs out, and those will be implemented from H2. The action has already been taken in the final quarter. There has been a strong momentum in our order book and the opportunity pipeline, which we will again come on to.
There is an example here of the rather beautifully manufactured, precision-engineered, F900 access cover that we have moved manufacturing from our Dover plant into Halstead, which came with the acquisition of Wade a few years ago. It is quite interesting because certainly Heathrow has very much liked the quality of this product. There is no lead that is being used as an infiller here. Actually now we are manufacturing, we are putting components on shelves, and then pulling them off. It is giving us an advantage in being able to supply these products very quickly, and assemble them from the components that we have already manufactured. So that has been a really good move. We have also launched a new facades rain screen. I have got a separate section on new products, so I cover that one there.
Then I have touched on the two appointments in the senior management side, two MDs that we brought into this division. The order book at the end of December was actually 53% ahead of the prior year, so that is quite significant, and 63% ahead of 2023. I move now into the second division, which is building envelope and roofing. Actually the performance with the revenue down 6%, underlying profit down 25%, belies the actual performance here where they did very well in developing some blue-chip customers, including Waitrose and work with BT. These have got very large property portfolios in the U.K. that require refurbishment from time to time. We supplied Hinkley Point Power Station, University of Manchester with the start of a project, and there is further to come there. Various healthcare areas, as I say, Hinkley Point Power Station.
So some quite big projects in here, across both the private and public sector. A high level of activity. But once again, the Building Safety Act interfered, I am afraid. Do not get me wrong, we are very much for the Building Safety Act, but it is just the way it has been implemented that has given problems to contractors and ourselves. But coming into late quarter 2, we found revenue and order intake improved. We have been continuing to grow our market share because of the outstanding technical support that we give. We have been also benefiting from increasing regulations and sustainability requirements. In addition to the blue-chip private landlords and the public sector demand, we have also brought in a new product. This will be featured, and I will show you this in the new product area, but it is Aluply, under our brand, actually.
They are very good at getting a top product and a top manufacturer to supply this product as an own label for ourselves. Our order book, at the end of December, was 12% ahead of the prior year, 38% ahead of 2023. Moving in the right direction. I move into the third division, which is Housebuilding Products, with the brand Timloc in there. This was the victory door. This was, in my view, an astonishing performance where it grew its sales, it grew its profit to GBP 2.2 million. This is against a very difficult housebuilding background where volumes have not really recovered very much, but it has a fantastic outstanding customer service. Competitor supply issues also benefited it. Its OTIF was 100% again. It delivers next day. It has launched new products.
As a matter of fact, the one launched a couple of years ago, InVentive, we now reckon has got about a 12% market share. This is a tile vent going through specialized roofing products, merchants, but ending up on a house. This has helped to plug the shortfalls from the reduction in the marketplace. They have also taken market share, and they have had further trading agreements signed. We have had to invest in a further 1,000-tonne injection molding machine to improve our capability, and we have had to extend the building there slightly. We have a new product, which is the new Loftite loft door. We have around 30% to 35% of the U.K. loft door market anyway. I will come on to more detail of that and how we think it is going to be a winner. We are well-positioned to support any demand recovery.
We have a focus on sustainability, which supports the drive for lower carbon homes. We will continue to launch new products into the new financial one into 2026 as well. Significant capacity for growth. We estimate 40% to 50%. Actually, with the injection molding tools, you can add cavities. In other words, if you have got a 10-cavity one, you might make that into a 15 or 20. It is not infinite. You cannot go to 100 easily. There are things like this that can also help our capacity, so that out of a bang on the equipment, we can get more products coming out. Significant capacity there for growth. Just to remind ourselves, Timloc does not have an order book because it is straight in, straight out, really the next day, and that is where it wins its business. Okay.
Let us have a little look here on page 19 at our order book and the opportunity pipeline. We have not really talked about opportunity pipelines much in the past, but we think this is a good moment to come into this. Actually, if we look at the order book in the top right-hand area, the numbers in white or invisible, you might say background there, are CLK, and you can see those coming down from GBP 7 million to GBP 1.7 million in 2025. Meanwhile, our other general orders, and bear in mind, this is Water Management and Roofing only, moved from GBP 8.9 million to GBP 12.8 million there. Good movement, good strengthening there. Our opportunity pipeline, which we estimate to be GBP 188 million at the end of December 2025, with 75% of it specification-backed.
You can see with 59.8 coming into 2026, 73.3 into 2027, and 54.4 for FY 2028 and beyond. On the left-hand side, higher up, we are showing the comparators excluding the Chek Lap Kok of the order book versus the prior years. Looking quite strong coming into H2. We have the Chek Lap Kok final phase of GBP 2 million orders already in. We are ready to go.
We have the start of the Changi Airport project that was in total at this stage, GBP 2 million. Let us have a look at the U.K. opportunity pipeline at GBP 145 million here. You can see it is quite well spread across private and public sector areas. We have defense driving some of that public, the 3% GDP that is going to be spent. Health, education, prisons, energy center generation and data centers, transport infrastructure. It is a quite reasonable spread here of opportunity.
We are going to win a good proportion of these. Moving to the next slide, this takes us into the export area. Our traditional areas of exports have been in Asia, Chek Lap Kok, Singapore, et cetera, and the Middle East. There are two big airports that are coming through in the Middle East over the next few years, King Salman Airport in Saudi, and the U.A.E. have got an equivalent, and these could have six to eight runways, very big airports. If we move fully to the left-hand side, we are describing it as Americas, but it is really Latin America. We have moved in there in the last couple of years with this win, particularly in Brazil from a chap operating, one of our salespeople operating out of Bogotá in Colombia.
It is also covering Colombia, Mexico, Costa Rica, Peru, Chile, and unearthing of some good opportunities there, and further ones in Brazil, São Paulo area, et cetera. We are quite excited about the opportunity there. Moving across into the next area, which is Africa. In West Africa, particularly Nigeria, there are good opportunities there. It is a petrodollar state country that is quite wealthy. In Senegal, in French West Africa, their ports are available. Nigeria would have airports and ports that give opportunities. The evidence is that you put the people in, you put the salespeople in, and with our good products, our good technical support, particularly on Gatic covers and Slotdrain, and particularly into airports and ports, then we are starting to win some additional business, and that is pretty exciting. It really is very exciting, actually.
We have, and we will be investing further into our sales teams for exports in the second half-year. Let us go on to NPD, new product development. We have in façades on the left-hand side, water management. These have only just been launched. The BBA approved CWCT, that stands for Centre for Window and Cladding Technology, weather-tested, ready to go here, marketed under a strong brand that we have called Skyline, that is already covering copings and fascias. We will not be installing, but we will be supplying, and we will be in combination with market-leading bracketry partner there. We are quite excited about that one, and we are ready to go. In the middle, building envelope, which is roofing. We do not manufacture, but we are bringing this in from a very reputable supplier under our own brand, which is great. Under Aluply.
We have cost and performance advantages, the highest level of European fire safety classification, and warranted up to 25 years. This is suitable for new build and refurbishment projects. Then finally, on the right-hand side, we have this Housebuilding Products Loftite door that exceeds the requirements for L1 and L2, et cetera. It has two seals for maximum airtightness. What is quite interesting here is that it has a patent pending situation on the fitting slots that allow rapid single-person installation. That is important for house builders if they can have these products installed by just one person. We are quite excited about that. There is some good interest as we look to again get this product going. We have only just launched it. If I may, I will ask Simon to cover the next slide on championing sustainable building products, please.
Thank you, Paul. An important part of our growth story are the target markets that we look to sell into. Over 80% of our product portfolio addresses markets with long-term regulatory and environmental growth drivers. These cover building decarbonization, improvements to a building's energy efficiency, primarily through improved insulation, managed ventilation, but also through facilitating solar power generation and even CO2-absorbing membranes. We also improve buildings' climate resilience with products that manage urban rain and stormwater, and we help provide urban green spaces, which reduce habitat loss and improve biodiversity in the built environment. We continue to see strengthening demand tailwinds in these growth drivers, despite the recent market disruption. Back to you for the other.
Thank you, Simon. We are on our last slide now, which is the outlook. We had a resilient performance in H1, and we are on track to deliver on the full year expectations. We have a strong order book and pipeline with growing momentum. We have restructured the cost base and water management. We have strengthened the management team there. We expect GBP 2 million to come in for the rest of the CLK project, which will be shipped in H2, and we have the first call-offs coming in from Changi Airport. There are some early signs of improving business and consumer confidence, evidenced by that RICS report in December. Any interest rate reductions, which have already happened to some extent, and further ones will assist. Also getting the BSA and NPPF reforms in place will help unlock latent demand later in the year.
In terms of medium-term potential, we believe that is significant because of our significant end markets, diversity of our end markets rather, and also the export potential. We have a strategic alignment with the shift to sustainable construction. We like to innovate with products, and I showed examples of three that have come in over just a couple of months period. We have an experienced management team. We have best-in-class service. We have operational excellence. The board remains confident in the group achieving its full-year forecast. We are also well-positioned to deliver substantial shareholder value as markets recover. Excuse me. That is us. Thank you. I think we have a couple of questions. Do we?
That is great. Thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the right-hand corner of your screen. Just while the company takes a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via the dashboard. As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I will pick up from you at the end.
Thank you very much. First question, Paul, is can you talk a bit more about the international opportunity? Is this just focused on Gatic or other brands, too?
Okay, good question. I covered that quite a bit, I think, on the slide on 21 on the export opportunity pipeline and really our plans in that area. It is to keep hiring people in different parts of the world, because I am so excited from what we did in Colombia and bringing that salesperson in who has been so successful, and we will be doing that in other areas of the world. It is not just Gatic that we are promoting out there. There is somewhat of an opportunity as we use our Euroroof brand on roofing.
For instance, as data centers pop up in colder parts of the world, like Finland, we are not restricted from exporting our own brands, whereas we would be with some of the other brands that we are using and importing, such as Derbigum and Hydrotech, where there is a limit, mainly into U.K. and Ireland, so Southern Ireland. Therefore, it will not just be Gatic. We will look at opportunities for Euroroof, which is an interesting brand name because it came with a company we bought around 40 years ago, and the contractors certainly in the U.K. are aware of that name, and we have now used it to bring and use our own products, our own branding, really. So we have full control of those products and those brands.
It is an exciting area, and as you saw, we have grown by 24% in the Water Management division with our exports in H1, and we have just won Changi, which is very exciting, Changi Airport in Singapore, and that will lead to further business that in effect will replace the Chek Lap Kok we have participated project. Thank you.
Thank you, Paul. The next one is, what is the five-year value creation story from here? How will you maximize shareholder value? If you like, I will cover that one, Paul.
Yeah, if you want to cover that.
Well, we do have ambitious plans. Over that timeframe, we would expect some market recovery. We believe volumes in our key markets are still 15%-20% below pre-pandemic levels. So over that timeframe, we would expect some cyclical recovery. We also expect Alumasc to outperform that market recovery. We have markets with long-term and progressive environmental and regulated growth drivers. We will leverage our spare capacity and the investments we have made and will continue to make in capability. We have a lot of export opportunities that Paul has just spoken to, with the large project specification-led approach that we have. There is a circa 2-5-year lead time. So you reap now what you sowed 2-5 years ago. So there is substantial opportunity there following the investments that we have made and will continue to make in technical sales capability.
We expect margins to grow into that 15%-20% range over that timeframe, and we will expect to have done some bolt-on M&A. We have a good track record of creating value and accelerating strategy through acquisition. Hence our statement that we are well positioned to deliver substantial shareholder value over the medium term.
Very good.
What is management and board stock ownership like? Will you be buying more given the current share price? I can comment on that briefly. About 5% of the company stock is in management hands. It is something we encourage through stock ownership schemes, share retention guidelines. It is good practice to align the interest of management with shareholders. Second part of the question, would I buy? I am not in the business of giving people investment advice. I will always be a net purchaser regardless of price. As a director of a publicly listed company, I think you want to be holding a substantial part of your own personal wealth in the company stock.
Yeah. I would like to feel that I have tried to set some example there. My shareholding is not just from LTIPs, et cetera. I have bought quite a number of those, and had to rebuild a bit after a divorce 12 years ago. I have used bonuses, et cetera, to try to buy shares along the way.
On the opportunity pipeline, what would you class as medium term? I think opportunity pipeline, I think probably most of that is things that we are aware of and are coming. We have either tendered on them or in the process of tendering for them or we are aware that they are about to come to tender. I think most of that is short coming into medium term opportunity. There will be some out there that get into the medium term, but equally, there is ones on that will drop into the opportunity pipeline that I think are not yet out there but will be in the next year or two. I hope that answers.
Agree with that. Yeah.
What is the manufacturing capacity level of your product production? I think you covered Timloc, Paul.
I did, and we have probably got around a third to 50% that we could call on. We are not running 24-hour shifts. We are not running across weekends. And we do flex quite a bit. For instance, at Gatic and Wade, when we get a good order book of Slotdrain in a month, we will bring temps in along the way. So I would say we have probably got a third, yeah, 33% to 50% that we could call on fairly readily.
Mm-hmm. Is Alumasc considering doing any bolt-on M&A, and what sort of areas are you looking at?
Do you want to comment on that?
Sure. Yes, it's definitely part of our strategy. I guess the key points are, we would look to be in areas we currently know well or adjacent ones. We don't want to buy something we don't really understand. We want something that we believe that we can grow and/or bring synergies into the group. Bolt-on for us is probably in the GBP 10 million to GBP 15 million consideration range. I think we're sector-agnostic, we're division-agnostic. I think we would consider the right acquisition if it came along. It wouldn't matter whether it's water management or building envelope, or housebuilding products. If it's the right acquisition, it's the right acquisition.
Agree with all that.
Mm-hmm. Were Timloc prices increased this year, and how did this contribute to the revenue increase? What was the volume change year on year? I don't believe Timloc prices moved significantly. If they did, maybe 1% or 2%. It wasn't a big part of the year-on-year revenue increase, and you can see that from the volume, the drop through into profit and the further accretion in the operating margin. Substantially all of that was volume change, I think.
Yeah.
Do you see any opportunities within water management for projects in the water sewage industry sector, with the extra funding that's going into that sector to 2030?
Yeah. We have looked at that area in the past, mainly with Gatic and Wade on the dirty water side. At the time it was fairly well catered for. We did try to make an acquisition that didn't come through in the end. It's an area that we will be considering. I can't really comment further than that. I think my successor will have some interest in looking at that too.
Mm-hmm. How do you sell to foreign accounts?
Okay. Good question. Mainly, through distributors. We are very keen on having the local presence who understand the culture and how the markets work. That would be an example, for instance, in Singapore where we are selling through a distributor there. Generally it would be through a distributor, not an agent. There are complications with agents, so we tend to avoid those.
Okay. Your margin is so much higher than like-minded building product makers. It cannot just be the service. What is the secret sauce?
Well, we are very focused on it and people are very accountable for their margins. We have been targeting that 15%-20% bottom line margin across the group over the last five years. We were at about 8% or 9% if we go back five, six years ago. We have set our stall out to get up to that level. It has not been easy to do that, but we have done it through some operational improvements, by moving, consolidating some of our facilities, by ensuring through each board meeting every month that we analyze what have been the cost increases that have been incurred, what have we been able to pass on in prices. Actually being the number one or number two player, as we are in many cases, has allowed us to successfully move our prices on when we have needed to.
At the same time giving a good customer support is very key to differentiate ourselves and to really have our brand strengthened. It is a very key thing to have a brand that people want to buy. You must not be complacent, you have got to continue to really give a great service to customers, and that will include technical support along the line. It has been a combination of those events and particularly operational efficiencies. For instance, Timloc. How do you get 26% as a bottom line? Well, you operate very efficiently. That is a very automated plant and a very good management team running it. You make sure you do not get caught with costs that you cannot pass on. It is very important that you pass your costs on, and that you give an outstanding service.
I think that's probably all I can say on that one.
I think down to the last couple now. Can you clarify your dividend policy? I'll have a go at that. We have a progressive policy, which means that we would expect the dividends to rise in line with earnings or rise as earnings increase. We would look to distribute or maintain dividend cover of between 2.5 - 3 times. That's based on earnings, but obviously cash flow is important, but over time we'd normally expect cash flow and earnings to move alongside each other. Does that answer that one? Then just a couple which I will summarize together. Thank you, Paul. Wish you all the very best. As a long-term shareholder, I appreciate the leadership and service.
Well, then, that's so kind of you. Thank you very much. Thank you for your support as a shareholder too. We couldn't have done it without our shareholder support too.
Which probably leads quite nicely onto the wrap up.
Yes. Thank you, Simon. We have had a tough H1, but we are on track to deliver on the full year expectations. We are also well-positioned to deliver substantial shareholder value as market recovers. Thank you very much everybody for attending today and for your support and for your very good questions too. Thanks a lot.
Paul, Simon, thanks for updating investors today. Can I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and will still be greatly valued by the company. On behalf of the management team of Alumasc Group plc, we would like to thank you for attending today's presentation and good afternoon to you all.