RNS Number:9052H
Stadium Group PLC
25 February 2003
25 February 2003
STADIUM GROUP PLC SEES PRE-EXCEPTIONAL EARNINGS PER SHARE DOUBLE
Stadium Group plc, the AIM listed provider of Electronic Manufacturing Services,
today announced its preliminary results for the year ended 31 December 2002,
ahead of market expectations.
HIGHLIGHTS FOR YEAR ENDED 31 DECEMBER 2002
* Turnover from continuing activities up by 4% to #35.4m, including Stadium
Asia turnover up by 45% to #11.7m.
* Group operating profit on continuing activities before goodwill
amortisation up by 59% to #1.5m.
* Group operating loss of #0.35m down from #5.6m.
* Profit on continuing activities before tax, goodwill and exceptional
items of #1.2m.
* Stadium Asia operating profits up eight-fold to #0.78m.
* Pre-exceptional earnings per share from continuing activities more than
doubled to 4.0 pence.
* Basic loss per share reduced from 28p to 3p.
* Net bank borrowings reduced by #6.6m to #4.5m, giving year end gearing of 36%.
* Proposed full year dividend unchanged at 2.8 pence, representing a yield
of approximately 8%.
* Net asset value of 45 pence per share.
* Substantial new business wins have brought Asia factory to 60% capacity.
* Intention to incorporate new subsidiary in the People's Republic of China
with domestic selling rights.
* Board remains positive about prospects for future growth.
Commenting on the results, Nigel Rogers, Chief Executive, said:
"We are now in a phase of strong organic growth at Stadium Asia, and our UK
operations have been stabilised. The strength of our balance sheet indicates
ample financial resources, and we have a strong team of dedicated people
providing first class services to an expanding list of high quality customers,
many of whom are household names."
For further information please contact:
Nigel Rogers, Chief Executive, Stadium Group plc 020 7786 9600 (today) 01429
852 500 (thereafter)
Keeley Clarke, Binns & Co PR Ltd 020 7786 9600 (today) 0113 242 1171
(thereafter)
STADIUM GROUP PLC
CHIEF EXECUTIVE'S REVIEW
Overview
We are pleased to report trading results which are ahead of expectations,
further substantial reductions in net borrowings and a positive outlook for the
year ahead.
This has been achieved against a difficult backdrop, with most UK-based
manufacturers, including both our customers and competitors, facing tougher
market conditions as volumes and margins come under continued pressure.
By contrast, rapid development of the Pearl River delta area of South Eastern
China for both sourcing and OEM inward investment has fuelled excellent growth
in turnover and earnings at Stadium Asia.
Within the group results from continuing activities we have also borne the
effects of a weakening US dollar and additional costs associated with the
funding of UK pension obligations.
Results and Dividend
Profit before tax, goodwill amortisation and exceptional items from continuing
activities was #1.22m, based on operating profits up 59% to #1.49m (2001 :
#0.93m) less interest costs of #267,000 (2001 : #939,000). Earnings from these
activities was more than doubled to 4.0 pence per share from 1.9 pence. Basic
earnings, after the impact of discontinued activities, disposals and goodwill
amortisation, were a loss of 3.0 pence per share against a loss of 28.3 pence in
2001. This reflects the final phase of implementation of the June 2001
strategic review and further exceptional costs are anticipated to be minimal.
Net borrowings were reduced by #6.57m to #4.52m to give gearing of 36%. These
figures are expressed without allowing for deferred consideration receivable
totalling #2.30m, including #1.02m during 2003. Adjusted gearing net of
deferred consideration was 18%.
The Board proposes a final dividend of 1.85 pence per share, bringing the total
for the year to 2.8 pence (2001 : 2.8 pence). The final dividend will be
payable to shareholders on the register on 4 April 2003 and will be paid on 5
May 2003.
Electronics
2002 2001
#'000 Continuing Total Continuing Total
Turnover 25,486 26,921 24,222 28,974
Operating profit (before 799 625 295 178
exceptionals)
Operating margin 3.1% 2.3% 1.2% 0.6%
Turnover at Stadium Asia increased by 45% to #11.71m, and operating profits
increased eight-fold to #0.78m. These results were especially strong in view of
the ten per cent depreciation of the Hong Kong Dollar relative to sterling
during the year. The increase in turnover is attributable to the full annual
impact of major automotive and consumer products contracts won in 2001, and the
introduction of new customers including a leading producer of domestic appliance
controls.
The rapid introduction of new business brought capacity utilisation to around
60%, with resulting benefits in operational gearing. We have continued to
invest in developing the capability of the business, and this is attracting more
complex projects. The level of new business won towards the end of the year
gives us confidence that strong growth can be sustained in the coming year.
Negotiations are ongoing to incorporate a new subsidiary in the People's
Republic of China with domestic selling rights. This will place Stadium in a
strong position to exploit major opportunities in high growth consumer,
telecommunications and automotive markets in the region.
UK electronics achieved results slightly better than break even despite a
decline in turnover of more than 20% to #13.77 million. This reduction reflects
the continuing difficult conditions for UK based manufacturers. Exceptional
costs of #0.39m were borne in closing a number of sites, and our UK headcount in
electronics fell by almost half from 529 to 275.
Our businesses in the UK are lean and well managed, and remain an important part
of our service offer to customers, both in their own right and as a gateway to
Stadium Asia.
Plastics - continuing activities
2002 2001
#000's #000's
Turnover 9,889 9,909
Operating profit (before exceptionals) 922 828
Operating margin 9.3% 8.4%
Operations at Chingford were able to deliver improved profits in stable markets,
making a valuable contribution to the group's overall performance.
Investment in additional plastic injection moulding capacity at the turn of the
year should provide the opportunity to maintain progress.
Balance Sheet and Cash Flow
The full benefits of our restructuring are now apparent, with major reductions
in fixed and working capital flowing into dramatically reduced borrowings.
This provides ample financing for the future growth of the business, and will
lead to even lower interest costs in 2003.
In November 2002 the net borrowings of the group were revised to include a US
dollar denominated loan which provides a hedge against US dollar linked assets
held in Asia. This provided a benefit of #0.12m to reserves in 2002 and is
expected to largely eliminate further exposure in 2003.
Pensions
During the year the two principal defined benefit schemes, which have been
closed to new entrants since 1996, were combined, and a triennial actuarial
review was carried out as at 7 April 2002.
The resulting charge to profit and loss account was #0.20 million of normal
contributions for the full year and a further #0.26 million of additional
contributions (representing nine months) to reflect the accumulated deficit.
This compares to a net pension credit of #0.11 million in 2001, and the full
cost has been expensed against continuing activities.
Current trading and prospects
Sales for the current year to date at Stadium Asia are substantially higher than
the corresponding period last year, and the order book is at a high level.
Operations in the UK remain under some pressure, but are trading at levels
comparable with last year.
The rate of new business coming into Asia, and the potential yet to be realised
in the domestic Chinese market, give us confidence both in the short and long
term future of the group.
Nigel Rogers
Chief Executive
25 February 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2002
Discontinued,
exceptional Total Total
Continuing Items & 2002 2001
pre-exceptional Goodwill Unaudited
Items & Goodwill Amortisation
#'000 #'000 #'000 #'000
Turnover
Continuing operations 35,375 - 35,375 34,131
Discontinued operations - 8,482 8,482 41,606
35,375 8,482 43,857 75,737
Cost of sales (28,229) (7,837) (36,066) (63,604)
Gross profit 7,146 645 7,791 12,133
Net operating expenses (5,658) (1,011) (6,669) (10,544)
Exceptional items - (1,341) (1,341) (3,426)
Goodwill amortisation & impairment - (132) (132) (3,771)
Total net operating expenses (5,658) (2,484) (8,142) (17,741)
Continuing operations 1,488 (132) 1,356 194
Discontinued operations - (1,707) (1,707) (5,802)
Operating (loss)/profit 1,488 (1,839) (351) (5,608)
Exceptional losses (772) (3,027)
Interest payable (267) (939)
Loss on ordinary activities before taxation (1,390) (9,574)
Taxation 551 1,595
Loss for the financial year (839) (7,979)
Dividends (790) (790)
Retained loss for the year (1,629) (8,769)
Earnings per share from continuing activities
before goodwill, amortisation and exceptional
items
4.0p 1.9p
Basic
Diluted 4.0p 1.9p
Loss per share
Basic (3.0p) (28.3)p
Diluted (3.0p) (28.3)p
GROUP BALANCE SHEET
as at 31 December 2002
2002 2001
#'000 #'000
Fixed assets
Intangible assets 933 1,067
Tangible assets 11,194 15,447
12,127 16,514
Current assets
Stocks 4,128 8,898
Debtors due after more than one year 1,278 279
Debtors due within one year 7,755 14,166
Cash 590 623
13,751 23,966
Creditors: amounts falling due within one year
Bank overdrafts (1,035) (966)
Creditors (8,606) (16,365)
( 9,641) (17,331)
Net current assets 4,110 6,635
Total assets less current liabilities 16,237 23,149
Creditors: amounts falling due after more than one year (3,459) (8,995)
Provisions for liabilities and charges (150) (858)
12,628 13,296
Capital and reserves
Called up equity share capital 1,411 1,411
Share premium account 4,032 4,032
Capital redemption reserve 88 88
Merger reserve 2,751 2,751
Profit and loss account 4,346 5,014
Equity shareholders' funds 12,628 13,296
Bank borrowings (net) 4,525 11,094
Gearing 36% 83%
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2002
2002 2001
#'000 #'000
Net cash inflow from operating activities 815 3,591
Servicing of finance (267) (938)
Tax received/(paid) 285 (465)
Capital expenditure
Purchase of tangible fixed assets (732) (1,146)
Sale of tangible fixed assets 1,936 1,955
1,204 809
Disposals
Proceeds from sale of businesses 4,952 2,547
Deferred consideration 316 -
5,268 2,547
Equity dividends paid (790) (1,312)
Net cash inflow before financing 6,515 4,232
Financing
Loans repaid (6,555) (3,878)
Net cash outflow from financing (6,555) (3,878)
(Decrease)/increase in cash (40) 354
NOTES:
1. Segmental Analysis
Exceptional 2002 Exceptional 2001
Continuing Discontinued and goodwill Total Continuing Discontinued and goodwill Total
#000's #000's #000's #000's #000's #000's #000's #000's
Turnover
Electronics 25,486 1,435 - 26,921 24,222 4,752 - 28,974
Plastics 9,889 5,560 - 15,449 9,909 25,764 - 35,673
Other - 1,487 - 1,487 - 11,090 - 11,090
activities
Total 35,375 8,482 - 43,857 34,131 41,606 - 75,737
Operating
profit/
(loss)
Electronics 799 (174) (762) (137) 295 (117) (5,924) (5,746)
Plastics 922 (26) - 896 828 179 (55) 952
Other - (166) (453) (619) (91) 593 (497) 5
activities
Group (233) - (258) (491) (98) - (721) (819)
adjustments
Total 1,488 (366) (1,473) (351) 934 655 (7,197) (5,608)
Net assets
Electronics 5,389 31 - 5,420 6,882 751 - 7,633
Plastics 3,680 - - 3,680 4,277 6,229 - 10,506
Other - 84 - 84 779 698 - 1,477
activities
Group 3,444 - - 3,444 (6,320) - - (6,320)
adjustments
Total 12,513 115 - 12,628 5,618 7,678 - 13,296
The analysis of Electronics between continuing and discontinued reflects the
fact that closure or disposal of these businesses was part of the wider
strategic review to focus the Group on the EMS market, with a reduction in the
UK manufacturing capacity. Prior to this these businesses were a material part
of the Electronics division.
2. Exceptional Costs in Operating Expenses
2002 2001
#'000 #'000
Redundancy costs (565) (1,115)
Asset impairments & stock provisions (518) (1,635)
Other closure costs (258) (676)
Goodwill impairment & amortisation - (3,771)
(1,341) (7,197)
3. Exceptional Gains/(Losses)
2002 2001
#'000 #'000
Gain on sale of properties 1,082 -
Impairment to Plastics division fixed assets - (2,500)
Loss on sale of subsidiaries (1,854) (527)
(772) (3,027)
4. (Loss)/earnings per share
The calculation of basic loss per share is based on the loss for the financial
year of #839,000 (2001 : (#7,979,000)) and the weighted average number of
ordinary shares in issue during the year of 28,212,198 (2001 : 28,212,198).
Diluted earnings per share reflect options granted resulting in a weighted
average number of 28,212,198 ordinary shares (2001 : 28,212,198).
The reconciliation of basic earnings per share to earnings per share excluding
exceptional items and goodwill amortisation is as follows:
2002 2001
Earnings per share (before goodwill and exceptional items) 4.0p 1.9p
Discontinued activities (1.3)p 0.0p
Exceptional items (5.2)p (16.8)p
Goodwill amortisation and impairment (0.5)p (13.4)p
Basic loss per share (3.0)p (28.3)p
5. Dividends
The proposed final dividend of 1.85 pence per share will cost #522,000 and will
be payable on 5 May 2003 to shareholders on the register on 4 April 2003.
6. Net Cash Inflow from Operating Activities
2002 2001
#'000 #'000
Operating loss (351) (5,608)
Release of grants received (67) (68)
Goodwill amortisation 132 3,771
Depreciation 1,379 3,434
Loss on sale of tangible fixed assets 25 243
Decrease in stocks 1,269 2,920
Increase in debtors (425) (1,425)
(Decrease)/Increase in creditors (1,147) 324
Net cash inflow from operating activities 815 3,591
7. Analysis of Changes in Net Debt
2001 Cash Flow Exch Diffs 2002
#'000 #'000 #''000 #'000
Cash 623 29 (62) 590
Bank overdrafts (966) (69) - (1,035)
(343) (40) (62) (445)
Loans due within one year (2,114) 1,314 - (800)
Loans due after one year (8,637) 5,241 116 (3,280)
(11,094) 6,515 54 (4,525)
8. Financial Information
The un-audited financial information set out above does not constitute the
Group's statutory accounts.
Statutory accounts for the year ended 31 December 2001 have been delivered to
the Registrar of Companies. Statutory accounts for the year ended 31 December
2002 will be delivered to the Registrar of Companies following the Annual
General Meeting.
9. Annual Report & Financial Statements
The Annual Report and Financial Statements will be posted to shareholders
shortly. The Annual General Meeting will be on Monday 28 April 2003 at 5
Giltspur Street, London EC1. Copies of the Annual Report and of this
announcement will be available at the Company's registered office: Stephen
House, Brenda Road, Hartlepool, TS25 2BQ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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