TIDMSTRL
RNS Number : 4145H
Stirling Industries PLC
15 November 2018
Stirling Industries plc
("Stirling" or "the Company")
Interim report
Stirling Industries plc, (AIM: STRL.L) the specialist industrial
investment business, today announces its interim results for period
from 20 February 2018 to 30 September 2018.
Highlights
-- Successful listing on the AIM market of the London Stock
Exchange, raising GBP8.9 million and creating a platform for
M&A in the industrials sector
-- Focused on targeting businesses where it can implement its
'Acquire, Develop, Sell' strategy, with the key objective of
creating value for shareholders
-- Established a strong core team with significant
transactional, operational and management experience and built on
its strong networks of industry relationships and advisers
-- The management team has identified, evaluated and engaged on
a number of potential acquisition opportunities and remains
confident of its ability to deliver the Company's business
model
Robin Williams, Chairman of Stirling Industries, said:
"Following our successful listing earlier in the year, I am
pleased with the progress we are making in identifying and pursuing
potential targets where our Acquire, Develop and Sell strategy can
create value.
"We continue to have the support of a powerful investor base
that includes blue chip institutional investors, high net worth
individuals, family offices and equity investors, which will be
instrumental as we pursue and complete these potential
acquisitions.
"Whilst the Board acknowledges the recent change in market
sentiment amongst some with regard to economic conditions, we
remain optimistic about a number of current opportunities and
believes that Stirling is well-positioned to implement its strategy
in the near term and create superior value for shareholders."
For more information contact:
Stirling Industries plc
Blair Illingworth, Chief Executive
c/o Montfort Communications
Numis Securities - Nominated Adviser
and Broker
Luke Bordewich
Ben Stoop +44 (0)20 7260 1000
Montfort Communications - Financial
communications
Olly Scott +44 (0)78 1234 5205
Honoria Simpson +44 (0)20 3965 6960
Notes to editors
Stirling (AIM: STRL.L) has been set up to offer a differentiated
management and ownership approach for industrial businesses where
the strategic and operational expertise of its team combines with
that of the company's management to drive and enable improvements
that create long-term shareholder value.
The Company focuses on acquiring businesses with strong
fundamentals and enterprise values between GBP100-GBP750 million.
Transactions will be financed through a combination of new equity
and prudent leverage, with the company's target debt to be no more
than 2.5x the company's EBITDA.
Stirling's approach begins with the belief that many companies
have the potential to achieve material margin improvement and
operational growth. Stirling's value add is to ensure management
have the right strategy, the right focused leadership, empowered
and incentivised management teams and the appropriate capital
investment to support growth.
The Company's leadership team has significant experience of
identifying the key value drivers of a given business, implementing
change strategies across a diverse range of industries and
delivering significant operational value creation.
Chairman's statement
As set out at the time of listing, the Group exists to 'Acquire,
Develop and Sell' industrial businesses, with the key objective of
creating value for shareholders. The listing, which raised GBP8.9
million, was an important milestone for Stirling, creating a
platform for M&A in the mid-market industrials sector and
providing the Group with efficient access to investment capital to
fund acquisitions.
In the first half, the Board and management team have made
strong progress in actively identifying and evaluating appropriate
acquisition opportunities across the UK, European and US
industrials markets. All these opportunities have strong
fundamentals but are not fulfilling their true potential. With
significant UK and overseas experience, Stirling's management team
has the expertise to identify and acquire such businesses, and the
vision and skill to achieve sustainable improvements and
significant long-term growth.
Whilst the Board acknowledges the recent change in market
sentiment amongst some with regard to economic conditions, we
remain optimistic about a number of current opportunities and
believes that Stirling is well-positioned to implement its strategy
in the near term and create superior value for shareholders.
Robin Williams
Chairman
15 November 2018
Chief Executive's review
Building on the momentum generated by the Group's listing on AIM
in March, our first six months as a listed business have been spent
strengthening our networks across industry, investors, financial
advisers and other intermediaries which have yielded a number of
target acquisition opportunities where our strategy can create
value.
Stirling Industries was established in 2017 and listed this year
to acquire companies or businesses where it can implement
strategic, operational and performance improvements using a
permanent capital base to raise funds, build acquisitions through
the cycle of ownership and create long-term and sustainable value
for shareholders.
In line with the investment policy set out in our Admission
Document, acquisition targets are industrial businesses in the
building materials, engineering and manufacturing sectors operating
in the UK, Europe and US with strong fundamentals and enterprise
values between GBP50 million and GBP750 million.
For vendors, Stirling offers efficient and expert transactional
execution capabilities, a committed founding shareholder base,
(which includes the leadership team) who are expected to support
significant acquisitions and the ability to retain a minority
post-sale stake.
The Group's values-driven approach ensures investment in the
long-term potential of the business's people, assets and markets.
Stirling empowers management teams and employees, giving them the
right incentives to perform, sustainably growing their business to
deliver long-term value.
In the six months to 30 September 2018, Stirling has identified
a number of possible acquisition opportunities and engaged in
constructive discussions with intermediaries and potential targets.
The GBP8.4 million net proceeds of the Placing earlier this year
have been partially utilised to fund operating expenses and due
diligence in relation to potential acquisition opportunities. We
remain disciplined in our approach to incurring expenditure on
potential acquisitions and whilst we have yet to conclude a
transaction, we are confident of our ability to deliver our first
acquisition in the near term, as detailed discussions continue with
prospective vendors.
Blair Illingworth
Chief Executive
15 November 2018
Financial review
Turnover for the period was nil and will remain so until an
acquisition is completed.
The loss before interest and income tax for the period was
GBP1.1 million, which includes GBP0.3 million of deal related costs
on active processes. The resulting loss before income tax of GBP1.1
million equates to a loss per ordinary share of 1.21 pence.
In addition, the Group incurred fees of GBP0.5 million relating
to its original admission to AIM on 6 March 2018. These costs have
been offset against the share premium account for the ordinary
share listing.
As at 30 September, the Group's cash or cash equivalents
balances totalled GBP7.7 million.
Dividend Policy
As previously stated on listing, the Group's Directors are
committed to a dividend policy that will include regular annual
dividends (following completion of an acquisition). However, this
will depend on the nature of its acquisition(s), following which,
the Directors will review the Group's dividend policy to ensure
that it maintains an appropriate level of dividend cover and that
sufficient funds are retained to finance the development of the
Group's activities.
Outlook
We remain confident of delivering on our strategy in the near
term.
Joanne Curin
Chief Financial Officer
15 November 2018
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the
Period 20 FEBRUARY 2018 TO 30 SEPTEMBER 2018
Note Period 20 Feb
18 to 30 Sep
18
GBP
--------------------------------------- ----- --------------
CONTINUING OPERATIONS
Administrative expenses (982,238)
Other operating expenses (120,592)
Finance income 3 27,089
--------------
LOSS BEFORE INCOME TAX (1,075,741)
Income tax -
--------------
LOSS FOR THE PERIOD (1,075,741)
--------------
Earnings per share expressed in pence
per share: 4
Basic and diluted (1.21)
--------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30
SEPTEMBER 2018
Note 30 Sep 18 19 Feb 18
GBP GBP
------------------------------- ----- ------------ ----------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 5 11,927 -
------------ ----------
11,927 -
------------ ----------
CURRENT ASSETS
Trade and other receivables 6 113,021 -
Money Market Investments 7 4,013,064 -
Cash and cash equivalents 8 3,693,362 3
------------ ----------
7,819,447 3
------------ ----------
7,831,374 3
------------ ----------
TOTAL ASSETS
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 9 89,310 3
Share premium 8,326,835 -
Retained earnings (1,075,741) -
------------ ----------
TOTAL EQUITY 7,340,404 3
------------ ----------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 10 490,970 -
TOTAL LIABILITIES 490,970 -
------------ ----------
TOTAL EQUITY AND LIABILITIES 7,831,374 3
------------ ----------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the
Period 20 FEBRUARY 2018 TO 30 SEPTEMBER 2018
Called up Retained Share premium Total equity
share capital earnings GBP
GBP GBP GBP
------------------------- --------------- ------------ -------------- -------------
Changes in equity
Issue of share capital 3 - - 3
--------------- ------------ -------------- -------------
Balance at 19 February
2018 3 - - 3
--------------- ------------ -------------- -------------
Changes in equity
Issue of ordinary share
capital 89,307 - 8,326,835 8,416,142
Total comprehensive
loss - (1,075,741) - (1,075,741)
--------------- ------------ -------------- -------------
Balance at 30 September
2018 89,310 (1,075,741) 8,326,835 7,340,404
--------------- ------------ -------------- -------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the Period 20
FEBRUARY 2018 TO 30 SEPTEMBER 2018
Note Period 20 Feb
18 to 30 Sep
18
GBP
-------------------------------------------- ----- --------------
Cash flows from operating activities
Cash absorbed by operations 1 (722,731)
--------------
Net cash absorbed by operating activities (722,731)
--------------
Cash flows from investing activities
Purchase of tangible fixed assets (14,077)
Money Market Investments (4,000,000)
Interest received 14,025
--------------
Net cash outflow from investing activities (4,000,052)
--------------
Cash flows from financing activities
Share issue 8,930,997
--------------
8,930,997
Share issue costs (514,855)
--------------
(514,855)
Net cash from financing activities 8,416,142
--------------
Increase in cash and cash equivalents 3,693,359
Cash and cash equivalents at beginning
of period 2 3
--------------
Cash and cash equivalents at end of
period 3,693,362
--------------
NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for
the Period 20 FEBRUARY 2018 TO 30 SEPTEMBER 2018
1. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH ABSORBED BY
OPERATIONS
Period 20 Feb
18 to 30 Sep
18
GBP
----------------------------------------- --------------
Loss before income tax (1,075,741)
Depreciation charges 2,150
Finance income received (14,025)
Finance income receivable (13,064)
--------------
(1,100,680)
Increase in trade and other receivables (113,021)
Increase in trade and other payables 490,970
--------------
Cash absorbed by operations (722,731)
--------------
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statement of Cash Flows in respect
of cash and cash equivalents are in respect of these Statement of
Financial Position amounts:
GBP
-------------------------------- ----------
Period ended 30 September 2018
Cash and cash equivalents 3,693,362
----------
Period ended 19 February 2018
Cash and cash equivalents 3
----------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the Period 20 FEBRUARY 2018 TO 30 SEPTEMBER 2018
1. STATUTORY INFORMATION
Stirling Industries Plc is a public limited Group, registered in
England and Wales. The Group's registered number and registered
office address can be found on the Group's website. Stirling
Industries Plc was incorporated on 13 February 2018 and has set its
accounting date as 31 March.
The presentation currency of the financial statements is the
Pound Sterling (GBP).
2. ACCOUNTING POLICIES
Basis of preparation
The Group is a public limited Group incorporated in England and
Wales and domiciled in the UK. The address of its registered office
is 29 Farm Street, London, W1J 5RL. The Group is listed on the
Alternative Investment Market ('AIM') in London. The Group has
issued 9,200 incentive shares at a subscription price of GBP2.
These interim condensed consolidated financial statements do not
comprise statutory accounts within the meaning of Section 434 of
the Companies Act 2006. This condensed half year financial
information has not been audited.
This condensed consolidated half year financial information for
the interim period to 30 September 2018 has been prepared in
accordance with the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority and with IAS 34, "Interim financial
reporting" as adopted by the European Union.
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
The interim condensed consolidated financial statements have
been prepared on a going concern basis.
Property, plant and equipment
Depreciation is provided at the following annual rates in order
to write off each asset over its estimated useful life:
Fixtures and Fittings 33.33%
Computer Equipment 33.33%
Depreciation is charged from the date of purchase.
Financial instruments
Financial instruments are recognised in the Group's balance
sheet when the Group becomes party to the contractual provisions of
the instrument.
Financial assets and liabilities are offset, with the net
amounts presented in the financial statements, when there is a
legally enforceable right to set off the recognised amounts and
there is an intention to settle on a net basis or to realise the
asset and settle the liability simultaneously.
Classification of financial liabilities
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into.
Basic financial liabilities
Basic financial liabilities, including creditors, and loans from
fellow group companies are initially recognised at transaction
price.
Trade creditors are obligations to pay for goods or services
that have been acquired in the ordinary course of business from
suppliers. Amounts payable are classified as current liabilities if
payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are initially
recognised at transaction price.
Investments
Investments in subsidiaries are recorded at cost less any
impairment.
Money market investments are recognised at fair value.
Taxation
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantially enacted by the statement of
financial position date.
Foreign currencies
Assets and liabilities in foreign currencies are translated into
sterling at the rates of exchange ruling at the statement of
financial position date. Transactions in foreign currencies are
translated into sterling at the rate of exchange ruling at the date
of transaction. Exchange differences are taken into account in
arriving at the operating result.
Hire purchase and leasing commitments
Rentals paid under operating leases are charged to the income
statement on a straight-line basis over the period of the
lease.
Employee benefit costs
The Group operates a defined contribution pension scheme.
Contributions payable to the Group's pension scheme are charged to
the income statement in the period to which they relate.
3. NET FINANCE INCOME
Period 20 Feb
18 to 30 Sep
18
GBP
-------------------------- --------------
Finance income:
Deposit account interest 27,089
--------------
4. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted
average number of shares adjusted to assume the conversion of all
dilutive potential ordinary shares.
Earnings Weighted average Per-share amount
number of shares (p)
GBP
----------------------- ------------ ------------------ -----------------
Basic and diluted EPS
Adjusted earnings (1,075,741) 88,810,003 (1.21)
------------ ------------------ -----------------
5. PROPERTY, PLANT AND EQUIPMENT
Fixtures and Computer equipment Totals
fittings
GBP GBP
---------------------- ------------- ------------------- --------
COST
Additions 1,216 12,861 14,077
------------- ------------------- --------
At 30 September 2018 1,216 12,861 14,077
------------- ------------------- --------
DEPRECIATION
Charge for period (52) (2,098) (2,150)
------------- ------------------- --------
At 30 September 2018 (52) (2,098) (2,150)
------------- ------------------- --------
NET BOOK VALUE
At 30 September 2018 1,164 10,763 11,927
------------- ------------------- --------
6. TRADE AND OTHER RECEIVABLES
30 Sep 18
GBP
------------------------------------ ----------
Current:
Amounts owed by group undertakings -
Other debtors 10,300
VAT 51,459
Prepayments 51,262
----------
113,021
----------
7. INVESTMENTS
30 Sep 18
GBP
-------------------------- ----------
Money Market Investments 4,013,064
----------
8. CASH AND CASH EQUIVALENTS
30 Sep 18
GBP
------------------ ----------
Deposit account 3,414,025
Current accounts 279,337
----------
3,693,362
----------
9. CALLED UP SHARE CAPITAL
Allotted, issued and fully paid
Number Class Nominal value 30 Sep 18 19 Feb 18
GBP GBP
---------- ---------------- -------------- ---------- ----------
8,931,003 Ordinary Shares 0.01 89,310 3
---------- ----------
89,310 3
---------- ----------
The following fully paid shares were allotted during the period
at a premium as shown below:
8,931,000 Ordinary Shares of GBP0.01 each at 0.99 per share
9,200 Incentive Shares of GBP1 each at 0.621739 per share
Share premium
GBP
-------------------------- --------------
At 19/2/18 -
Premium on shares issued 8,841,690
Cost of share issue (514,855)
--------------
At 30/9/18 8,326,835
--------------
Ordinary Shares
The ordinary shares entitle the holder to full rights in respect
of voting and shall entitle to holder to full participation in
respect of the equity in the event of winding up the Group.
Incentive Shares
On 27 February 2018, the Group issued 9,200 incentive shares of
GBP1.00 each in the capital of the Group pursuant to awards made
under The Stirling Industries Plc Long-Term Incentive Scheme, at a
subscription price of GBP2:
Holder Number of shares Subscription
price
GBP
--------------------- ----------------- -------------
Blair Illingworth 4,000 8,000
Simon Thomas 2,000 4,000
Joanne Curin 2,000 4,000
Robin Williams 800 1,600
Christopher Dowling 400 800
----------------- -------------
Total 9,200 18,400
----------------- -------------
This scheme was put in place to reward participants for any
increase in shareholder value over a four-year period from the date
of completion of the Group's first acquisition. The potential
reward will be in the form of new shares (subject to dilution
limits) equal to 10% of the difference between actual amounts
invested (increased by RPI +2% p.a.) and market value at vesting,
after adjustment for dividends paid and distributions.
10. TRADE AND OTHER PAYABLES
30 Sep 18
GBP
--------------------------------- ----------
Current:
Trade payables 175,891
Social security and other taxes 33,933
Pension 296
Incentive Shares 18,400
Other payables 262,450
----------
490,970
----------
11. SUBSIDIARIES
Stirling Group Holdings Limited is a 100% subsidiary of Stirling
Industries Plc.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FFEEDLFASEIF
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