TIDMSTT
RNS Number : 1916P
Straight PLC
30 September 2013
Date: 30 September 2013
On behalf of: Straight plc ("Straight" or "the Group")
Embargoed for release at 0700hrs
Straight plc
Interim Results
For the six months ended 30 June 2013
Straight plc (AIM:STT.L), the Environmental Products and
Services Group and the UK's leading supplier of recycling
containers, announces its interim results for the six months ended
30 June 2013.
Highlights
-- Group EBITDA* increased by 30.0% to GBP1.12m (H1 2012: GBP0.86m)
-- Group PBT increased to GBP0.34m (H1 2012: loss of GBP0.24m)
-- Group gross margin increased to 26.9% (H1 2012: 23.3%)
-- Underlying EPS 2.7p (H1 2012: 1.8p)
-- Basic EPS 2.1p (H1 2012 loss of 2.1p)
-- Innovative new products introduced
-- Major contracts and tender wins
Commenting on the results, James Newman, Chairman of Straight
said:
"The Group completed the first half of 2013 with a strong order
book which has given a solid start to the second half. With finance
in place for three years, a significantly reduced manufacturing
cost base and a number of new products coming to market, the Group
is in a good place to build on its achievements to date."
Chief Executive, Jonathan Straight added:
"It is a pleasure to report this positive set of results and the
Group's return to profitability. Now that the vertical integration
and associated reorganisation of our Group is complete, our focus
returns to profitably growing revenues in all of our diverse
markets."
*Underlying operating profit excluding depreciation, share
option costs and goodwill amortisation
For further information please contact:
Straight plc
Jonathan Straight/Jim Mellor 0113 245 2244
Cenkos Securities
Ivonne Cantu (Nomad)
Christian Hobart 0207 397 8980
Redleaf Polhill
Rebecca Sanders-Hewett/Jenny Bahr 0207 382 4730
straight@redleafpr.com
Notes to Editors
-- Straight plc is a leading manufacturer and distributor of
environmental products with two key areas of current focus: Waste
and recycling container solutions and Environmental home and garden
products.
-- The business operates through two distinct divisions and
serves a diverse marketplace:
- The Trade Business supplying products in bulk to local
authorities, utilities, the waste industry, retailers and other
businesses
- The Retail Business supplying a range of proprietary
environmentally friendly consumer products directly to the public,
often in partnership with a local authority or a utility.
-- Straight plc's offering is underpinned by significant market
drivers including the legislative landscape and a number of other
external influences and initiatives on the environmental
agenda.
-- In addition to its leading positions in the UK market, which
include being the UK's leading supplier of specialist kerbside
recycling containers, Straight plc has established diverse overseas
sales channels for its products, and supplies into Europe, North
America, Australia and Asia.
-- Straight plc listed on aim in 2003 under ticker STT. Further
information about the company and its products can be found at:
www.straight.co.uk
CHAIRMAN'S STATEMENT
I am pleased to report on a period in which there has been a
significant improvement in the Group's financial performance. This
improvement has been built upon the work completed during 2012
which aligned the Group's manufacturing operations to core customer
demand. The result has been considerable cost savings and greatly
improved margins.
As previously announced, the Group re-negotiated the deferred
consideration associated with the acquisition of the manufacturing
facility. The amount has been reduced by almost GBP0.5m and is now
payable over a five year period.
On 3 June we announced that the Group had successfully
re-financed its funding requirements for the next three years.
These new arrangements support the Group's operating requirements
and will partly fund future growth.
Results
Group EBITDA* increased by 30.0% to GBP1.12m (H1 2012:
GBP0.86m), with underlying operating profits doubling to GBP0.56m
(H1 2012: GBP0.28m). A significant increase in gross margins to
26.9% (H1 2012: 23.3%) and lower operating costs of GBP3.17m (H1
2012 GBP3.6m) both contributed to this improvement.
Group sales in the first half of 2013 were GBP13.90m (H1 2012:
GBP16.70m). Group sales in 2012 were buoyed by the drought in early
spring and subsequent over-stocking by customers which impacted
2013 demand.
The Group recorded a profit before taxation of GBP0.34m (H1
2012: loss of GBP0.24m) after accounting for share option costs,
amortisation, non-recurring items and finance costs.
Underlying earnings for the period were 2.7p (H1 2012: 1.8p)
with basic earnings per share of 2.1p (H1 2012: loss of 2.1p).
Dividend
The Group has a number of cash commitments to fulfil in the
second half of 2013 which include the launch of two major new
products. The Board remains committed to re-instating the payment
of dividends as soon as possible. This matter will be reviewed in
light of the anticipated continued improvement in performance.
Outlook
The Group completed the first half of 2013 with a strong order
book which has given a solid start to the second half. The Group
operates in diverse markets each of which present specific
challenges. However, with finance in place for three years, a
significantly reduced manufacturing cost base and a number of new
products coming to market, the Group is in a good place to build on
its achievements this year.
James H Newman
Chairman
30 September 2013
* Underlying operating profit excluding depreciation, share
option costs and goodwill amortisation
OPERATING REVIEW
We began 2013 by building a strong order book following the well
reported delays in municipal markets towards the end of last year.
These sales, combined with a much reduced cost base, allowed us to
generate vastly improved margins.
Manufacturing operations
Our factory benefitted from high utilisation following its
alignment to the core business.
The introduction of the long awaited continental shift working
pattern led to a significant improvement in productivity
transforming an operating loss of GBP0.25m in the first half of
2012 to an operating profit this year of GBP0.56m.
Trade Commercial Business
Customer over-stocking of water butts in 2012 resulted in lower
sales of GBP12.3m (H1 2012: GBP14.3m). These products deliver a
high gross margin and this, combined with the pricing profile of
large municipal contracts, led to a reduction in reported margins
in the Trade Commercial account to 11.6%. This was mitigated in
part by a 19.5% reduction in overheads. Consequently the underlying
operating profit was GBP0.43m (H1 2012: GBP1.02m).
Municipal markets
Municipal sales grew by 2.2% to GBP9.4m and we achieved
considerable success with tendered business. Tender successes
included Hartlepool Borough Council for wheeled bins with home
delivery services, Thanet District Council and East Ayrshire
Council for kerbside boxes and food waste containers and the Mid
Kent Waste Partnership (Ashford, Maidstone and Swale) for food
waste containers with compostable liners. In addition to these
tendered contracts, we were also awarded a significant contract
with Serco, the international service company, to provide
containers and other products for its Canterbury City Council
contract.
Non-municipal markets
Sales in non-municipal markets fell from GBP5.14m to GBP2.86m
because of lower water butt sales and the disposal of our DIY
business. The DIY business unit contributed little to profit. We
remain committed to growing the sales in all of our corporate
markets including export, third party retailers and the waste
management industry.
Retail Business
Underlying profits fell slightly from GBP0.24m to GBP0.22m.
Gross margins increased to 30.0% (H1 2012: 23.7%) as a result of
increased sales of high margin water saving products including
Tapmagic(R). Improved margins and reduced overheads ensured our
profitability in this area held up despite a reduction in sales of
water butts.
Innovation
The development of new products remains a key strategic focus,
which serves to maintain our market leading position and brand.
Being attentive to the needs of our customers and through
subsequent collaboration, we have developed two exciting new
products with an investment of GBP0.4m. The 3BoxStack(TM) is a
stacking recycling solution offering three or four separate
recycling streams mounted on a trolley. The Food Waste Inner Caddy
(FWIC), combines the functionality of our market-leading inner
caddy designs with our market-leading food waste caddies.
Management and staff
I would like to thank my colleagues for their hard work so far
this year and am grateful for their support and commitment to our
continuous improvement.
Going concern
Along with my fellow directors I believe that the Group is well
placed to successfully manage its business risks in spite of the
current economic climate. We believe that the Group has adequate
resources to continue in operational existence for the foreseeable
future based upon its current forecast and committed funding
facilities. For this reason we continue to adopt the going concern
basis in preparing the financial statements.
Outlook
It is a pleasure to report this positive set of results and the
Group's return to profitability. Now that the vertical integration
and associated reorganisation of our Group is complete, our focus
returns to profitably growing revenues in all of our diverse
markets.
Jonathan M Straight
Chief Executive
30 September 2013
Consolidated Income Statement
For the 6 months ended 30 June 2013
Half year to Half year to Year ended
30 Jun 2013 30 Jun 2012 31 Dec 2012
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Revenue 2 13,874 16,700 27,822
Cost of sales (10,145) (12,807) (21,115)
______ ______ _____
Gross profit 2 3,729 3,893 6,707
Operating costs excluding
depreciation (2,608) (3,035) (5,953)
______ ______ _____
Underlying operating profit
excluding share option
costs, depreciation and
goodwill amortisation 1,121 858 754
Depreciation (565) (575) (998)
______ ______ ______
Underlying operating profit 556 283 (244)
Share option costs (7) (8) (16)
Amortisation of customer
relationships and trademarks (42) (42) (83)
Non-recurring items - increase
in deferred consideration
over previous estimate - - (477)
Non-recurring items - other 3 (14) (405) (611)
Finance costs (150) (72) (198)
_____ _____ _____
Profit/(loss) before taxation 343 (244) (1,629)
Income tax (charge)/credit 4 (97) - 177
_____ _____ _____
Profit/(loss) for the period
attributable to equity
holders of the parent 246 (244) (1,452)
_____ _____ _____
Earnings per share for profit attributable to the
equity holders of the Company during the period
Basic and diluted 5 2.1p (2.1)p (12.6)p
Adjusted basic and diluted 5 2.7p 1.8p (2.3)p
Consolidated Statement of Changes in Equity
For the 6 months ended 30 June 2013
Half year Half year Year ended
to to
30 Jun 30 Jun 31 Dec
2013 2012 2012
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Balance at start of period 8,330 9,766 9,766
Profit/(loss) and total comprehensive
income/(outgoings) for the
period 246 (244) (1,452)
Share based payments 7 8 16
______ ______ ______
8,583 9,530 8,330
______ ______ ______
Statement of Financial Position
At 30 June 2013
30 Jun 30 Jun 31 Dec
2013 2012 2012
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Assets
Non current assets
Property, plant and equipment 7,138 7,428 7,493
Intangible assets 6,688 6,798 6,754
_____ _____ _____
13,826 14,226 14,247
Current assets
Inventories 1,567 1,927 2,121
Trade and other receivables 5,697 5,184 2,799
Cash and cash equivalents 159 768 86
_____ _____ _____
7,423 7,879 5,006
_____ _____ _____
Total assets 21,249 22,105 19,253
_____ _____ _____
Liabilities
Current liabilities
Overdraft facility - - -
Trade and other payables (8,760) (9,169) (7,535)
Financial liabilities (636) (1,384) (1,071)
Income tax payable - - -
Provisions (212) (554) (243)
_____ _____ _____
(9,608) (11,107) (8,849)
_____ _____ _____
Non current liabilities
Trade and other payables (937) - (1,070)
Financial liabilities (1,510) (777) (490)
Deferred taxation (611) (691) (514)
_____ _____ _____
(3,058) (1,468) (2,074)
_____ _____ _____
_____ _____ _____
Total liabilities (12,666) (12,575) (10,923)
_____ _____ _____
_____ _____ _____
Net assets 8,583 9,530 8,330
_____ _____ _____
Capital and reserves
Share capital 119 119 119
Reserves 7,444 7,429 7,437
Profit and loss account 1,020 1,982 774
_____ _____ _____
Total equity 8,583 9,530 8,330
_____ _____ _____
Consolidated Cash Flow Statement
For the 6 months ended 30 June 2013
Half year Half year Year ended
to to
30 Jun 30 Jun 31 Dec 2012
2013 2012
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss) after tax 246 (244) (1,452)
Adjustments for
Depreciation 565 579 998
Loss/(profit) on sale of property, plant and equipment 2 (3) (32)
Profit on disposal of intangibles (130) - -
Intangibles amortisation 42 42 173
Net finance costs 150 72 198
Taxation credit recognised in income statement 97 - (177)
Share option costs recognised in income statement 7 8 16
Decrease in inventories 554 1,072 878
(Increase)/decrease in trade and other receivables (2,148) (1,206) 1,174
Increase in trade and other payables 761 824 354
Decrease in provisions (31) - (311)
____ ____ ____
Cash generated from operations 115 1,144 1,819
Income tax repaid - 165 170
____ ____ ____
Net cash generated from operating activities 115 1,309 1,989
Cash flows from investing activities
Purchases of intangibles (3) - (89)
Disposal of intangibles 130 - -
Purchase of business combinations - deferred consideration (83) - -
Purchases of property, plant and equipment (198) (322) (642)
Proceeds from sale of property, plant and equipment 13 13 53
____ ____ ____
Net cash used in investing activities (141) (309) (678)
Cash flows from financing activities
Net cash received from debtor facility 411 1,757 1,663
Interest paid (147) (72) (198)
Proceeds from borrowings 1,639 - -
Repayment of borrowings (1,054) (834) (1,607)
Repayment of letter of credit facility (750) - -
____ ____ ____
Net cash received/(used) in financing activities 99 851 (142)
____ ____ ____
Net increase in cash and cash equivalents 73 1,851 1,169
Cash and cash equivalents at beginning of period 86 (1,083) (1,083)
____ ____ _____
Cash and cash equivalents at end of period 159 768 86
____ ____ _____
Notes to the Interim Results Announcement
For the 6 months ended 30 June 2013
1. General information
Straight plc "the Group" supplies container solutions for source
separated waste in the UK and overseas. The Company is registered
in England under company registration number 2923140 and its
registered office is No 1 Whitehall Riverside, Leeds, LS1 4BN. As a
consequence of its AIM listing, the Group is required to prepare
statutory financial statements which comply with accounting
standards as adopted for use in the European Union "EU" in respect
of its financial year ended 31 December 2013.
These consolidated interim financial statements have been
approved for issue by the Board of Directors on 30 September
2013.
The financial information set out in this interim report does
not constitute statutory accounts as defined by section 434 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2012 which were prepared under IFRS as
adopted by the EU have been filed with the Registrar of Companies.
The auditor's report on those financial statements was unqualified,
included an emphasis of matter and did not contain a statement
under Section 498(2) or (3) of the Companies Act 2006.
These interim financial statements have been prepared on the
same basis and using the same accounting policies as used in the
full financial statements for the year ended 31 December 2012. The
income statement comparatives have been re-stated to show
underlying operating profit excluding share option costs,
depreciation and goodwill amortisation "EBITDA" as this is a key
performance measure for the Group. The Board has prepared a working
capital forecast based upon trading assumptions and has concluded
that the Group remains a going concern.
2. Segmental information
The Group's activities are organised into three segments: Trade,
Retail and Manufacturing. These divisions are the basis on which
the Group reports its primary segmental information.
Trade Trade Trade Total Central
Comm'l Mnf'g Adj Trade Retail o'head Total
HY2013 HY2013 HY2013 HY2013 HY2013 HY2013 HY2013
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External sales 12,262 - - 12,262 1,612 - 13,874
Inter-segment sales 7,207 (7,207) - - - -
______ ______ ______ ______ ______ ______ ______
12,262 7,207 (7,207) 12,262 1,612 - 13,874
______ ______ ______ ______ ______ ______ ______
Gross profit 1,418 1,828 - 3,246 483 - 3,729
Operating costs excluding
depreciation (672) (1,020) - (1,692) (266) (650) (2,608)
______ ______ ______ ______ ______ ______ ______
Underlying operating
profit excluding
depreciation 746 808 - 1,554 217 (650) 1,121
______ ______ ______ ______ ______ ______ ______
Depreciation (321) (244) - (565) - - (565)
______ ______ ______ ______ ______ ______ ______
Underlying operating 425 564 - 989 217 (650) 556
profit
Share option costs - - - - - (7) (7)
Amortisation of
goodwill and trade marks - - - - - (42) (42)
Non-recurring costs 137 - - 137 - (151) (14)
Finance costs - - - - - (150) (150)
______ ______ ______ ______ ______ ______ ______
Profit
before taxtion 562 564 - 1,126 217 (1,000) 343
______ ______ ______ ______ ______ ______ _____
Trade Trade Trade Total Central
Comm'l Mnf'g Adj Trade Retail o'head Total
HY2012 HY2012 HY2012 HY2012 HY2012 HY2012 HY2012
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External sales 14,349 - - 14,349 2,351 - 16,700
Inter-segment sales - 6,930 (6,930) - - - -
______ ______ ______ ______ ______ ______ ______
14,349 6,930 (6,930) 14,349 2,351 - 16,700
______ ______ ______ ______ ______ ______ ______
Gross profit 2,252 1,083 - 3,335 558 - 3,893
Operating costs excluding
depreciation (821) (1,167) - (1,988) (316) (731) (3,035)
______ ______ ______ ______ ______ ______ ______
Underlying operating
profit excluding
depreciation 1,431 (84) - 1,347 242 (731) 858
______ ______ ______ ______ ______ ______ ______
Depreciation (412) (163) - (575) - - (575)
______ ______ ______ ______ ______ ______ ______
Underlying operating 1,019 (247) - 772 242 (731) 283
profit
Share option costs - - - - - (8) (8)
Amortisation of
goodwill and trade marks - - - - - (42) (42)
Non-recurring costs (153) (252) - (405) - - (405)
Finance costs - - - - - (72) (72)
______ ______ ______ ______ ______ ______ ______
Profit/(loss)
before taxation 866 (499) - 367 242 (853) (244)
______ ______ ______ ______ ______ ______ ______
Trade Trade Trade Total Central
Comm'l Mnf'g Adj Trade Retail o'head Total
FY2012 FY2012 FY2012 FY2012 FY2012 FY2012 FY2012
Audited Audited Audited Audited Audited Audited Audited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External sales 24,178 - - 24,178 3,644 - 27,822
Inter-segment sales 12,901 (12,901) - - - -
______ ______ ______ ______ ______ ______ ______
24,178 12,901 (12,901) 24,178 3,644 - 27,822
______ ______ ______ ______ ______ ______ ______
Gross profit 3,442 2,510 - 5,952 755 - 6,707
Operating costs excluding
depreciation (1,941) (2,045) - (3,986) (550) (1,417) (5,953)
______ ______ ______ ______ ______ ______ ______
Underlying operating
profit excluding
depreciation 1,501 465 - 1,966 205 (1,417) 754
______ ______ ______ ______ ______ ______ ______
Depreciation (567) (431) - (998) - - (998)
______ ______ ______ ______ ______ ______ ______
Underlying operating 934 34 - 968 205 (1,417) (244)
profit
Share option costs - - - - - (16) (16)
Amortisation of
goodwill and trade marks - - - - - (83) (83)
Non-recurring costs (91) (309) - (400) - (688) (1,088)
Finance costs (143) (55) - (198) - - (198)
______ ______ ______ ______ ______ ______ ______
Profit/(loss)
before taxation 700 (330) - 370 205 (2,204) (1,629)
______ ______ ______ ______ ______ _______ ______
3. Non-recurring costs
The net non-recurring items of GBP14,000 consist of net
non-recurring revenues of GBP137,000 in the Trade Business and
costs of GBP151,000 charged centrally.
The net revenues are attributable mostly to the transfer of the
Group's DIY business to Garland Products in May 2013. The
non-recurring central costs are attributable mostly to the cost of
the advisors of the Group's bankers incurred in the period prior to
the re-financing of the Group on 31 May 2013.
4. Taxation
The taxation charge for the six months ended 30 June 2013 has
been estimated based on the anticipated effective rate of 28.3% for
the year ending 31 December 2013.
5. Earnings per share
Half year Half year Year ended
to to
30 Jun 30 Jun 31 Dec
2013 2012 2012
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Earnings
Earnings for the purposes
of basic earnings per
share being profit for
the period attributable
to the equity holders
of the Company 246 (244) (1,452)
Amortisation of customer
relationships and trademarks 42 42 83
Non-recurring items 14 405 1,088
Share scheme charges 7 8 16
____ ____ ____
Earnings for the purposes
of adjusted earnings
per share being the
adjusted profit for
the period attributable
to the equity 309 211 (265)
holders of the company ____ ____ ____
Number of shares
Weighted average number
of ordinary shares for
the purposes of basic
earnings per share 11,499,294 11,499,294 11,499,294
Dilutive effect of share - - -
options
_________ _________ _________
11,499,294 11,499,294 11,499,294
_________ _________ _________
Earnings per ordinary
share
Basic and diluted 2.1p (2.1)p (12.6)p
Adjusted basic and diluted 2.7p 1.8p (2.3)p
6. This statement is being sent to the shareholders of the
Company and will be available at the Company's registered office at
No 1 Whitehall Riverside, Leeds, LS1 4BN.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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