18 September 2024
Strix
Group Plc
("Strix", the "Group" or the "Company")
Interim
results for the six months ended 30 June 2024
Financial Summary
|
Results from continuing operations1
|
CER3
|
CER3
|
AER3
|
AER3
|
HY23
|
|
HY24
|
Change
|
HY24
|
Change
|
|
Adjusted measures
|
£m
|
%/bps
|
£m
|
%/bps
|
£m
|
|
Revenue
|
67.2
|
3.5%
|
66.1
|
1.8%
|
64.9
|
|
Gross profit
|
26.9
|
12.6%
|
26.4
|
10.5%
|
23.9
|
|
Gross profit %
|
40.0%
|
+320bps
|
39.9%
|
+310bps
|
36.8%
|
|
EBITDA
|
16.9
|
8.3%
|
16.7
|
7.1%
|
15.6
|
|
EBITDA %
|
25.1%
|
+110bps
|
25.3%
|
+130bps
|
24.0%
|
|
Operating profit
|
13.0
|
9.2%
|
12.8
|
7.6%
|
11.9
|
|
Profit before tax
|
8.0
|
15.9%
|
7.8
|
13.0%
|
6.9
|
|
Net debt2
|
|
|
68.8
|
(26.1)%
|
93.1
|
|
Net debt leverage
|
|
|
1.76x
|
(33.8)%
|
2.66x
|
|
Operating cash
conversion
|
|
|
115.4%
|
+1,670bps
|
98.7%
|
|
Diluted earnings per
share
|
2.9p
|
7.4%
|
2.9p
|
7.4%
|
2.7p
|
|
GAAP Measures
|
|
|
|
|
|
|
Revenue
|
|
|
63.9
|
(1.6)%
|
64.9
|
|
Operating profit
|
|
|
1.1
|
(89.0)%
|
10.0
|
|
(Loss)/profit before
tax
|
|
|
(3.8)
|
(174.5)%
|
5.1
|
|
Diluted (loss)/earnings per
share
|
|
|
(2.3)p
|
(227.8)%
|
1.8 p
|
1. Adjusted results
from continuing operations exclude adjusting items, see note 16 and
results from discontinued operation, Halosource see note
15
2. Net debt is as
defined by our bank facility agreement and excludes the impact of
IFRS 16 lease liabilities
3. "CER" being
Constant Exchange Rate, is calculated by translating the HY24
figures by the average HY23 exchange rate, and "AER" being Actual
Exchange Rate.
Financial Highlights
|
·
|
Adjusted revenues increase by 3.5%
to £67.2m at CER (AER: 1.8%) in HY24, led by a strong performance
in Kettle Controls and a positive mix shift to higher margin sales
in the regulated and less regulated markets
|
|
·
|
Adjusted gross margins at 40.0%
are up 320bps at CER (AER: 39.9%, +310 bps) on HY23, maintaining
FY23 levels despite seasonally lower trading
|
|
·
|
Strong adjusted PBT growth of
15.9% (at CER) to £8.0m (AER: 13.0%, £7.8m; HY23: £6.9m)
|
|
·
|
Successful completion of 5% equity
placing originating from a reverse enquiry (the "Equity Placing"),
generated gross proceeds of £8.7m
|
|
·
|
Strong cash management reduced net
debt leverage to just under 2.0x, significantly ahead of year-end target, with a further
reduction to 1.76x from the proceeds of the Equity Placing
(FY23: 2.19x, Covenant: 2.75x)
|
|
·
|
Management have exercised prudence
with the essential continuation of investment into the business,
focused on areas such as new product development and other
growth supporting initiatives
|
|
·
|
Net debt decreased to £68.8m
(FY23: £83.7m), with RCF facility headroom of £9.0m at HY24 and
increasing to £10.5m by the reporting date (FY23: £nil)
|
|
·
|
One year extension of the Group's
£80.0m RCF banking facilities was secured on 11 September 2024
extending maturity to 25 October 2026
|
|
·
|
As a result of the restructuring
and rebasing of the business (noted below), a number of impairments
and other adjusting items have been booked in the period (see note
16)
|
Operational Highlights
|
·
|
As stated at the time of the full
year results in March 2024, the Group has commenced a rebasing of
the core business to build strong foundations to support the
Group's medium-term opportunities for profitable
growth
|
|
·
|
The Group has implemented a number
of restructuring initiatives including the:
o Planned disposal of Halopure expected to complete by the end
of FY24
o Further streamlining of the Consumer Goods division to drive
ongoing profitable growth
o Partial relocation of manufacturing
activity at the Ramsey factory to Strix's China facility improve
shipping times, cost and environmental footprint
|
|
·
|
The integration of Billi into the
wider Strix group has been successfully completed along with a
strategic reorganisation to support the longer term growth
ambitions of the division, including the launch of new products
(although slightly delayed) and securing initial distribution
agreements in Europe
|
|
·
|
The Group commenced its capital
investment into our new next generation kettle controls at the end
of Q2 and will continue to prioritise this throughout the second
half of the year, with revenue streams expected to flow in the
second half of 2025
|
|
·
|
Continued focus on IP protection
with three successful actions taken in HY24 and more identified for
the second half
|
|
·
|
Investment made in China factory
to support appliance manufacturing for a major brand within the
Consumer Goods division
|
Outlook
|
·
|
The rebasing of the business has
made significant progress in the first half of the year which the
Group expects to see continue to the year end. The Board is very
pleased with the accelerated rate in which the leverage position
has been reduced and the target of 1.5x is now expected to be
achieved ahead of the end of FY25
|
|
·
|
Following relatively lower trading
for parts of Q3, Strix expects to have further clarity on the sales
trends in the Kettle Control Markets as it moves into its peak
season, supported by further product launches to increase the
Group's target addressable market
|
|
·
|
Billi's expanding sales strategy
is on track, generating initial sales in Europe with the division
now expected to report high single digit growth for FY24 following
the slightly delayed roll out of new products to the
market
|
|
·
|
Consumer Goods restructure has
successfully positioned the division for profitable medium term
growth
|
|
·
|
Currency headwinds and commodity
prices continue to present obstacles, the Group are actioning
various strategies to mitigate the effect of these where
possible
|
|
·
|
The Group's return to a position
of balance sheet strength, allows for the continued investment in
its technology and innovation, future proofing the
business
|
|
·
|
The Board is pleased to confirm
that notwithstanding the macro uncertainties, including relatively
lower trading for parts of Q3 in regulated Kettle Controls, the
Group is on track to report results for FY24 in line with market
expectations
|
Mark Bartlett, Chief Executive Officer of Strix Group Plc,
commented: "Strix has made
considerable progress on a number of fronts in the first half of
the year, namely the continued rebasing of the business and the
reduction of our debt position which I'm very pleased to report is
ahead of our target. Operational improvements have been made across
the Group, better positioning us for medium and long term growth
opportunities including new product launches, rationalisation of
the Consumer Goods division and the roll out of Billi in key
markets.
We continue to see profitable
growth opportunities in all of our core markets and look forward to
executing on our strategy in the second half of the year, further
improving our competitive position, strengthening the balance sheet
and delivering profit growth. Notwithstanding the macro
uncertainties, including the relatively lower trading for parts of
Q3 in regulated Kettle Controls, the Board expects to deliver full
year results for the year in line with market
expectations."
Analyst & Investor Presentation
Strix will be hosting a
presentation for analysts later this morning, at 09:30am (BST).
Analysts wishing to attend should email strix@gracechurchpr.com
for details.
Strix will also be conducting an
online Investor Presentation on Monday 23 September 2024 at 11am
(BST), providing an update to investors following today's results
and to answer questions submitted by viewers.
The webinar is open to all
existing and potential shareholders, and registration is free. You
can sign up to register here:
https://www.equitydevelopment.co.uk/news-and-events/strixgroup-investorpresentation-23sept2024
The Group intends to release a
further update to the market in November 2024 following attendance
at the autumn trade fairs and feedback from our key partners and
customers.
For further enquiries, please contact:
|
Strix Group Plc
|
+44 (0) 1624 829829
|
|
Mark Bartlett, CEO
Clare Foster, CFO
|
|
|
Zeus (Nominated Advisor and Joint
Broker)
|
+44 (0) 20 3829
5000
|
|
Nick Cowles / Jordan Warburton
(Investment Banking)
Dominic King (Corporate
Broking)
|
|
|
Stifel Nicolaus Europe Limited (Joint
Broker)
|
+44 (0) 20 7710 7600
|
|
Matthew Blawat / Francis
North
|
|
|
Gracechurch Group (Financial PR and IR)
|
+44 (0) 204 582 3500
|
|
Heather Armstrong / Claire Norbury
/ Harry Chathli
|
|
The person responsible for
arranging release of this Announcement on behalf of the Company is
Mark Bartlett.
Information on Strix
Founded in 1982, Isle of Man based
Strix is a global leader in the design, manufacture and supply of
kettle safety controls and other components and devices involving
water heating and temperature control, steam management and water
filtration.
Strix has built up market leading
capability and know-how, expanding into complementary products and
technologies. The Group's brands include Aqua Optima, LAICA and
Billi providing our customers with market leading water solutions
on a global basis.
Strix is quoted on the AIM Market
of the London Stock Exchange (AIM: KETL).
CEO's Report
Introduction
Strix continues to execute against
its stated objectives, and I am pleased to report the progress the
Group has made in the first six months of the year. As announced in
March 2024, the rebasing and restructuring of the business has
continued into HY24 to build strong foundations for medium-term
growth opportunities as the market continues to recover. While the
global economic backdrop remains volatile, Strix remains resilient
as a result of the Group's revenue diversification
strategy.
As stated on 25 July 2024 in the
Company's Trading Update, Strix is seeing growth in its key Small
Domestic Appliance ("SDA") markets which is encouraging.
Progress has been made across all three of
Strix's divisions in the period. The
completion of the restructuring and rebasing of the business, and
the return to a strong balance sheet will see the Group continue
the pay down of its debt, aid in the renegotiation of its banking
facilities and support further investment in Strix's technology and
innovation, future proofing the Group for the long term.
Deleveraging
Reducing Strix's net debt leverage
position remains a key priority for the Group, with a previously
reported target to achieve less than 2.0x leverage by the end of
FY24 and 1.5x leverage by the end of FY25. Over the course of HY24,
the management team successfully implemented a number of self-help
actions to conserve cash, via enhanced working capital management
and a careful deceleration of capital expenditure. In addition, as
announced on 12 June 2024, the Group raised £8.7m via an Equity
Placing to further accelerate these efforts.
Pleasingly, at the end of HY24,
the self-help initiatives resulted in net debt leverage dropping
below 2.0x, with the funds secured in the Equity
Placing bringing this position down further to 1.76x. As a result
of this success, progress towards the Group's stated target of 1.5x
leverage, has been effectively accelerated and we now expect to see
this being achieved before the end of FY25.
Management have exercised prudence
to balance the reduction of the leverage position with the
essential continuation of investment into the business. This
includes focusing spend on areas such as new product development
and other growth supporting initiatives, to ensure the long-term
growth prospects of the Group remain protected.
Restructuring
As part of the planned rebasing of
the business, the Board has remained focused on maximising cash
generation to support debt reduction. Resources have been
selectively allocated to optimise commercial success, realigning
efforts from commercially less sustainable projects to more
attractive ones, to best support improved
margins and the Group's medium term growth aspirations.
Over the course of HY24, Strix has
undertaken a number of actions including streamlining of the
Consumer Goods division through further rationalising of product lines and groups,
and reducing headcount. This provides greater flexibility to
selectively invest time and resources in projects with higher
returns, allowing commercial focus to be redirected, so as to
better support short and medium term high margin product launches
across the Group.
The Group has also relocated parts
of its manufacturing capabilities to its China facility from the
Ramsey factory, namely the press production lines, while keeping
the core technology of blades production,
a key part of its heritage, on the Isle of Man. This allows for the
transportation of raw materials and components to be more cost
effective and efficient, as well as enhancing Strix's environmental
footprint.
Following a comprehensive review
of the Premium Filtration Systems (PFS) division, it was concluded
that Strix would look to dispose of Halopure as it was not
considered complementary to the Group's focus on smaller scale
domestic filtration products. The growth prospects of Halopure in
the medium term are limited, while also requiring additional
investment. Disposal via sale is expected to complete in the second
half of FY24 for a nominal value. This will allow the PFS division
(now renamed Billi) to solely focus on capitalising on the
significant growth opportunities presented by Billi, now that it
has been fully integrated into the wider Strix Group
offering.
As a result of the restructuring
and rebasing of the business through the activities above, there
have been a number of impairments and other adjusting items that
have been booked in the period (see note 16).
The segmental reporting structure
outlined in the Group's Interim Results now comprises:
1. Kettle
Controls
2. Billi
(previously PFS)
3.
Consumer goods
Market Overview
The global economic backdrop and
geopolitical tensions remained volatile through the first half of
the year, providing Strix with a mixed trading backdrop.
For the Kettle Controls division,
the UK and Germany form the most important regulated markets.
According to Deloitte, consumer confidence in the UK has risen by
over ten percentage points in the first half of the year, returning
to levels last seen before the latest wave of high inflation, and
is expected to continue rising. Reports from JP Morgan suggest that
it expects the UK economy to grow 0.4% between July and September
2024, up from a previous estimate of 0.3%.
According to the Royal Institute
of Chartered Surveyors ("RICS"), Britain's housing market in March
2024 saw the strongest levels of interest among buyers in more than
two years, and a gauge of house prices also touched its
highest level since 2022 as a recovery gathers more momentum. Figures from
the RICS added to recent signs of stabilisation in the UK's housing
market, driven by cooling inflation and falling mortgage costs
after their rise hit demand in 2022 and 2023. We have seen further
stability in the UK economy following the General Election and the
IMF has noted that UK interest rates should fall to 3.5% by the end
of 2025.
Reports from the European Union
suggest that the German economy went through a recession in 2023
when real GDP declined by 0.2%. Despite continued headwinds, it
recovered slightly at the start of 2024, with economic activity
expected at 0.2% growth
quarter on quarter in Q1 of 2024 which is
encouraging.
Global trade has been under
significant pressure since October 2023, when the Israel-Hamas war
commenced. The disruption that this conflict has brought to
transport routes in the Red Sea has meant higher freight costs and
increased expenses for insuring commercial trade goods.
After three years of extreme
volatility, commodities prices are set to broadly stabilise yet
remain high in 2024, according to the Economist Intelligence Unit.
However, adverse weather conditions, escalating geopolitical
tensions and increased shipping costs are among the risks to
commodity price forecasts to watch. On the foreign exchange side,
these trading results have been negatively impacted by fluctuations
in the AUS dollar and Euro.
Kettle Controls
Kettle Controls contributed
revenues of £30.5m at both CER and AER (HY23: £28.8m), up 5.9%, on
the first half of 2023. The Group has continued to see growth and a
stronger sales mix, with a focus on the higher margin regulated and
less regulated markets. The regulated market, has seen underlying
growth in the period in the USA, the Netherlands and the UK, with
similar positive trends being seen in less regulated markets.
Chinese market volumes have reduced against HY23, as Strix has
pivoted away from some of the less profitable product lines, in
line with its strategy. The successful launch of the new low cost
control series is expected to facilitate the improvement of market
share in this key strategic market for the future, with initial
sales in Q3.
It is still too early to confirm
whether the improvement in sales across the regulated and less
regulated markets is due to stock refill or an underlying
improvement in consumer demand. We are encouraged by the trends we
have seen in the first six months of the year, although note that
trading levels have been more volatile during Q3,
in part due to factory shut downs at a number of
Chinese OEMs. We will continue to monitor
this closely and expect to have clearer visibility of true consumer
demand across the whole market as we get further into the second
half. This will also be supported by Strix's involvement at the
Canton Fair, which provides important engagement opportunities with
the Group's key customers and partners.
Following planned capital
investments in the second half of FY24, the Group will be launching
its next generation series of controls in FY25. Further supporting
regulated market sales and protecting the long-term resilience of
the division through product diversification.
Copper and silver make up a
significant portion of Strix's consumption of raw materials. Strix
sees these prices remaining high in the short term, adding pressure
to gross margins. To mitigate these risks, the Group enters into
forward commodity contracts or makes payments in advance where
possible.
Billi
The integration of Billi into the
Strix portfolio is progressing well. The division contributed
£22.2m (HY23: £21.4m) to Group revenue at CER (AER: £21.4m), up
3.7%, with 76.6% of that revenue generated in the Australia market.
According to KPMG, the Australian economy "staggered" into 2024,
edging close to recession with just 0.1% growth over Q1 2024.
Notwithstanding these macro challenges, Billi is performing well
against its previously stated strategy of new product development
and geographic expansion. Strix has secured initial distribution
agreements in Europe and first sales to this key region were
reported in HY24. Although subject to some short delays, the Group
has successfully launched a number of new products in the period,
including the Multi-Function Tap, compatible with the full range of
Billi under-counter modules and the new Omni-One under-counter
unit, with more in the pipeline.
The Group is in discussions with
strategic partners and distributors to establish a comprehensive
platform in Europe to provide the foundation for ongoing growth in
this key region. Due to short delays in the roll out of new
products, Strix now expects the division to grow slightly slower in
FY24, to achieve high single digit growth on a constant currency
basis vs FY23.
Consumer Goods
The Consumer Goods division
reported a slight decrease in revenues, down by (1.4)%, to £14.5m
at CER (AER: £14.2m; HY23: £14.7m). Strong progress has been made
in HY24 in terms of restructuring the division for future
profitable growth predominantly through the ongoing rationalisation
and streamlining of product lines.
Progress in further expanding our
OEM partnerships with new relationships as well as reinforcing
connections with our existing partners has been successful in the
period. This has resulted in the creation of new appliances and
products being developed and manufactured by Strix to be launched
in the second half of the year and continuing into 2025. By
expanding our OEM and ODM partnership base, we expect new product
development projects to continue as well as allowing us to access
routes to new markets.
New distribution agreements have
been secured for our LAICA brand, opening a sales channel for
Italian manufactured filtration products in China. Progress has
also been made in positioning LAICA as the European leader in
products for consumers wanting to achieve "wellness at home".
Product development has continued at pace and will see a number of
products released to the market in the second half of
FY24.
The Group was also delighted to
celebrate LAICA's 50th Anniversary in June of this year,
representing an important milestone for such a key brand within the
Group's portfolio.
Barriers to Entry and IP
Strix evaluates the risks and
threats from the competitive landscape on an ongoing basis. As a
result, the innovative technology produced by Strix is constantly
evolving, supported by a solution led R&D team. Strix protects
its new products and solutions through a robust IP strategy and
sustainable investment, and remains
committed to consumer safety. We continue to prompt regulatory
enforcement authorities to remove unsafe and poor quality products
from our major markets. Strix has successfully taken such actions
in the first half of FY24 with more identified for the second half
of the year. The Group also continues to defend its intellectual
property, initiating litigation in China against a control
manufacturer it believes to be infringing on
patents.
The relationships that Strix has
cultivated with its brands, OEMs and retailers are unique,
contributing to its market leading position. The Group's extensive
market knowledge allows it to provide support across the value
chain and throughout the product lifecycle, including product
design and advice on specification and manufacturing solutions.
These solution-led and customer focused services help to foster
strong relationships, ensuring brand strength and positioning Strix
as a trusted partner in the market.
Sustainability
Sustainability remains a priority
for Strix across its divisions and we continue to make progress
against our stated targets. Strix achieved its ambitious net zero
Scope 1 and 2 targets in 2023 with a reduction in emissions of 95%
over two years and investment to supply 10% of the Group's
requirements from its own solar infrastructure. Scope 1 focus
remains on how to further reduce emissions with investment in more
efficient infrastructure such as boilers and the use of electric
vehicles. Scope 2 is now concentrated on the Group's 100% use of
green power or self-generated solar energy; hence the focus has
shifted to absolute reduction in consumption of energy usage and
intensity (both per piece and per £m).
The restructuring of the Group and
the relocation of manufacturing capabilities from Ramsey to China
has been positive for all Scopes, including Scope 3 through reduced
transportation emissions.
In 2024 greater focus has been
given to biodiversity and nature to ensure compliance with the
forthcoming Taskforce on Nature-related Financial Disclosures
initiative, aligning Strix with the Global
Biodiversity Framework. Furthermore, additional resource
will be given to progressing Strix's social agenda
through structure and incentivisation,
significantly increasing employee community engagement and events.
Strix's consumer focused subsidiary, LAICA, is developing a
stand-alone sustainability capability and reporting to assist
relationships with local stakeholders including financially focused
audiences.
ISO roll-out across the Group
continues with Billi applying for both ISO14001 (Environmental)
& ISO45001 (OHSAS) by the year end while work is underway to
evaluate the adoption of ISO14064 (reporting & validation of
GHG emissions).
Outlook
The rebasing of the business has
made significant progress in the first half of the year and we
expect to see this continue to the year end. The Board is very
pleased with the accelerated rate in which the leverage position
has been reduced and we now expect the target of 1.5x to be
achieved before the end of FY25.
Following relatively lower trading
for parts of Q3, Strix expects to have further clarity on the sales
trends in the Kettle Controls markets as it moves into its peak
season, supported by further product launches to increase the
Group's target addressable market. Billi's expansion sales strategy
is on track, generating initial sales in Europe with the division
now expected to report single digit growth for FY24, following the
slightly delayed roll out of new products to the market.
Currency headwinds and commodity
prices continue to present obstacles, the Group is actioning
various strategies to mitigate the effect of these where
possible.
The Group's return to balance
sheet strength and its resilient cash flows will allow for the
continued pay down of debt as well as ongoing investment in its
technology and innovation, thereby future proofing the
business.
CFO's Review
Financial performance - continuing
operations
|
|
HY24
(CER)2
|
HY24
(AER)2
|
HY23
(AER)2
|
|
|
Adjusted Revenue1
£m
|
Change
|
Adjusted
GP%1
|
Change
|
Adjusted Revenue1
£m
|
Change
|
Adjusted
GP%1
|
Change
|
Adjusted Revenue1
£m
|
Adjusted
GP%1
|
|
Kettle Controls
|
30.5
|
5.9%
|
38.2%
|
100bps
|
30.5
|
5.9%
|
38.2%
|
100bps
|
28.8
|
37.2%
|
|
Billi (previously PFS)
|
22.2
|
3.7%
|
49.1%
|
280bps
|
21.4
|
0.0%
|
49.3%
|
300bps
|
21.4
|
46.3%
|
|
Consumer Goods
|
14.5
|
(1.4%)
|
29.6%
|
740bps
|
14.2
|
(3.4%)
|
29.5%
|
730bps
|
14.7
|
22.2%
|
|
Group
|
67.2
|
3.5%
|
40.0%
|
320bps
|
66.1
|
1.8%
|
39.9%
|
310bps
|
64.9
|
36.8%
|
1. Adjusted results
from continuing operations exclude adjusting items, see note 16 and
results from discontinued operation, Halosource see note
15
2. "CER" being
Constant Exchange Rate, is calculated by translating the HY24
figures by the average HY23 exchange rate, and "AER" being Actual
Exchange Rate.
Revenue
Group revenues reached £67.2m,
representing a 3.5% increase (at CER) against the prior half year.
At AER, growth was lower at 1.8%, reflecting foreign exchange
headwinds in the form of a weaker AUD and EUR.
Kettle Controls has shown positive
growth in the first six months, up 5.9% at CER to £30.5m (AER: 5.9%
to £30.5m). China sales have experienced a marked decrease of
(25.9)%, reflecting both a slowdown in this part of the kettles
market and a degree of market share reduction as the Group
continues to walk away from non-profitable business in this highly
price sensitive sector. More than offsetting this, we have seen
strong growth of 11% in the higher margin regulated/less regulated
markets in HY24.
Billi (previously PFS) continues
to report growth, up 3.7% at CER to £22.2m (AER: 0.0% to £21.4m).
As expected, this is running below double digit growth in the first
half year, following on from a strong start to HY23, and ahead of
new product introductions and the push into Europe. Both of which
are expected to drive higher growth levels in the second half of
the year.
Our Consumer Goods division has
seen a small decrease in the first six months, down (1.4)% at
£14.5m at CER (AER: (3.4)% to £14.2m) as ongoing restructuring
activities have continued (see note 16). Looking ahead, actions
taken will see this part of the Group able to focus more
effectively on its core higher margin growth areas.
Trading profit
The Group has performed well at a
gross margin level, with a strong increase of 320bps to 40.0% (AER:
39.9%; HY23: 36.8%) and maintaining margins at FY23 levels, despite
lower seasonal trading levels in the first half of the year.
Reflecting the increases in both trading and margin, gross profit
of £26.9m is 12.6% up at CER (AER: 10.5% up at £26.4m; HY23:
£23.9m).
Regionally, our Consumer Goods
division is showing the biggest improvement in gross margin with a
740bps increase on HY23 at CER (AER: 730bps). This is predominantly
due to an improved sales mix, with a greater degree of higher
margin sales to key OEMs and lower online trading, improved
overhead recovery and the positive impact of sale price increases
secured over the last 12 months.
In Kettle Controls GP% has
increased 100bps to 38.2% (HY23: 37.2%), largely reflecting the
positive mix shift to the regulated/less regulated sector. Our
Billi division continues to report the highest gross margin in the
Group, with gross margin increasing by a further 280bps to 49.1% at
CER (AER: 49.5%; HY23: 46.3%) as higher margin sales in the UK part
of the business continue to grow.
Net overhead and distribution
costs are running ahead of the prior half year at £13.9m at CER
(AER: £13.6m; HY23: £12.0m) as a result of additional costs in
Billi UK (annualisation of investments made in FY23), higher
freight costs due to the issues in the Middle East, increased
advertising and promotional spend to support online sales in the
Consumer Goods division and the impact of inflation.
Despite the increase in overheads,
operating profits at CER remain 9.2% up at £13.0m (AER: 7.6% up to
£12.8m) HY23: £11.9m) as the positive impacts at the gross profit
level more than offset the increased overhead and distribution
costs.
The Group's adjusted EBITDA margin
remains strong at 25.1% at CER (AER: 25.3%; HY23: 24.0%) reflecting
the robust underlying profitability of the
Group.
Reflecting all of the commentary
above and the impact of finance costs, we have seen a strong
increase in adjusted profit before tax, up 15.9% to £8.0m at CER
(AER: £7.8m; HY23: £6.9m).
Finance costs
Finance costs remain in line with
the prior half year at £5.0m (HY23: £5.0m). We expect costs to be lower in the second half of the year
due to the significant reduction in gross debt following on from
the part repayment of the RCF facility of £9.0m in June, in
addition to the ongoing amortising term loan repayments of £3.6m
per quarter.
Lower net debt leverage, has also
brought the Group into a lower interest rate ratchet for the
remainder of the year, decreasing the interest margin on the
Group's facilities by 50bps to 2.35%.
Adjusting items from continuing
operations
As announced in our FY23
presentation and as part of the Group's subsequent updates to the
market, the restructuring and rebasing of the business has
continued in 2024 to allow us to build strong foundations to
support the Group's medium-term growth opportunities.
A key part of this process has
been the ongoing commercial review of product lines/groups
(predominantly within the Consumer Goods division) with the
intention of providing the business with the flexibility to
selectively invest time and resources in those projects with higher
returns. As a result of this process, the business has approved the
cessation of a number of product lines/groups and associated
capital development projects, which has resulted in the impairment
of certain items on the balance sheet including capital development
assets, stock and some licensing debtors.
As a result of these activities,
in continuing operations the Group has reported non-recurring
adjusting items of £10.9m for the first six months of the year
(HY23: £1.8m) (see note 16).
The largest element of these costs
relates to impairments in our Consumer Goods division of £5.8m,
including tooling/intangibles, inventories and licensing agreements
associated with product lines/groups where the Group does not
intend to place further commercial focus or allocate resources.
These decisions have been made based on the level of additional
investment in both time and resources required to ensure specific
product lines/groups can be successfully marketed, including the
provision of suitable marketing and promotional strategies, versus
the expected timing and profitability of that product
line/group. Additional personnel costs of
£0.6m, relating to the restructuring of the Consumer Goods division
have also been incurred in the period.
Non-recurring adjusting items have
been recognised in our Kettle Controls division of £1.2m. Certain
Kettle Controls capital expenditure projects were deferred to allow
the business to retain additional cash within the group and reduce
net debt levels. This timing change has resulted in the £0.8m
impairment of specific fixed term licensing debtors that related to
this technology. Restructuring costs related to the announced
part-closure of our Ramsey manufacturing site totalled
£0.4m.
Central restructuring costs of
£0.2m (HY23: £nil) relate to personnel changes.
The £3.1m of settlements relate
predominantly to the Group being in the final stages of negotiating
a commercial settlement with one of its key OEM customers. The
Group expect this process to be completed in the coming weeks,
leading to an estimated settlement amount of £2.2m. We have accrued
for this amount within the 30 June 2024 balance sheet as an
adjusting post balance sheet event for HY24. As this is a
non-recurring and material amount, this has been presented as an
adjusting item in the HY24 income statement. The other £0.9m
largely relates to a final settlement agreement with all parties to
the LAICA acquisition, regarding the transfer of a Taiwanese
property.
Adjusting items from discontinued
operations
Following a comprehensive review
of the Group's business unit Halopure (previously part of our PFS
division), it was concluded that the Group would look to dispose of
this business. Disposal is expected to be via sale at a nominal
value in the second half of the year. The net assets of the
business have been reclassified as assets held for sale in the
Group's balance sheet and have been impaired by £2.3m to £nil,
reflecting the minimal expected fair value less costs to sell on
disposal. This number will continue to be reviewed ahead of
eventual sale, but is not expected to change significantly. In
addition to this, we have also recognised £0.2m (HY23: £nil) of
redundancy costs.
Cash flow
The Group has maintained
consistently high operating cash generation, with a strong adjusted
operating cash conversion ratio of 115.4% in the current period
(HY23: 98.7%; FY23: 106.4%).
Ongoing improvements in working
capital management have reduced net working capital by a further
£2.8m in the first half year. Reflecting our success in this area,
working capital as a % of sales has reduced significantly to 7.6%
(FY23: 16.7%). A measured and careful deceleration of organic
capital expenditure has further aided cash conservation, leading to
reduced investment outflows of £3.9m (HY23: £6.5m).
Net proceeds from the reverse
equity placing generated £8.4m of cash in the first half of the
year, allowing the part repayment of the Group's RCF. As at 30 June
2024, the Group has access to £9.0m of unutilised RCF facilities
(FY23: £nil), providing a much greater security and flexibility of
funding.
Net debt and capital
allocation
Prioritising cash generation and
net debt reduction remains a top priority for the Group. As a
result of that focus, and reflecting all the successes discussed
above, the Group's net debt position (as defined in our banking
facility agreement), decreased by £14.9m
to £68.8m (FY23: £83.7m).
Net debt leverage reduced
significantly in the period, to 1.76x (FY23: 2.19x), providing
substantial headroom against a covenant of 2.75x. The Group
continues to prioritise cash retention and net debt leverage
reduction in the short term in line with its capital allocation
framework. As a result of this process, a target of initially
reducing net debt leverage to 1.5x has been put in place. After
which, leverage appetite will remain at between 1.0x to 2.0x for
the medium term.
The Group has continued to work
proactively with its banking partners to enhance flexibility and
security of funds within the existing agreement. Step one of that
process was the March 2024 normalisation of the Group's net debt
leverage covenant to 2.75x for the duration of the remaining
facility (previously: 2.25x). This has been followed up by the
approval of a one year extension on 11 September 2024, for the full
£80m of RCF facility, providing the Group with funding security out
to 25 October 2026.
Looking ahead, the Group intends
to initiate a full competitive refinancing process in FY25 to
provide appropriate cost effective and flexible funding to support
the Group's medium term investment driven growth
aspirations.
Condensed INTERIM consolidated statement of comprehensive
income
for the period ended 30 June 2024
(unaudited)
|
|
|
|
Period ended
30 June 2024
|
Period ended
30 June 2023
|
|
|
|
|
|
Restated*
|
|
Income statement
|
|
Note
|
£000s
|
£000s
|
|
Revenue - before adjusting
items
|
|
|
66,096
|
64,948
|
|
Revenue - adjusting
items
|
|
16
|
(2,200)
|
-
|
|
Revenue
|
|
|
63,896
|
64,948
|
|
Cost of sales - before adjusting
items
|
|
|
(39,702)
|
(41,006)
|
|
Cost of sales - adjusting
items
|
|
16
|
(1,062)
|
(66)
|
|
Cost of sales
|
|
|
(40,764)
|
(41,072)
|
|
Gross profit
|
|
|
23,132
|
23,876
|
|
Distribution costs
|
|
|
(5,489)
|
(4,860)
|
|
Administrative expenses - before
adjusting items
|
|
|
(8,334)
|
(7,283)
|
|
Administrative expenses -
adjusting items
|
|
16
|
(8,415)
|
(1,829)
|
|
Administrative expenses
|
|
|
(16,749)
|
(9,112)
|
|
Share of losses from joint
ventures
|
|
|
-
|
(25)
|
|
Other operating income
|
|
|
194
|
135
|
|
Operating profit
|
|
|
1,088
|
10,014
|
|
Finance costs
|
|
4
|
(5,009)
|
(5,029)
|
|
Finance income
|
|
|
91
|
67
|
|
(Loss)/profit before taxation
|
|
|
(3,830)
|
5,052
|
|
Income tax expense
|
|
|
(1,200)
|
(1,109)
|
|
(Loss)/profit from continuing operations
|
|
|
(5,030)
|
3,943
|
|
Loss from discontinued operations
- before adjusting items
|
|
15
|
(245)
|
(116)
|
|
Loss from discontinued operations
- adjusting items
|
|
15/16
|
(2,494)
|
-
|
|
Loss from discontinued operations
|
|
15
|
(2,739)
|
(116)
|
|
(Loss)/profit for the period
|
|
|
(7,769)
|
3,827
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
|
|
|
(Loss)/profit for the
period
|
|
|
(7,769)
|
3,827
|
|
Items that may be reclassified to profit or
loss
|
|
|
|
|
|
Exchange differences on
translation of foreign operations
|
|
|
(1,035)
|
(794)
|
|
Exchange differences on
translation of discontinued operation
|
|
|
(42)
|
(177)
|
|
Total comprehensive (expense)/income
|
|
|
(8,846)
|
2,856
|
|
|
|
|
|
|
|
(Loss)/profit for the period attributable
to:
|
|
|
|
|
|
Equity holders of the
Company
|
|
|
(7,796)
|
3,856
|
|
Non-controlling
interests
|
|
|
27
|
(29)
|
|
|
|
|
(7,769)
|
3,827
|
|
Total comprehensive (expense)/income for the period
attributable to:
|
|
|
|
|
|
Equity holders of the
Company
|
|
|
(8,858)
|
2,900
|
|
Non-controlling
interests
|
|
|
12
|
(44)
|
|
|
|
|
(8,846)
|
2,856
|
|
Total comprehensive (expense)/income for the period
attributable to Equity holders of the Company arises
from:
|
|
|
|
|
|
Continuing operations
|
|
|
(6,077)
|
3,193
|
|
Discontinued operations
|
|
15
|
(2,781)
|
(293)
|
|
|
|
|
(8,858)
|
2,900
|
* Prior period numbers have been
restated as a result of discontinued operations, see note
15
Condensed INTERIM consolidated statement of comprehensive
income
for the period ended 30 June 2024 (unaudited)
(continued)
|
|
|
|
Period ended
30 June 2024
|
Period ended
30 June 2023
|
|
|
|
Note
|
|
Restated*
|
|
(Loss)/earnings per share (pence) from continuing
operations
|
|
|
|
|
|
Basic
|
|
5
|
(2.3)
|
1.8
|
|
Diluted
|
|
5
|
(2.3)
|
1.8
|
|
(Loss)/earnings per share (pence)
|
|
|
|
|
|
Basic
|
|
5
|
(3.5)
|
1.8
|
|
Diluted
|
|
5
|
(3.5)
|
1.7
|
* Prior period numbers have been
restated as a result of discontinued operations, see note
15
Condensed INTERIM consolidated balance
sheet
as at 30 June 2024 (unaudited)
|
|
Note
|
As at
30 June
2024
|
(audited)
As at
31
December 2023
|
|
ASSETS
|
|
£000s
|
£000s
|
|
Non-current assets
|
|
|
|
|
Intangible assets
|
6
|
68,409
|
73,409
|
|
Property, plant and
equipment
|
7
|
44,231
|
46,215
|
|
Deferred tax asset
|
|
922
|
957
|
|
Investments in joint
ventures
|
|
1
|
1
|
|
Net investments in finance
leases
|
|
-
|
11
|
|
Total non-current assets
|
|
113,563
|
120,593
|
|
Current assets
|
|
|
|
|
Inventories
|
8
|
27,593
|
25,440
|
|
Trade and other
receivables
|
9
|
20,816
|
27,713
|
|
Current income tax
receivable
|
|
354
|
220
|
|
Cash and cash
equivalents
|
|
19,960
|
20,114
|
|
|
|
68,723
|
73,487
|
|
Assets classified held for
sale
|
15
|
399
|
-
|
|
Total current assets
|
|
69,122
|
73,487
|
|
|
|
|
|
|
Total assets
|
|
182,685
|
194,080
|
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
Equity
|
|
|
|
|
Share capital and share
premium
|
|
32,002
|
23,642
|
|
Share based payment
reserve
|
|
126
|
572
|
|
Retained earnings
|
|
9,879
|
18,167
|
|
Non-controlling
interests
|
|
665
|
653
|
|
Total equity
|
|
42,672
|
43,034
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other
payables
|
|
31,365
|
27,165
|
|
Borrowings
|
10
|
16,326
|
16,062
|
|
Future lease
liabilities
|
|
1,217
|
1,218
|
|
Current income tax
liabilities
|
|
2,113
|
2,074
|
|
Liabilities associated with assets
held for sale
|
15
|
826
|
-
|
|
Total current liabilities
|
|
51,847
|
46,519
|
|
Non-current liabilities
|
|
|
|
|
Future lease
liabilities
|
|
3,081
|
3,592
|
|
Deferred tax liability
|
|
10,145
|
10,304
|
|
Borrowings
|
10
|
74,169
|
89,743
|
|
Post-employment
benefits
|
|
771
|
888
|
|
Total non-current liabilities
|
|
88,166
|
104,527
|
|
Total liabilities
|
|
140,013
|
151,046
|
|
|
|
|
|
|
Total equity and liabilities
|
|
182,685
|
194,080
|
Condensed INTERIM consolidated statement of changes in
equity
as at 30 June 2024 (unaudited)
|
|
Share capital and share
premium
|
Share-based payment
reserve
|
Retained
earnings
|
Total equity attributable to
owners
|
Non-controlling
interests
|
Total
equity
|
|
|
£000s
|
£000s
|
£000s
|
£000s
|
£000s
|
£000s
|
|
Balance at 1 January 2023
|
23,861
|
202
|
12,479
|
36,542
|
707
|
37,249
|
|
Profit/(loss) for the
period
|
-
|
-
|
3,856
|
3,856
|
(29)
|
3,827
|
|
Other comprehensive
expense
|
-
|
-
|
(956)
|
(956)
|
(15)
|
(971)
|
|
Total comprehensive income/(expense) for the
period
|
-
|
-
|
2,900
|
2,900
|
(44)
|
2,856
|
|
Transfers between
reserves
|
-
|
(47)
|
10
|
(37)
|
-
|
(37)
|
|
Transaction costs
|
(219)
|
-
|
-
|
(219)
|
-
|
(219)
|
|
Share-based payment
transactions
|
-
|
86
|
-
|
86
|
-
|
86
|
|
Total transactions with owners recognised directly in
equity
|
(219)
|
39
|
10
|
(170)
|
-
|
(170)
|
|
Other transactions recognised directly in
equity
|
-
|
31
|
(64)
|
(33)
|
-
|
(33)
|
|
Balance at 30 June 2023
|
23,642
|
272
|
15,325
|
39,239
|
663
|
39,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2024
|
23,642
|
572
|
18,167
|
42,381
|
653
|
43,034
|
|
(Loss)/profit for the
period
|
-
|
-
|
(7,796)
|
(7,796)
|
27
|
(7,769)
|
|
Other comprehensive
expense
|
-
|
-
|
(1,062)
|
(1,062)
|
(15)
|
(1,077)
|
|
Total comprehensive (expense)/income for the
period
|
-
|
-
|
(8,858)
|
(8,858)
|
12
|
(8,846)
|
|
Transfers between
reserves
|
2
|
(572)
|
570
|
-
|
-
|
-
|
|
Issue of shares
|
8,748
|
-
|
-
|
8,748
|
-
|
8,748
|
|
Transaction costs
|
(390)
|
-
|
-
|
(390)
|
-
|
(390)
|
|
Share-based payment
transactions
|
-
|
129
|
-
|
129
|
-
|
129
|
|
Total transactions with owners recognised directly in
equity
|
8,360
|
(443)
|
570
|
8,487
|
-
|
8,487
|
|
Other transactions recognised directly in
equity
|
-
|
(3)
|
-
|
(3)
|
-
|
(3)
|
|
Balance at 30 June 2024
|
32,002
|
126
|
9,879
|
42,007
|
665
|
42,672
|
Condensed INTERIM consolidated cash flow
statement
for the PERIOD ended 30 June 2024
(unaudited)
|
|
|
|
|
|
Period
ended
|
Period
ended
|
|
30 June
2024
|
30 June
2023
|
|
|
Note
|
£000s
|
£000s
|
|
Cash flows from operating activities
|
|
|
|
|
Cash generated from
operations
|
13(a)
|
17,940
|
14,443
|
|
Tax paid
|
|
(1,365)
|
(1,327)
|
|
Net cash generated from operating
activities
|
|
16,575
|
13,116
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
|
(1,522)
|
(3,338)
|
|
Capitalised development
costs
|
6
|
(2,068)
|
(2,747)
|
|
Earnout payments regarding the
acquisition of LAICA
|
|
-
|
(7,499)
|
|
Consideration refunded regarding
the acquisition of Billi
|
|
-
|
1,046
|
|
Purchase of other
intangibles
|
6
|
(321)
|
(463)
|
|
Finance income
|
|
91
|
65
|
|
Net cash used in investing activities
|
|
(3,820)
|
(12,936)
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Repayments of non-current
borrowings
|
13(b)
|
(15,550)
|
(3,661)
|
|
Finance costs paid
|
|
(4,645)
|
(4,358)
|
|
Principal elements of lease
payments
|
|
(849)
|
(489)
|
|
Net proceeds from issue of new
shares
|
|
8,418
|
-
|
|
Net cash used in financing activities
|
|
(12,626)
|
(8,508)
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents
|
|
129
|
(8,328)
|
|
Cash and cash equivalents at the
beginning of the period
|
|
20,114
|
30,443
|
|
Effects of foreign exchange on
cash and cash equivalents
|
|
(281)
|
(684)
|
|
Cash and cash equivalents at the end of the
period
|
|
19,962
|
21,431
|
Cash and cash equivalents at the
end of the period include £2k (HY23: £145k) relating to
discontinued operations and included in assets held for
sale.
Notes to the condensed INTERIM cONSOLIDATED financial
statements
for the PERIOD ended 30 June 2024
(unaudited)
1. Basis
of preparation
These condensed consolidated
interim financial statements have been prepared in accordance with
IAS 34 "Interim Financial Reporting". They do not include all the
information required for a complete set of financial statements
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union. However, explanatory
notes are included to explain events and transactions that are
significant to an understanding of the changes in the Group's
financial position and its financial performance compared with the
comparative periods ended 31 December 2023 and 30 June 2023. These
interim financial statements should be read in conjunction with the
last annual consolidated financial statements as at 31 December
2023.
The Group's annual financial
statements are prepared in accordance with IFRS Accounting
Standards ("IFRS") and International Financial Reporting Standards
Interpretation Committee ("IFRS IC") interpretations as adopted by
the European Union. The interim financial statements have been
prepared in accordance with the accounting policies set out in the
Group's Annual Report and Accounts for the year ended 31 December
2023, which is available at www.strixplc.com. The comparative figures for the financial year ended 31
December 2023 have been extracted from the full Annual Report and
Accounts for that financial year. Those accounts have been
reported on by the Company's auditor. The Independent
Auditor's report was unqualified. These condensed consolidated
interim financial statements are unaudited.
At the date of approval of the
interim financial statements, there are no new standards and
interpretations which are relevant to the Group which were in issue
but not yet effective.
Non-current assets held for sale and discontinued
operations
Non-current assets (or disposal
groups) are classified as assets held for sale when their carrying
amount is to be recovered principally through a sale transaction
and a sale is considered highly probable. They are measured at the
lower of carrying amount and fair value less costs to sell, with
the exception of assets which are scoped out
of the measurement requirements of
IFRS 5 'Non-current assets held for sale and discontinued
operations', for example financial assets, which continue to be
measured in accordance with IFRS 9 'Financial
instruments'.
Where the carrying amount of a
non-current asset or disposal group held for sale exceeds its fair
value less costs to sell, a loss is recognised. This is allocated
firstly against any goodwill attributable to the disposal group,
and then to other non-current assets in the disposal group that are
in scope of IFRS 5's measurement requirements. Any excess loss
remaining is recognised against the remaining assets of the
disposal group as a whole.
A component of the Group that is
held for sale or disposed of is presented as a discontinued
operation either when it is a subsidiary acquired exclusively with
a view to resale; or it represents, or is part of a coordinated
plan to dispose of, a separate major line of business or
geographical area of operations. The net results of discontinued
operations are presented separately in the Group income statement
(and the comparatives restated).
Going concern
These interim financial statements
have been prepared on the going concern basis. The Directors have
made enquiries to assess the appropriateness of continuing to adopt
the going concern basis.
In making this assessment they have
considered:
|
·
|
The current and historic trading and
profitability performance of the Group;
|
|
·
|
Income statement and cash flow
forecasts for the period to 31 December 2025, including current and
forecast debt covenant headroom; and
|
|
·
|
The current financial position of
the Group, including (i) cash and cash equivalents balances of
£20.0m (FY23: £20.1m) and (ii) undrawn and accessible RCF
facilities of £9.0m (FY23: £nil)
|
Based on these considerations, the
Directors have concluded that there is a reasonable expectation
that the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future. The key
entities in the Group have traded profitably, excluding non-cash
adjusted items, for an extended period of time. As a result, the
Directors continue to adopt the going concern basis of accounting
in preparing the interim financial statements and consider there
are no material uncertainties about the Group's ability to continue
as a going concern.
Seasonality of operations
The Group's revenue and profit
after tax is subject to a degree of seasonality due to the
occurrence of the Chinese New Year public holiday during the first
half of the year and the seasonality of small domestic appliance
markets. In the financial year ended 31 December 2023, 45% (FY22:
42%) of the Group's revenue and 24% (FY22: 37%) of the Group's
profit after tax accumulated in the first half of the
year.
2. Critical accounting judgements and
estimates
In the application of the Group's
accounting policies, the Directors are required to make judgements
(other than those involving estimations) that have a significant
impact on the amounts recognised and to make estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
In preparing these condensed
consolidated interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty include
those disclosed in the consolidated financial statements for the
year ended 31 December 2023.
Alternative performance measures (APMs) - Adjusting
items
Management and the Board consider
the quantitative and qualitative factors in classifying items as
adjusting items and exercise judgement in determining the
adjustments to apply to IFRS measures. This assessment covers the
nature of the item, cause of occurrence, frequency, predictability
of occurrence of the item or related event, and the scale of the
impact of that item on reported performance.
For the six months to 30 June
2024, the presentation as discontinued operations and the fair
value of assets being held for sale in relation to discontinued
operations is a new key judgement area, due to the planned disposal
of Halosource (see note 15). We have assessed fair value less costs
to sell to be minimal, due to the nominal expected sales price and
therefore have impaired all related non-current assets to £nil,
excluding lease ROU assets. We consider Halosource to be a separate
major line of business, as this represents a discrete business line
for the Group, that operates outside of our normal markets in the
industrial farming space, with exclusive manufacturing facilities
located in Shanghai and a separate workforce. Halosource was the
first acquisition that the Group made and we recognise that the
underlying trading results of this business are therefore of
specific and greater interest to stakeholders, notwithstanding its
relatively low level of trading in the period.
2. Critical accounting judgements and
estimates (continued)
Alternative performance measures (APMs) - Adjusting items
(continued)
The ongoing restructuring and
rebasing activities undertaken in HY24, have also led to additional
new judgements and estimates being made with regards to the impact
of the de-prioritisation of specific product lines & groups,
predominantly within the Group's Consumer Goods division. A key
area of focus being the estimation of the fair value of underlying
assets, and their related impairment in the 30 June 2024 balance
sheet (see note 16). Creditors relating to settlement claims have
also been recognised in the 30 June 2024 balance sheet where we
consider that the business has a constructive obligation to pay
monies over to third parties at the balance sheet date, to the
extent that amounts are considered to be reasonably
certain.
3.
SEGMENTAL REPORTING
Management has determined the
operating segments based on the operating reports reviewed by the
Board of Directors that are used to assess both performance and
strategic decisions. Management has identified that the Board of
Directors is the chief operating decision maker in accordance with
the requirements of IFRS 8 'Operating segments'.
The Group's activities consist of
the design, manufacture and sale of thermostatic controls, cordless
interfaces, and other products such as water dispensers, jugs and
filters, water heating and temperature control, steam management,
water filtration and small household appliances for personal health
and wellness, primarily to Original Equipment Manufacturers
("OEMs"), commercial and residential customers based in China,
Italy, Australia, New Zealand and the United Kingdom.
The Board of Directors has
identified 3 reportable segments from a product perspective,
namely: Kettle Controls, Billi (previously classified as Premium
Filtration Systems), and Consumer Goods (made up of water products
and appliances).
The Board of Directors primarily
uses a measure of gross profit to assess the performance of the
operating segments, broken down into revenue and cost of sales for
each respective segment which is reported to them on a monthly
basis. Information about segment revenue, cost of sales and gross
profit is disclosed below.
|
|
Reported
Results
|
|
|
Period ended 30 June
2024
|
|
|
(£000s)
|
|
|
Kettle
Controls
|
Billi
|
Consumer
Goods
|
Total
|
|
Revenue
|
28,322
|
21,364
|
14,210
|
63,896
|
|
Cost of sales
|
(19,078)
|
(10,823)
|
(10,863)
|
(40,764)
|
|
Gross profit
|
9,244
|
10,541
|
3,347
|
23,132
|
|
|
Period
ended 30 June 2023
|
|
|
(£000s)
|
|
|
Kettle
Controls
|
Billi
|
Consumer
Goods
|
Total
|
|
Revenue
|
28,819
|
21,468
|
14,661
|
64,948
|
|
Cost of sales
|
(18,127)
|
(11,515)
|
(11,430)
|
(41,072)
|
|
Gross profit
|
10,692
|
9,953
|
3,231
|
23,876
|
3.
SEGMENTAL REPORTING (continued)
|
|
Adjusted
Results
|
|
|
Period ended 30 June
2024
|
|
|
(£000s)
|
|
|
Kettle
Controls
|
Billi
|
Consumer
Goods
|
Total
|
|
Revenue
|
30,522
|
21,364
|
14,210
|
66,096
|
|
Cost of sales
|
(18,855)
|
(10,823)
|
(10,024)
|
(39,702)
|
|
Gross profit
|
11,667
|
10,541
|
4,186
|
26,394
|
|
|
Period
ended 30 June 2023
|
|
|
(£000s)
|
|
|
Kettle
Controls
|
Billi
|
Consumer
Goods
|
Total
|
|
Revenue
|
28,819
|
21,468
|
14,661
|
64,948
|
|
Cost of sales
|
(18,084)
|
(11,518)
|
(11,404)
|
(41,006)
|
|
Gross profit
|
10,735
|
9,950
|
3,257
|
23,942
|
Results from discontinued
operations are not included in these numbers and were previously
reported under Billi.
Below is the geographical analysis
of adjusted revenue from external customers.
|
|
Period ended
30 June 2024
|
Period
ended
30 June 2023
|
|
Australia
|
14,199
|
14,490
|
|
China
|
28,455
|
27,119
|
|
Italy
|
6,177
|
6,777
|
|
UK
|
8,141
|
7,477
|
|
Others
|
9,124
|
9,085
|
|
Total
|
66,096
|
64,948
|
Assets and liabilities
No analysis of the assets and
liabilities of each operating segment is provided to the Board of
Directors as part of monthly management reporting. Therefore, no
analysis of segmented assets or liabilities is disclosed in this
note.
3.
SEGMENTAL REPORTING (continued)
Non-current assets (i) attributed to country of domicile and
(ii) attributable to all other foreign countries
In accordance with IFRS 8, the
following table discloses the non-current assets located in both
the Company's country of domicile (the Isle of Man) and foreign
countries, primarily China, Italy Australia, New Zealand, and the
United Kingdom where the Group's main principle operating
subsidiaries are domiciled.
|
|
30 June
2024
|
31
December 2023
|
|
|
£000s
|
£000s
|
|
Country of domicile
|
|
|
|
Intangible assets
|
11,391
|
13,084
|
|
Property, plant and
equipment
|
2,350
|
2,599
|
|
Total country of domicile
|
13,741
|
15,683
|
|
Foreign countries
|
|
|
|
Intangible assets
|
57,018
|
60,325
|
|
Property, plant and
equipment
|
41,881
|
43,616
|
|
Total foreign countries
|
98,899
|
103,941
|
|
|
|
|
|
Total
|
112,640
|
119,624
|
Major customers
In the first half of 2024, no
customer individually accounted for at least 10% of total revenues
(HY23: one customer). The revenues relating to this customer in 6
months ended 30 June 2023 were £6.9m.
4. finance
costs
|
|
Period ended
30 June 2024
|
Period
ended
30 June 2023
|
|
|
£000s
|
£000s
|
|
Letter of credit
charges
|
80
|
89
|
|
Lease liability
interest
|
90
|
75
|
|
Borrowing costs
|
4,839
|
4,865
|
|
Total finance costs
|
5,009
|
5,029
|
Further information about the
Group's borrowings is provided in note 10.
Results from discontinued
operations are not included in these numbers.