TIDMSTT
RNS Number : 2654N
Straight PLC
27 September 2012
Date: 27 September 2012
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 2012
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 2012.
Financial highlights:
-- Group sales increased by 11.4% to GBP16.70m (H1 2011: GBP14.99m)
-- Group underlying profit* increased to GBP0.28m (H1 2011: GBP0.19m)
-- Loss before tax GBP0.24m (H1 2011: loss of GBP0.11m)
-- Basic loss per share of 2.1p (H1 2011: loss of 0.9p)
-- Underlying earnings per share 1.8p (H1 2011: 1.1p)
-- Net debt reduced from GBP4.1m (December 2011) to GBP3.2m (June 2012)
Operational Highlights:
-- Market leading position maintained
-- Expansion of manufacturing site completed
-- 33% reduction in factory labour costs to impact second half
-- Positions on three framework agreements with YPO
-- Contacts with Severn Trent Water, May Gurney and Dorset Waste Partnership
Commenting on the results, James Newman, Chairman of Straight
said:
"With significant operating costs removed from the manufacturing
operation, the Group is now in an excellent position to drive
improved profitability and generate cash."
Chief Executive, Jonathan Straight added:
"We have once again maintained our position as market leader,
having successfully grown our sales both in the UK and
overseas.
"With the market for waste and recycling containers remaining
buoyant we are well placed to continue to capitalise on growth both
in the UK and overseas. We are confident about the future potential
of the business."
*Underlying operating profit excluding 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 566 6720
straight@redleafpolhill.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
The Group has made substantial progress increasing its sales by
11.4% and significantly increasing underlying operating profit.*
These sales were underpinned by growth in the garden and hardware
sector, made possible by the Group's first full season of blow
moulding manufacturing in its own plant.
Group efforts have been focused on reducing net debt and
manufacturing operating costs now that the investment in the
expansion of its manufacturing infrastructure is complete.
Net debt was reduced from GBP4.1m to GBP3.2m by closely
controlling output and by managing inventories, which fell by
GBP1.0m. The reduction in net debt was achieved despite
reorganisation costs of GBP405,000, much of which was redundancy
costs in the manufacturing facility.
* Underlying operating profit excluding share option costs and
goodwill amortisation
Results
Group sales increased in the first half of 2012 by 11.4% to
GBP16.70m (H1 2011: GBP14.99m).
Group underlying operating profit increased to GBP0.28m (H1
2011: GBP0.19m).
Trade Commercial Business
Operating profits in the Group's Trade Business doubled to
GBP1.02m (H1 2011: GBP0.49m). This increase in profits was buoyed
by a 7.0% increase in sales to GBP14.35m (H1 2011: GBP13.41m) and
by higher margins of 15.7% (H1 2011: 12.5%). The increase in margin
was attributable to the relative stability in raw material costs
associated with the Group's policy to use recycled raw material and
the recently added manufacturing capacity which enabled the demand
for higher margin blow moulded products to be met. Neither would
have been possible prior to the Group's vertical integration.
Retail Business
Retail sales also benefitted from the expansion into blow
moulding manufacture. This, along with reduced operating costs,
contributed to a much improved performance with operating profits
increasing by 19.2% to GBP0.24m (H1 2011: GBP0.20m).
Manufacturing
New working practices have now been introduced. These, combined
with a considerable reduction in factory costs, are expected to
significantly improve performance in the second half and beyond.
Whilst it had been hoped performance would improve early in the
second quarter, protracted negotiations with the trade union
delayed implementation until the end of June. As a consequence,
Manufacturing incurred an operating loss of GBP0.25m (H1:2011
profit of GBP0.12m), however, plant profitability since the end of
the period has been transformed.
Central costs
Central costs were GBP0.73m (H1 2011: GBP0.63m).
Overall result
Group underlying operating profit increased to GBP0.28m (H1
2011: GBP0.19m). Whilst revenue and headline performance both
improved in the period, the Group recorded a loss before tax of
GBP0.24m (H1: 2011 loss of GBP0.11m) after accounting for
exceptional costs of GBP0.40m (H1 2011: GBP0.18m) and finance costs
of GBP0.07m (H1 2011: GBP0.06m).
Earnings per share
Underlying earnings for the period were 1.8p (H1 2011: 1.1p)
with a basic loss per share of 2.1p (H1 2011: loss of 0.9p).
Dividend
The Board remains committed to a policy of paying dividends.
However, for the remainder of 2012, the reduction of net debt and
overheads remains its priority. This will be reviewed in 2013 in
light of the expected improvement in performance.
Outlook
With significant operating costs removed from the manufacturing
operation, the Group is now in an excellent position to drive
improved profitability and generate cash.
James H Newman
Chairman
27 September 2012
OPERATING REVIEW
We have once again maintained our position as market leader,
having successfully grown our sales both in the UK and
overseas.
The modernisation of our manufacturing facility has taken longer
than initially expected. However, with new working practices in
place from late June, the facility is well placed to be profitable
in the second half of the year.
Trade Business
Municipal markets
The legislative drivers underpinning our work in the UK
municipal markets remain in place with additional Government
funding anticipated. Demand for higher quality secondary materials
is driving an increase in the source separation of waste.
We achieved positions on three separate framework agreements let
by the YPO (former Yorkshire Purchasing Organisation) covering
plastic wheeled containers, recycling containers and compostable
liners. Significant contract wins with May Gurney and the Dorset
Waste Partnership also helped to maintain our sales line.
In spite of continued competitive pressure the Group has
succeeded again in sustaining its market lead with municipal sales
increasing to GBP9.20m (H1 2011: GBP9.11m).
Non municipal markets
The Board's decision to invest in proprietary blow moulding
manufacture ensured that the Group was well placed to grow its
sales in the garden and hardware sector.
Corporate sales, boosted by high sales of blow moulded products
and also by increased overseas sales, grew to GBP5.15m (H1 2011:
GBP4.30m). Overseas markets accounted for 8.9% of Trade sales,
growing to GBP1.20m (H1 2011: GBP0.89m) in the period.
Retail Business
Retail sales increased 48.2% to GBP2.35m (H1 2011: GBP1.59m). As
with the Trade Business, these sales were boosted by blow moulded
products manufactured in the Group's new facility.
A contract with Severn Trent Water has now commenced and is
expected to result in the delivery of products to 200,000 homes and
generate revenues of more than GBP1m over three years.
Manufacturing operations
With the expansion of the site completed, management has been
focusing on making production more efficient by reducing labour
costs, modernising working practices and outsourcing manufacturing
for non-core products.
The commencement of new shift patterns at the end of June was a
significant milestone in this process, reducing factory labour by
one third. Work will continue in the second half with further
reductions in overheads planned.
Further to the success in switching the plant to the use of
recycled plastic, reducing both cost and price volatility, a new
two year contract for 100% renewable electricity has been
negotiated which fixes energy costs at current levels.
Of the GBP2.9m consideration for the manufacturing facility
agreed at acquisition, only the first instalment has been paid. Any
further payments will be subject to the settlement of substantial
warranty claims to be brought against the vendors.
Management and staff
The progress we have made this year has required further
exceptional efforts from my Board colleagues, management and all
staff. I would like to thank them for their complete commitment to
the business.
Outlook
With the market for waste and recycling containers remaining
buoyant we are well placed to continue to capitalise on growth both
in the UK and overseas. We are confident about the future potential
of the business.
Jonathan M Straight
Chief Executive
27 September 2012
Consolidated Income Statement
For the 6 months ended 30 June 2012
Half year to Half year to Year ended
30 Jun 2012 30 Jun 2011 31 Dec 2011
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Revenue 2 16,700 14,992 27,974
Cost of sales (12,807) (11,228) (21,023)
______ ______ _____
Gross profit 2 3,893 3,764 6,951
Operating costs (3,610) (3,579) (6,785)
______ ______ _____
Underlying operating profit
excluding share option
costs and goodwill amortisation 283 185 166
Share option costs (8) (8) (16)
Amortisation (42) (44) (86)
Corporate development costs - - (38)
Reorganisation costs 4 (405) (183) (677)
Finance costs (72) (61) (139)
_____ _____ _____
Loss before taxation (244) (111) (790)
Income tax credit - - 547
_____ _____ _____
Loss for the period attributable
to equity holders of the
parent (244) (111) (243)
_____ _____ _____
Earnings per share for profit attributable to the
equity holders of the Company during the period
Basic 5 (2.1)p (1.0)p (2.1)p
Adjusted 5 1.8p 1.1p 6.7p
Diluted Basic 5 (2.1)p (0.9)p (2.1)p
Consolidated Statement of Changes in Equity
For the 6 months ended 30 June 2012
Half year Half year Year ended
to to
30 Jun 30 Jun 31 Dec
2012 2011 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Balance at start of period 9,766 10,292 10,292
Loss and total comprehensive
outgoings for the year (244) (111) (243)
Share based payments 8 8 16
Dividends paid - (300) (299)
______ ______ ______
9,530 9,889 9,766
______ ______ ______
Statement of Financial Position
At 30 June 2012
30 Jun 30 Jun 31 Dec
2012 2011 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Assets
Non current assets
Property, plant and equipment 7,428 8,333 7,699
Intangible assets 6,798 6,786 6,838
_____ _____ _____
14,226 15,119 14,537
Current assets
Inventories 1,927 3,589 2,999
Trade and other receivables 5,184 4,591 4,143
Cash and cash equivalents 768 - -
_____ _____ _____
7,879 8,180 7,142
_____ _____ _____
Total assets 22,105 23,299 21,679
_____ _____ _____
Liabilities
Current liabilities
Overdraft facility - (515) (1,083)
Trade and other payables (9,169) (6,870) (6,589)
Financial liabilities (1,384) (1,289) (2,125)
Income tax payable - (678) -
Provisions (554) (515) (554)
_____ _____ _____
(11,107) (9,867) (10,351)
_____ _____ _____
Non current liabilities
Trade and other payables - (775) -
Financial liabilities (777) (1,858) (871)
Deferred taxation (691) (493) (691)
Provisions - (417) -
_____ _____ _____
(1,468) (3,543) (1,562)
_____ _____ _____
Total liabilities (12,575) (13,410) (11,913)
_____ _____ _____
_____ _____ _____
Net assets 9,530 9,889 9,766
_____ _____ _____
Capital and reserves
Share capital 119 119 119
Reserves 7,429 7,412 7,421
Profit and loss account 1,982 2,358 2,226
_____ _____ _____
Total equity 9,530 9,889 9,766
_____ _____ _____
Consolidated Cash Flow Statement
For the 6 months ended 30 June 2012
Half year Half year Year ended
to to
30 Jun 30 Jun 31 Dec 2011
2012 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit after tax (244) (111) (243)
Adjustments for
Depreciation 579 479 931
Profit on sale of property, plant and equipment (3) - (5)
Intangibles amortisation 42 44 132
Net finance costs 72 61 139
Taxation expense recognised in income statement - - (547)
Share option costs recognised in income statement 8 8 16
Decrease/(increase) in inventories 1,072 (959) (369)
(Increase)/decrease in trade and other receivables (1,206) 588 1,206
Increase/(decrease) in trade and other payables 2,581 580 (563)
____ ____ ____
Cash generated from operations 2,901 690 697
Income tax received 165 - -
____ ____ ____
Net cash generated from operating activities 3,066 690 697
Cash flows from investing activities
Purchase of business combinations net of cash - - (12)
Purchases of intangibles - (2) (108)
Purchases of property, plant and equipment (322) (1,167) (1,477)
Proceeds from sale of property, plant and equipment 13 - 59
____ ____ ____
Net cash used in investing activities (309) (1,169) (1,538)
Cash flows from financing activities
Interest paid (72) (61) (117)
Dividends paid - (299) (299)
Proceeds from borrowings - 100 535
Repayment of borrowings (834) (585) (1,170)
____ ____ ____
Net cash used in financing activities (906) (845) (1,051)
____ ____ ____
Net increase/(decrease) in cash and cash equivalents 1,851 (1,324) (1,892)
Cash and cash equivalents at beginning of period (1,083) 809 809
____ ____ ____
Cash and cash equivalents at end of period 768 (515) (1,083)
____ ____ ____
Notes to the Interim Results Announcement
For the 6 months ended 30 June 2012
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 2012.
These consolidated interim financial statements have been
approved for issue by the Board of Directors on 27 September
2012.
The financial information set out in this interim report does
not constitute statutory accounts as defined by the Companies Act
2006. The Group's statutory financial statements for the year ended
31 December 2011 have been filed with the Registrar of Companies.
The auditor's report on those financial statements was unqualified
and did not contain a statement under Section 498 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 2011. 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
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 (1,233) (1,330) - (2,563) (316) (731)
(3,610)
______ ______ ______ ______ ______ ______ ______
Underlying
Operating profit 1,019 (247) - 772 242 (731) 283
______ ______ ______ ______ ______ ______ ______
Share option costs - - - - - (8) (8)
Amortisation of
goodwill and trade marks - - - - - (42) (42)
Corporate dev't costs - - - - - - -
Reorganisation costs (153) (252) - (405) - - (405)
Finance costs - - - - - (72) (72)
______ ______ ______ ______ ______ ______ ______
Profit/(loss)
before taxtion 866 (499) - 367 242 (853) (244)
______ ______ ______ ______ ______ ______ _____
Trade Trade Trade Total Central
Comm'l Mnf'g Adj Trade Retail o'head Total
HY2011 HY2011 HY2011 HY2011 HY2011 HY2011 HY2011
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External sales 13,406 - - 13,406 1,586 - 14,992
Inter-segment sales 7,956 (7,956) - - - -
______ ______ ______ ______ ______ ______ ______
13,406 7,956 (7,956) 13,406 1,586 - 14,992
______ ______ ______ ______ ______ ______ ______
Gross profit 1,681 1,488 - 3,169 595 - 3,764
Operating costs (1,195) (1,367) - (2,562) (392) (625)
(3,579)
______ ______ ______ ______ ______ ______ ______
Underlying
Operating profit 486 121 - 607 203 (625) 185
______ ______ ______ ______ ______ ______ ______
Share option costs - - - - - (8) (8)
Amortisation of
goodwill and trade marks - - - - - (44) (44)
Corporate dev't costs - - - - - - -
Reorganisation costs (183) - - (183) - - (183)
Finance costs - - - - - (61) (61)
______ ______ ______ ______ ______ ______ ______
Profit/(loss)
before taxation 303 121 - 424 203 (738) (111)
______ ______ ______ ______ ______ ______ ______
Trade Trade Trade Total Central
Comm'l Mnf'g Adj Trade Retail o'head Total
FY2011 FY2011 FY2011 FY2011 FY2011 FY2011 FY2011
Audited Audited Audited Audited Audited Audited Audited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External sales 25,302 - - 25,302 2,672 - 27,974
Inter-segment sales 15,503 (15,503) - - - -
______ ______ ______ ______ ______ ______ ______
25,302 15,503 (15,503) 25,302 2,672 - 27,974
______ ______ ______ ______ ______ ______ ______
Gross profit 3,473 2,734 - 6,207 744 - 6,951
Operating costs (2,317) (2,605) - (4,922) (586) (1,277)
(6,785)
______ ______ ______ ______ ______ ______ ______
Underlying
Operating profit 1,156 129 - 1,285 158 (1,277) 166
______ ______ ______ ______ ______ ______ ______
Share option costs - - - - - (16) (16)
Amortisation of
goodwill and trade marks - - - - - (86) (86)
Corporate dev't costs - - - - - (38) (38)
Reorganisation costs (393) (185) - (578) - (99) (677)
Finance costs (79) (60) - (139) - - (139)
______ ______ ______ ______ ______ ______ ______
Profit/(loss)
before taxation 684 (116) - 568 158 (1,516) (790)
______ ______ ______ ______ ______ _______ ______
3. Dividends
Half year Half year Year ended
to to
30 Jun 2012 30 Jun 2011 31 Dec
2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Amounts recognised as equity
distributions in the period - 305 305
Refund on 2010 dividend paid
to shares held in trust - (6) (6)
_____ _____ ____
- 299 299
_____ _____ _____
Date dividend paid - 03.03.11 03.03.11
Amount paid per share - 2.65p 2.65p
4. Reorganisation costs
The reorganisation costs of GBP405,000 relate mostly to the
costs of making staff redundant and the reorganising of the Group's
banking facilities.
5. Earnings per share
Half year Half year Year ended
to to
30 Jun 30 Jun 31 Dec
2012 2011 2011
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 (244) (111) (243)
Amortisation 42 44 86
Deferred tax charge - - 198
Exceptional items 405 183 678
Corporate development
costs - - 38
Share scheme charges 8 8 16
____ ____ ____
Earnings for the purposes
of adjusted earnings
per share being the
adjusted profit for
the period attributable
to the equity 211 124 773
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 - 260,071 -
options
_________ _________ _________
11,499,294 11,759,365 11,499,294
_________ _________ _________
Earnings per ordinary
share
Basic (2.1)p (1.0)p (2.1)p
Adjusted 1.8p 1.1p 6.7p
Diluted (2.1)p (0.9)p (2.1)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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