Final Results
April 20 2004 - 2:00AM
UK Regulatory
RNS Number:7737X
Straight PLC
20 April 2004
Straight plc
Preliminary Announcement for the year ended 31 December 2003 (un-audited)
Highlights
* Successful AIM flotation
* Turnover at #10.2 million - up 96%
* Pre tax profits at #451,000 - up 48%
* Earnings per share at 23.6p
* Adjusted earnings per share up from 3.5p to 4.9p
* New contract wins
* Order book buoyant
* New Finance Director appointed
Commenting on the results, James Newman, Chairman, said
"The 2003 performance and higher profile as a result of the flotation will
provide an excellent base from which to make further progress in 2004. The
Company has cash in the bank, continues to be cash generative on its trading
operations and has taken a number of steps towards its business and commercial
aims since flotation.
My board colleagues and I look forward to 2004 with confidence."
Jonathan Straight, Chief Executive, added
"The entire team is currently dedicated to implementing all of the new
innovations and changes that will serve to keep the business at the forefront of
the recycling container market whilst making operations more efficient and
facilitating further expansion."
Contacts
Company: James Newman/Jonathan Straight - 0113 245 2244
Simon Mountford Communications: Simon Mountford - 01347 844844
Durlacher Limited: Matthew Robinson/Katherine Roe - 0207 459 3600
The preliminary announcement was approved by the Board on 19 April 2004.
Chairman's Statement
I am delighted to report a year of significant change and progress for the
Company in this, my first statement as Chairman.
AIM flotation
The Company successfully floated on the Alternative Investment Market (AIM) in
early November. Thanks must go to all my colleagues on the Board and the
Company's advisors for achieving this milestone on time and without too much
disruption to day to day business operations. The flotation was a result of the
tremendous efforts made by our Chief Executive, Jonathan Straight, who started
the business in 1993.
The primary reason for listing on AIM was to give the Company a stronger
financial base from which to significantly expand its activities. These
included the development of new products, more efficient systems and a general
increase in marketing activity as well as looking for suitable acquisitions.
Although the Company's admission to AIM came only a few weeks before the
financial year end, much progress has been made in a number of these areas. No
acquisitions have yet been made but some potential targets have been identified.
Results for the year
Although there were inevitably some distractions caused by the flotation
process, turnover almost doubled to #10.2 million against #5.2 million in 2002.
Margins, however, were reduced in 2003 as a result of the sales mix as larger
trade contracts were won. There was a greater expenditure on direct marketing
activity in conjunction with some of our largest customers.
Despite this reduction in margin, profit before tax at #451,000 was up 48% on
2002, an excellent performance. In line with the statement made in the
Prospectus at the time of the float, the Board is not recommending a dividend.
Board
I and my two non-executive colleagues, Roger Green and Colin Glass, officially
joined the Board a month before the flotation. Jonathan Straight and Tom
Musgrove, the Operations Director of the Company have been directors for some
time.
I am delighted to confirm that James Mellor, our Financial Controller, who
joined the Company just before the flotation, has been appointed to the Board as
Finance Director and Company Secretary with effect from today. James is a
Chartered Accountant and has considerable industry experience.
Outlook
The 2003 performance and higher profile as a result of the flotation will
provide an excellent base from which to make further progress in 2004. The
Company has cash in the bank, continues to be cash generative on its trading
operations, and has taken a number of steps towards its business and commercial
aims since flotation.
My board colleagues and I look forward to 2004 with confidence.
James H Newman
Chairman
20 April 2004
Chief Executive's Review
Chief Executive's Report
The primary goal for 2003 was to bring the Company to the Alternative Investment
Market (AIM) which was successfully achieved at the beginning of November.
Notwithstanding the flotation, rapid growth for the previous two years and the
prospect of further accelerated growth, 2003 provided us with numerous other
challenges and considerable opportunities which needed to be met. I am pleased
to report that considerable progress has been made by the Company across a
number of its activities during the year.
Financial performance
Operating profitability
In spite of the inevitable consumption of management time by the flotation,
turnover was almost doubled in the year, increasing to #10.2 million in 2003
from #5.2 million in 2002.
This turnover increase was achieved with only a modest fall in operating margin
from 5.5% in 2002 to 4.3% in 2003. The factors behind the fall were a change in
the sales mix towards high volume but lower margin business as the Company
increased its share of its growing market, and also a relatively weak Euro at
the end of 2003. The Company increased its expenditure on marketing in
partnership with local authorities and utility companies, and also general
marketing activity during the year.
Earnings per share
Basic earnings per share were 23.6p and adjusted earnings per share, calculated
as if all shares in issue at 31 December 2003 had been in issue throughout 2002
and 2003, rose 40% from 3.5p in 2002 to 4.9p in 2003.
Cash flow
Net working capital increased from #63,000 in July 2003, as reported in the pro
forma balance sheet included in our Prospectus at flotation, to #235,000 at 31
December 2003. Management believes that there is scope to reduce working
capital during 2004.
The business remains and will remain strongly cash generative as the new finance
team in place since the flotation continues to strive to maximise cash flow.
Business activities
As soon as we were admitted to AIM, we began a programme of implementing a
number of the innovations and exploring the opportunities mentioned in the
Prospectus.
New tools have been commissioned for products in several of our markets. These
include a new 44 litre kerbside box, which integrates with our market-leading 55
litre product, thus allowing increased volume to be collected in a manner to
suit many of our local authority clients. Also two new home composting bins have
gained us numerous new accounts and an outdoor recycling bin has made an
impressive debut in London.
Having our shares listed on AIM has brought a number of additional benefits and
these became apparent immediately after flotation. Our success in coming to the
market generated tremendous publicity with a national profile. This has helped
to increase our brand awareness.
A new PR agency is now successfully handling our trade press relations and
bright new advertisements are appearing on the back pages of the main industry
titles to further increase our profile amongst our core trade customer base.
On the retail side, our new catalogue has just been published. This doubles the
number of products offered in previous years and is published in our own even
greener version as well as a number of versions cross branded with water company
liveries.
Various investments in IT hardware and software are ongoing and are making our
service more efficient. Once complete, we will then be able to scale up some
areas of our activity without significant increases in staffing levels.
Contract awards
The investment in increased market presence is paying off. Our #1.1 million
contract in Northampton, announced on 9 March 2004, to supply kerbside boxes and
wheeled bins, is now complete. I am pleased to announce another contract win
with a #1.8 million award from the London Borough of Bexley for boxes and
wheeled bins, as well as for integrated tracking hardware and software.
Other contract wins include those from WRAP - the government funded recycling
co-ordinator - which has ordered compost bins worth more than #900,000 for
distribution across several local authority areas. In addition Northumbrian
Water Limited appointed us as their affinity-marketing partner in the Essex &
Suffolk Region for the first time, adding this to our traditional work with them
in the north east.
Currently our order book is the highest it has ever been and will provide a good
base for further turnover growth in 2004.
Jonathan M Straight
Chief Executive
20 April 2004
Summarised Profit and Loss Account
For the year ended 31 December 2003 (un-audited)
2003 2002
Note #'000 #'000
Turnover 2 10,180 5,194
Cost of sales 3 (8,947) (4,137)
_____ _____
Gross profit 1,233 1,057
Operating expenses 3 (798) (770)
_____ _____
Operating profit 435 287
Interest receivable 4 16 17
_____ _____
Profit on ordinary activities before taxation 2 451 304
Taxation 5 (113) (61)
_____ _____
Profit for the financial year 338 243
Dividends 6 - (32)
_____ _____
Profit retained and transferred to reserves 338 211
_____ _____
Basic earnings per share (p) 7 23.6 2,430.0
Diluted earnings per share (p) 7 23.5 2,430.0
All operations are continuing.
There were no recognised gains or losses other than the profit for the financial
year.
Summarised Balance Sheet
At 31 December 2003 (un-audited)
2003 2002
#'000 #'000
Fixed assets
Tangible fixed assets 290 60
Investments - -
_____ _____
290 60
Current assets
Stocks 199 195
Debtors 3,303 1,468
Cash at bank and in hand 1,758 632
_____ _____
5,260 2,295
Creditors: amounts falling due within one year (3,267) (1,619)
_____ _____
Net current assets 1,993 676
Total assets less current liabilities 2,283 736
Provisions for liabilities and charges (14) -
_____ _____
Net assets 2,269 736
_____ _____
Capital and reserves
Called up share capital 69 -
Share premium account 1,175 -
Profit and loss account 1,025 736
_____ _____
Equity shareholders' funds 2,269 736
_____ _____
Summarised Cash Flow Statement
For the year ended 31 December 2003 (un-audited)
2003 2002
Note #'000 #'000
Net cash inflow/(outflow) from operating activities 8 203 (47)
Returns on investments and servicing of finance
Interest received 16 17
_____ _____
Net cash inflow from returns on investments and servicing of 16 17
finance
Taxation (61) (62)
Capital expenditure
Purchase of tangible fixed assets (267) (43)
_____ _____
Net cash outflow from capital expenditure (267) (43)
Equity dividends - (31)
Net cash outflow before financing (109) (166)
Financing
Issue of share capital 1,524 -
Costs of share issue (289)
Repayment of directors loan capital - (7)
_____ _____
Net cash inflow from financing 1,235 (7)
_____ _____
Increase/(decrease) in cash 9 1,126 (173)
_____ _____
Notes to the Preliminary Announcement
For the year ended 31 December 2003 (un-audited)
1. Basis of preparation
The preliminary announcement has been prepared under the historic cost
convention in accordance with applicable accounting standards. The principal
accounting policies of the Company have remained unchanged from those set out in
the Company's 2002 Financial Statements.
2. Turnover and profit on ordinary activities before taxation
The turnover and profit on ordinary activities before taxation are attributable
to the principal activities. All turnover arises in the UK.
The breakdown of turnover between that which is attributable to the container
solutions business and environmentally friendly home and garden products
businesses has not been disclosed as it would be seriously prejudicial to the
Company's interests.
The profit on ordinary activities before taxation is stated after the costs
stated below (except for those costs relating to the share issue).
2003 2002
#'000 #'000
Depreciation of owned assets 37 35
Operating lease rentals 62 47
Auditors' remuneration (Grant Thornton) - audit services 13 -
Auditors' remuneration - (Winburn Glass Norfolk) - audit - 5
services
Auditors' remuneration (Grant Thornton) - other services 41 -
Auditors' remuneration - (Winburn Glass Norfolk) - other 35 25
services
During the year #41,000 was paid to Grant Thornton in respect of due diligence
work performed prior to the Company's flotation. #35,000 was paid to Winburn
Glass Norfolk for advisory services in respect of the share issue. These costs
have been offset against the share premium account.
3. Cost of sales and other operating expenses
2003 2002
#'000 #'000
Cost of sales 8,947 4,137
Operating expenses
Distribution costs 360 410
Administration expenses 438 360
_____ _____
798 770
_____ _____
4. Interest receivable
2003 2002
#'000 #'000
On bank deposits 16 17
5. Taxation
2003 2002
#'000 #'000
Corporation tax at an average rate of 23% (2002: 20%) 99 61
Deferred tax 14 -
_____ _____
113 61
_____ _____
Analysis of current tax charge
Profit on ordinary activites before tax 451 304
Profit on ordinary activities multiplied by standard
rate of corporation tax in the UK (30%) 135 91
Expenses not deductable for tax purposes 17 -
Capital allowances (in excess of)/less than depreciation (24) 2
Marginal relief (29) (32)
_____ _____
99 61
_____ _____
6. Dividends
2003 2002
#'000 #'000
Equity dividends
Final dividend - 32
In line with the statement made in the Prospectus at the time of the flotation
of the Company, the directors are not recommending a dividend.
7. Earnings per share
Basic and diluted earnings per share
Basic earnings per share is calculated on the basis of profit for the year after
tax divided by the weighted average number of shares in issue for the year.
Diluted earnings per share is calculated on the basis of profit for the year
after tax divided by the weighted average number of shares in issue for 2003
plus the weighted average number of shares which would be issued if all the
options granted were exercised.
All options were dilutive at 31 December 2003.
Earnings Weighted Per Earnings Weighted Per
average no. share average no. share
#'000 of shares pence #'000 of shares pence
Basic earnings attributable to
ordinary shareholders 338 1,431,733 23.6 243 10,000 2,430.0
Dilutive effect of securities
Options 3,758
____ _________ ____ _______
Diluted earnings per share 338 1,435,491 23.5 243 10,000 2,430.0
____ _________ ____ _______
Adjusted earnings per share
Adjusted earnings per share is calculated as if all shares issued at 31 December
2003 had been in issue throughout 2002 and 2003.
2003 2002
Earnings No. of Per Earnings No. of Per
shares in share shares in share
#'000 issue pence #'000 issue pence
Basic earnings attributable to
ordinary shareholders 338 6,903,750 4.9 243 6,903,750 3.5
8. Reconciliation of operating profit to net cash flow from operating
activities
2003 2002
#'000 #'000
Operating profit 435 287
Depreciation 37 35
(Increase)/decrease in stocks (4) (69)
(Increase)/decrease in debtors (1,835) (978)
Increase/(decrease) in creditors 1,570 678
______ ______
203 (47)
______ ______
9. Reconciliation of net cash flow to movement in net funds
2003 2002
#'000 #'000
Increase/(decrease) in cash in the year 1,126 (173)
Net funds at 1 January 2003 632 805
______ ______
1,758 632
______ ______
10. Publication of non statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985.
The summarised balanced sheet at 31 December 2003 and the summarised profit and
loss account, summarised cash flow statement and associated notes for the year
then ended have been extracted from the Company's financial statements. Those
financial statements have not yet been delivered to the Registrar, nor have the
auditors reported on them.
11. Annual General Meeting
The Annual General Meeting of the Company will be held in Leeds on Friday 18
June 2004. Full details will be included in the published Annual Report and
Financial Statements which will be sent to shareholders in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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