26th Feb 2007 07:02
Stadium Group PLC26 February 2007 STADIUM GROUP PLC PRELIMINARY RESULTS YEAR ENDED 31 DECEMBER 2006 Stadium Group plc reports improved results in second half Stadium Group plc, the AIM listed provider of Electronic Manufacturing Servicesannounces its preliminary results for the year ended 31 December 2006. Highlights - Turnover up 6% to £38.55m (2005 : £36.52m) - Profits before tax £2.35m (2005 : £2.64m) - Earnings per share 7.0p (2005 : 7.6p) - Underlying profits unchanged at constant currency rates - Adjusted PBT*, adjusted earnings* and operating cash flow improved in second half over first - Stadium Power acquisition of KRP contributing ahead of plan - Total dividend up 3% to 3.6 pence (2005 : 3.5 pence) Chairman Nick Brayshaw comments: "Following four years of profit growth, the company has demonstrated someresilience in recovering from the challenging market conditions prevalent in thefirst half of 2006. During the second half of the year a turning point wasreached, with sales, margins and operating cash flow all showing improvement. Welook forward with confidence to further organic growth, and will continue toseek to augment this with suitable acquisitions when appropriate opportunitiesarise." * stated before exceptional gains and goodwill amortisation (see table onfollowing page) For further information please contact: Nigel Rogers, Chief Executive, Stadium Group plc 020 7851 7480 (today) 01429 852 500 (thereafter) Paul McManus, Parkgreen Communications 020 7851 7480 (today) 07980 541 893(mobile) STADIUM GROUP PLC SUMMARISED PRELIMINARY RESULTS For the year ended 31 December 2006 Stadium Group produces electronic products and assemblies for original equipmentmanufacturers from its manufacturing facilities in China and the UK. Stadiumserves customers across the UK, Asia, Europe, Americas and Australia. Stadium'sproducts are focused on the Consumer, Industrial and Automotive sectors. 2006 H1 2006 H2 2006 2005 Summarised results Unaudited Unaudited Unaudited Unaudited £m £m £m £m Group turnoverAsia 10.7 10.6 21.3 20.2UK 8.5 8.8 17.3 16.3Total 19.2 19.4 38.6 36.5 Adjusted PBT* 1.05 1.11 2.16 2.60Goodwill amortisation (0.07) (0.08) (0.15) (0.13)Exceptional items 0.36 (0.02) 0.34 0.17Reported PBT 1.34 1.01 2.35 2.64 Cashflow from operations (excl pensions) 0.57 1.37 1.94 1.84Pension contributions (0.57) (0.52) (1.09) (1.24)Cashflow from operations 0.00 0.85 0.85 0.60 Pence Pence Pence Pence Adjusted EPS* 3.1 3.2 6.3 7.6Goodwill amortisation (0.2) (0.3) (0.5) (0.5)Exceptional items 1.2 0.0 1.2 0.5Reported EPS 4.1 2.9 7.0 7.6 Dividend per share 1.15 2.45 3.60 3.50 * stated before exceptional gains and goodwill amortisation STADIUM GROUP PLC CHAIRMAN'S STATEMENT Covering the year ended 31 December 2006 Introduction I am pleased to report improved results in the second half of the year andsatisfactory full year results for the year ended 31 December 2006. The business has delivered further sales growth, and margins are recoveringafter a period of turbulence arising from increasing commodity prices. Management have successfully completed the first acquisition since the StrategicReview in 2001, and the business is well placed to make further progress in2007. Results As anticipated, profit before taxation reduced by 11% to £2.35m (2005: £2.64m),although it should be noted that much of this reduction is attributable to thetranslation of dollar earnings at a weaker exchange rate. Earnings before exceptional items and goodwill amortisation of 6.3p wereslightly ahead of market expectation, although down by 17% compared with 2005(7.6p). Reported earnings, which reflect the exceptional gain on sale offreehold property, were 7.0p (2005: 7.6p). Net cash inflow from operating activities increased by 42% to £0.85m (2005:£0.60m). Net bank borrowings increased during the year from £2.06m to £4.38mreflecting investment in the relocation of our office premises in Hong Kong andalso the acquisition of KRP Power Source (UK) Limited in August. Dividends The Board proposes a final dividend of 2.45 pence per share (2005 : 2.4 pence)to be paid on 8 May 2007 to shareholders on the register on 13 April 2007. Thisbrings the total dividends for the year to 3.6 pence per share, an increase of3% over the prior year (3.5 pence per share), which is covered by earnings 1.9times (2005 : 2.2 times). Company Secretary David Collins retired as Company Secretary on 31 December 2006 after more thantwenty years of service to the company. Colin Wilson ACA was appointed as GroupFinancial Controller in April 2006, and assumed responsibility as CompanySecretary upon David Collins' retirement. Prospects Following four years of profit growth, the company has demonstrated someresilience in recovering from the challenging market conditions prevalent in thefirst half of 2006. During the second half of the year a turning point wasreached, with sales, margins and operating cash flow all showing improvement. Welook forward with confidence to further organic growth, and will continue toseek to augment this with suitable acquisitions when appropriate opportunitiesarise. Nick Brayshaw Chairman 26 February 2007 STADIUM GROUP PLC CHIEF EXECUTIVE'S REVIEW Covering the year ended 31 December 2006 Overview The business has reported satisfactory results in view of the underlying marketconditions, and enters 2007 with a positive outlook. Financial results Turnover increased 6% to £38.55m (2005: £36.52m), with similar rates of growthacross both Electronics and Plastics, and both in Asia and the UK. Operating profit reduced as expected by 12% to £2.28m (2005: £2.60m). This wasa reflection of the more challenging trading conditions prevailing for much ofthe year, and especially the first half. In particular, material, energy andoperating costs increased sharply, leading to pressure on margins until theireffect could be fully reflected in selling prices. Notwithstanding thesepressures, reported profits would have been virtually unchanged at constantrates of exchange, the effects of which are explained below. Profit before taxation decreased by 11% to £2.35m (2005 : £2.64m), or by 17% to£2.16m (2005 : £2.60m) before adjusting for exceptional gain and goodwillamortisation. The exceptional gain related to the sale of freehold property inHong Kong arising on the relocation of Stadium Asia office premises amounting to£0.34m (2005: sale of surplus UK freehold property of £0.33m). Reported earnings per share were 7.0 pence, a decrease of 8% on last year (2005:7.6 pence). Earnings before exceptional gains and goodwill amortisation were6.3 pence (2005: 7.6 pence). Effects of foreign currency exchange rates During the year the United States dollar weakened against Sterling byapproximately 15% and ended the year at the lowest level for many years. Thetranslation effect of these movements reduced reported sales by £1.49m (4%),profit before taxation by £0.14m (6%) and net assets by £0.89m (11%) whencompared with the opening rate of exchange. Furthermore, the Chinese Yuan has appreciated by a further 5% during the yearagainst the United States Dollar, adding approximately £0.2m to operating costsin China. Electronics 2006 2005 £'000 £'000Turnover- Asia 21,262 20,228- UK 6,693 6,227 27,955 26,455Operating Profit 1,873 2,173 Sales overall grew by 6% to £27.96m and it was especially satisfying toexperience a return to growth in our UK operations. Automotive volumescontinued to decline as expected, although significant new business has beenawarded that will enter production during 2007. Our phased withdrawal from the telecom market was completed during the firsthalf of the year, without incurring significant exit costs, and we do notanticipate further activity in this sector. Strong growth was experienced in consumer markets and there are furthersubstantial opportunities in the pipeline. Material prices, which increased rapidly throughout the first half of the year,were more stable in the second half. Most major customers have now acceptedprice increases to reflect new economics, although some marginal business wassacrificed where such increases could not be achieved. Our goal remains to work with substantial long term partners who recognise thevalue of quality, service and reliability when executing sourcing decisions. Whilst operating margin for the full year reduced by 1.5% to 6.7%, theperformance in the second half (7.3%) marked a recovery from the 6.1% reportedat the interim stage. Stadium Power contributed more than £3.3m of sales, including £0.4m from theacquisition of KRP Power Source (UK) Ltd on 30 August 2006. Growth was lessthan expected as a result of technology changes in the gaming machine sectorresulting in lower demand for hardware. Development of a range of industrystandard items for manufacture by Stadium Asia and distribution through StadiumPower and KRP will be completed during 2007. Plastics 2006 2005 £'000 £'000Turnover 10,597 10,060Operating Profit 848 871 Growth in sales was attributable to new product launches and additional marketshare won by Stadium Building Products. Profits were virtually unchanged; a commendable performance when taking intoaccount the substantial increases in material and energy costs incurred duringthe year. Balance sheet and cash flow Cash flow from operations amounted to £0.85m, stated after meeting pensiondeficit funding contributions of £1.09m (2005: net inflow of £0.60m afterpension contributions of £1.24m) Net cash outflow on fixed assets of £1.00m included the relocation of the HongKong office of Stadium Asia Limited at a net cost of £0.2m. There was furtherinvestment in manufacturing plant and equipment in Asia and the UK totaling£0.80m, slightly ahead of the corresponding depreciation charge. The acquisition of KRP Power Source (UK) Limited was completed on 30 August 2006at a total cost of £0.57m. This additional investment in the business wasfunded by drawing down net bank loans of £2.70m, and resulted in year endborrowings of £4.38m (2005: £2.06m). Pensions The market value of the pension scheme assets increased by 11% during the yearto exceed £22m. The net pension liability, measured on a basis consistent withthat used in the prior year, would have reduced from £4.86m to approximately£3.0m. The directors, in consultation with the scheme actuary, have recognisedmore recent guidance on expected mortality rates. The effect of this newguidance has resulted in an 8% increase to the scheme liabilities beforedeferred tax amounting to £2.04m, and a net pension liability of £4.45m. Acquisitions During the year we completed the acquisition of KRP Power Source (UK) Limitedfor net cash consideration of £0.57m. Since completion on 30 August 2006 thebusiness has performed slightly ahead of our expectations contributing anoperating profit (before goodwill amortisation) of £0.06m. Further acquisition activity, focused particularly on businesses with productdesign, marketing and distribution capabilities, remains a priority. Outlook Current trading is ahead of the corresponding period last year and the immediateoutlook is encouraging. We anticipate growth in revenues and a further recovery in margins in 2007,although sustained dollar weakness against both Sterling and the Chinese Yuanmay offset the full effect of this improvement in reported earnings. Nigel Rogers Chief Executive 26 February 2007 STADIUM GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 December 2006 Total Total 2006 2005 Note Unaudited Unaudited £'000 £'000Turnover - continuing operations 1 38,552 36,515 Cost of sales (30,059) (27,684) Gross profit 8,493 8,831 Net operating expenses before exceptional items and goodwill (6,070) (5,937)Exceptional operating expenses - (161) Goodwill amortisation (148) (132)Net operating expenses (6,218) (6,230) Operating profit - continuing operations 2 2,275 2,601 Profit on sale of fixed assets 3 340 330 Interest payable (250) (144)Other finance costs (12) (150) Profit on ordinary activities before taxation 2,353 2,637 Taxation (341) (482) Profit for the financial year 2,012 2,155 Earnings per shareBasic 4 7.0p 7.6p Diluted 7.1p 7.5p Statement of total recognised gains and lossesProfit for the financial year 2,012 2,155Movements on foreign exchange (885) 418Actuarial losses (net of deferred tax) (298) (331)Total recognised gains and losses 8 829 2,242 STADIUM GROUP PLC CONSOLIDATED BALANCE SHEET as at 31 December 2006 2006 2005 Note Unaudited Unaudited £'000 £'000Fixed assetsIntangible assets 872 537Tangible assets 10,102 9,832 10,974 10,369 Current assetsStocks 5,872 5,943Debtors due within one year 7,571 6,624Cash 296 236 13,739 12,803 Creditors: amounts falling due within one yearBank overdrafts (1,434) (1,758)Creditors (8,343) (8,688) (9,777) (10,446) Net current assets 3,962 2,357 Total assets less current liabilities 14,936 12,726 Creditors: amounts falling due after more than one year (2,713) -Provisions for liabilities and charges - (28)Net assets excluding net pension liability 12,223 12,698Net pension liability 9 (4,449) (4,858)Net assets 2 7,774 7,840 Capital and reservesCalled up equity share capital 1,440 1,432Share premium account 4,233 4,184Capital redemption reserve 88 88Profit and loss account 8 2,013 2,136 Equity shareholders' funds 7,774 7,840 Bank borrowings (net) 7 4,383 2,064Gearing 56.4% 26.3% STADIUM GROUP PLC CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December 2006 2006 2005 Note Unaudited Unaudited £'000 £'000 Net cash inflow from operating activities 6 847 605 Servicing of finance (250) (145) Tax paid (386) (326) Capital expenditurePurchase of tangible fixed assets (1,683) (702)Sale of tangible fixed assets 686 694 (997) (8) Acquisitions and disposalsAcquisition consideration paid (569) -Receipt of deferred consideration - 313 (569) 313 Equity dividends paid (1,022) (956) Net cash outflow before financing (2,377) (517) FinancingLoans drawn down 3,392 -Loans repaid (689) (1,045)Equity share capital subscribed 58 166Net cash outflow from financing 2,761 (879) Increase/(decrease) in cash in the year 7 384 (1,396) STADIUM GROUP PLC NOTES: 1. Turnover 2006 2005(a) By segment: £'000 £'000 Electronics - manufactured in Asia 21,262 20,228 - manufactured in UK 6,693 6,227 27,955 26,455 Branded Plastics 10,597 10,060 38,552 36,515 2006 2005 Electronics Total Electronics Total(b) By destination: £'000 £'000 £'000 £'000 UK 14,164 24,218 13,470 23,045 Europe 2,189 2,649 2,774 3,214 Asia 4,205 4,220 4,998 4,998 Americas 4,767 4,767 3,189 3,189 Other 2,630 2,698 2,024 2,069 27,955 38,552 26,455 36,515 2006 2005 Electronics Total Electronics Total(c) By industry sector: £'000 £'000 £'000 £'000 Consumer 14,707 25,304 10,973 21,033 Industrial 9,973 9,973 9,829 9,829 Automotive 3,078 3,078 4,751 4,751 Telecom 197 197 902 902 27,955 38,552 26,455 36,515 (d) Turnover includes £401,000 (2005 : £nil) derived from KRP Power Source(UK) Limited, a distributor of power conversion products, acquired on 30 August 2006. 2. Segment information Operating profit Net Assets 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Electronics 1,873 2,173 8,383 8,078 Branded Plastics 848 871 4,485 4,057 GroupNet pension liability - - (4,449) (4,858)Exceptional operating costs - (161) - -Goodwill amortisation (148) (132) 872 537Other (298) (150) (1,517) 26 (446) (443) (5,094) (4,295)Total 2,275 2,601 7,774 7,840 Operating profit includes £42,000 (2005 : £nil) derived from KRP Power Source(UK) Limited, a distributor of power conversion products, acquired on 30 August2006. 3. Profit on sale of fixed assets Profit on sale of fixed assets comprises gains on the sale of freeholdproperties, including office premises in Hong Kong (2006) and factory premisesat Clacton (2005). 4. Earnings per share The calculation of basic earnings per share is based on the profit for thefinancial year of £2,012,000 (2005 : £2,155,000) and the weighted average numberof ordinary shares in issue during the year of 28,755,369 (2005 : 28,537,013). The reconciliation of basic earnings per share to earnings per share excludingexceptional items and goodwill amortisation is as follows: 2006 2006 2005 2005 £'000 pence £'000 penceEarnings per share (before exceptional items and goodwill) 1,820 6.3 2,169 7.6Exceptional items (after taxation) 340 1.2 118 0.5Goodwill amortisation (148) (0.5) (132) (0.5) Basic earnings per share 2,012 7.0 2,155 7.6 5. Dividends The proposed final dividend of 2.45 pence per share will amount to £706,000 andwill be payable on 8 May 2007 to shareholders on the register on 13 April 2007. 6. Net cash inflow from operating activities 2006 2005 £'000 £'000 Operating profit 2,275 2,601Release of grants received - (45)Goodwill amortisation 148 132Share option costs 70 60Depreciation 864 841Loss on sale of tangible fixed assets - 6Difference between pension charge and cash (1,092) (1,237)contributionsDecrease/(increase) in stocks 169 (2,096)Increase in debtors (715) (520)(Decrease)/increase in creditors (872) 863Net cash inflow from operating activities 847 605 7. Analysis of changes in net debt 2005 Cash Flow 2006 £'000 £'000 £'000 Cash 236 60 296Bank overdrafts (1,758) 324 (1,434) (1,522) 384 (1,138)Loans due within one year (542) 10 (532)Loans due after one year - (2,713) (2,713) (2,064) (2,319) (4,383) 8. Profit and loss account reserve 2006 2005 Note Unaudited Unaudited £'000 £'000 Balance at 1 January 2,136 (1,961)Transfer from merger reserve - 2,751Total net recognised gains and losses 829 2,242Share option costs recognised 70 60Dividends paid (1,022) (956)Balance at 31 December 2,013 2,136 9. Net pension liability 2006 2005 Unaudited Unaudited £'000 £'000 Market value of scheme assets 22,381 20,145Present value of scheme liabilities (28,737) (27,085)Scheme deficit (6,356) (6,940)Related deferred tax asset 1,907 2,082 Net pension liability (4,449) (4,858) Movements during the year comprised:Net pension liability at 1 January (4,858)Current service costs (including curtailment) (312)Contributions paid 1,261Finance costs (12)Experience gains 892Changes in actuarial assumptions - mortality (2,043) - other 798Deferred taxation (175) (4,449) 10. Financial Information This preliminary announcement does not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985. The information for the year ended 31 December 2006 is an extract from thestatutory accounts to that date. The statutory accounts for the year ended 31December 2005 have been delivered to the Registrar of Companies and included anaudit report which was unqualified and which did not contain a statement underSection 237(2) or (3) of the Companies Act 1985. The statutory accounts for theyear ended 31 December 2006, upon which the auditors have still to report, willbe delivered to the Registrar following the Company's annual general meeting. 11. Annual Report & Financial Statements The Annual Report and Financial Statements will be posted to shareholdersshortly. The Annual General Meeting will be on Thursday 19th April 2007 at 12Smithfield Street, London, EC1A 9BD. Copies of the Annual Report and of thisannouncement will be available at the Company's registered office: StephenHouse, Brenda Road, Hartlepool, TS25 2BQ. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Stadium Group PLC