28th Apr 2009 07:00
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Immediate Release
|
28 April 2009
|
Superglass Holdings Plc
Interim Results for the Six Months ended 28 February 2009
Superglass Holdings Plc ("Superglass" or the "Group"), one of the UK's leading manufacturers of glass mineral fibre insulation products is pleased to announce its interim results for the six months ended 28 February 2009.
Highlights
Performance in line with expectations
Increased CERT demand
Turnover: £20.1m (2008: £20.5m)
EBITA: £3.0m (2008: £4.6m)
(Loss)/Profit before tax : (£0.2m) ( 2008:£1.1m)
Adjusted EPS: 3.5p (2008: 5.1p)
Basic EPS:(0.3p) (2008: 1.3p)
Net borrowings reduced by £1.1m
Comfortably within banking covenants
Interim dividend of 1p per share
Tim Ross, Chairman commented:
"Superglass performed satisfactorily despite the most challenging market conditions the Group has experienced since it was established. The benefits of the Carbon Emissions Reduction Target (CERT) and the Government's additional £1bn fuel poverty package are driving demand and as a result current trading conditions have improved. We remain positive about the Group's prospects for the second half of the year."
For further information, please contact:
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Superglass Holdings plc |
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John Smellie, Chief Executive Officer Tony Kirkbright, Chief Finance Officer |
01786 451 170 |
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Buchanan Communications |
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Diane Stewart/Carrie Clement/Tim Anderson |
0131 226 6150 / 0207 466 5000 |
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Brewin Dolphin Investment Banking |
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Andrew Kitchingman / Sean Wyndham-Quin |
0845 213 4787 |
Chief Executive's Statement
Introduction
I am pleased to present the Group's interim results for the six months ended 28 February 2009.
During the period, Superglass performed satisfactorily despite the most challenging market conditions the Group has experienced since it was established. Our team has continued to work hard to generate new business, protect margins and control input costs. As a result Superglass is able to report another robust set of figures supported by a strongly financed balance sheet.
Current demand for our insulation products continues to improve through the CERT programme which is now performing according to expectations and we anticipate further benefits from that in the second half of the year.
Interim Results
In the six months to 28 February 2009, we reported sales of £20.1m (2008: £20.5m), slightly down on the comparable period last year but a good achievement particularly in light of the competitive environment the Group is currently operating in. EBITA for the six months was £3.0m (2008: £4.6m) whilst profit before tax, amortisation and movement in financial instruments was £2.2m (2008: £3.3m).
The figures reflect maintained sales volumes in the UK, but reduced export sales. Markets remain very competitive.
In the reduced interest rate environment our funding costs on borrowings fell by over 20% year on year.
The Group continues to be strongly cash generative at the operating level and during the period we continued to make debt repayments on schedule to reduce our net debt position to £23.0m (2008: £24.1m). As at 28 February 2009, the Group had net assets of £2.9m (31 August 2008: £4.0m).
We remain comfortably within our banking covenants.
Dividend
The board proposes to pay an interim dividend of 1 p per share. The dividend will be paid on 17 July 2009 to shareholders on the register on 12 June 2009.
Strategy
In our preliminary results announcement for the twelve months ended 31 August 2008, we said that it would be difficult to predict any immediate recovery in the financial performance of the business whilst global economic challenges persist. However, we also indicated that increased energy prices and a firm commitment from the Government would help drive the demand for glass fibre insulation, particularly in the light of the Government's additional £1bn fuel poverty package announced in September 2008.
Our strategic aim is to continue growing the business in the UK, driven by CERT, and to maintain a modest share in the export market.
Insulation Market
The UK insulation market remains highly competitive with significant pricing pressure. We expect trading conditions outside of CERT to remain difficult as construction activity remains at low levels and there continues to be competition between insulation manufacturers who previously supplied the new build housing market, keeping prices at lower levels. We are working with utility providers on various initiatives to market our products more widely and generate additional business going forward.
Cost Control
We have maintained strict cost control measures across the business monitoring and responding to the volatile costs of both energy and raw materials which have a major impact on our margins.
Energy costs remained high during the first six months of 2009. However, our gas costs will reduce in the second half of the year due to lower market rates. This will have a positive impact on our results for the second half of the year. Our electricity supply pricing arrangements are fixed until 2010. We will continue to hedge our energy costs where appropriate.
The manufacturing process principally uses a high percentage of recycled glass as a raw material. We have been able to reduce the cost of the glass we use by moving from a mix of plate and bottled glass to bottled glass only.
Rigid cost control remains a key focus for the business going forward.
Production Plant
In 2008 we completed a major capital expenditure programme on our production plant at Stirling. The plant is modern and well invested and we have the capacity to ramp up production quickly as demand recovers and increases in line with the CERT programme.
Outlook
The benefits of CERT and the Government's additional £1bn fuel poverty package are driving demand and as a result current trading conditions have improved. None the less, the market for insulation products in the UK in the distributor and merchanting sectors remains difficult to predict due to the low levels of construction activity. However, we remain positive about the Group's prospects for the second half of the year.
John Smellie
Chief Executive
28 April 2009
Condensed Consolidated Income Statement
for the six months ended 28 February 2009
|
Unaudited Six months ended |
Year ended |
||||
|
28.02.09 |
29.02.08 |
31.08.08 |
|||
|
Note |
£'000 |
£'000 |
£000 |
||
|
Revenue |
3 |
20,084 |
20,535 |
41,138 |
|
|
Cost of sales |
(13,815) |
(12,156) |
(24,636) |
||
|
Gross Profit |
6,269 |
8,379 |
16,502 |
||
|
Distribution expenses |
(2,220) |
(2,774) |
(5,257) |
||
|
Administrative expenses |
(3,386) |
(3,400) |
(6,494) |
||
|
Other operating income |
153 |
171 |
307 |
||
|
Operating Profit |
816 |
2,376 |
5,058 |
||
|
Finance income |
- |
199 |
- |
||
|
Finance expenses |
(1,061) |
(1,475) |
(2,106) |
||
|
(Loss)/Profit before tax |
(245) |
1,100 |
2,952 |
||
|
Taxation |
4 |
53 |
(328) |
(473) |
|
|
(Loss)/Profit for the period/year attributable to equity holders of the parent |
(192) |
772 |
2,479 |
||
|
Diluted and basic (loss)/earnings per share |
(0.3p) |
1.3p |
4.2p |
||
|
Diluted and adjusted earnings per share |
3.5p |
5.1p |
11.8p |
||
|
Condensed consolidated statement of recognised Income and Expense for the 6 months ended 28 February 2009 |
|||||
|
Unaudited Six months ended |
Year ended |
||||
|
28.02.09 |
29.02.08 |
31.08.08 |
|||
|
Note |
£'000 |
£'000 |
£'000 |
||
|
(Loss)/Profit for the period/year and total recognised income and expense for the period attributable to equity holders of the parent |
8 |
(192) |
772 |
2,479 |
|
Condensed Consolidated Balance Sheet
at 28 February 2009
|
Unaudited |
Unaudited |
|||
|
As at 28.02.09 |
Restated as at 29.02.08 |
As at 31.08.08 |
||
|
Note |
£'000 |
£'000 |
£'000 |
|
|
Non-current assets |
||||
|
Property, plant and equipment |
5 |
14,948 |
15,476 |
15,844 |
|
Intangible assets |
6 |
20,794 |
25,186 |
22,989 |
|
35,742 |
40,662 |
38,833 |
||
|
Current assets |
||||
|
Inventories |
2,707 |
3,147 |
3,293 |
|
|
Trade and other receivables |
3,924 |
4,492 |
3,490 |
|
|
Cash and cash equivalents |
- |
1,200 |
- |
|
|
Derivative financial instruments |
1 |
9 |
193 |
201 |
|
6,640 |
9,032 |
6,984 |
||
|
Total assets |
42,382 |
49,694 |
45,817 |
|
|
Current liabilities |
||||
|
Other interest-bearing loans and borrowings |
3,787 |
3,286 |
3,400 |
|
|
Trade and other payables |
9,948 |
12,338 |
10,087 |
|
|
Deferred government grants |
193 |
110 |
193 |
|
|
Current tax |
4 |
1,606 |
1,789 |
1,861 |
|
15,534 |
17,523 |
15,541 |
||
|
Non-current liabilities |
||||
|
Other interest-bearing loans and borrowings |
19,199 |
22,345 |
20,730 |
|
|
Deferred government grants |
242 |
248 |
339 |
|
|
Deferred tax |
4,518 |
6,111 |
5,196 |
|
|
23,959 |
28,704 |
26,265 |
||
|
Total liabilities |
39,493 |
46,227 |
41,806 |
|
|
Net assets |
2,889 |
3,467 |
4,011 |
|
|
Equity attributable to equity holders of the parent |
||||
|
Share capital |
583 |
583 |
583 |
|
|
Share premium |
1,108 |
1,108 |
1,108 |
|
|
Retained earnings |
8 |
1,198 |
1,776 |
2,320 |
|
Total equity |
2,889 |
3,467 |
4,011 |
|
Condensed Consolidated Cash flow Statement
for the six months ended 28 February 2009
|
Unaudited six months ended |
Year ended |
|||
|
28.02.09 |
29.02.08 |
31.08.08 |
||
|
Note |
£'000 |
£'000 |
£'000 |
|
|
Cash flows from operating activities |
||||
|
(Loss)/profit for the period/year |
(192) |
772 |
2,479 |
|
|
Adjustments for: |
||||
|
Depreciation and amortisation |
3,283 |
3,343 |
6,453 |
|
|
Net financial expense |
1,061 |
1,276 |
2,106 |
|
|
Taxation |
(53) |
328 |
473 |
|
|
Equity settled share based payment transactions |
55 |
48 |
110 |
|
|
Cash from operating activities before changes in working capital and provisions |
4,154 |
5,767 |
11,621 |
|
|
Decrease/(increase) in inventories |
586 |
(59) |
(205) |
|
|
(Increase)/decrease in trade and other receivables |
(434) |
332 |
624 |
|
|
Decrease in trade and other payables and deferred government grants |
(188) |
(173) |
(1,492) |
|
|
Cash generated from the operations |
4,118 |
5,867 |
10,548 |
|
|
Interest paid |
(858) |
(967) |
(1,849) |
|
|
Tax paid |
(880) |
(795) |
(1,783) |
|
|
Net cash from operating activities |
2,380 |
4,105 |
6,916 |
|
|
Cash flows from investing activities |
||||
|
Acquisition of property, plant and equipment |
(192) |
(1,072) |
(2,315) |
|
|
Net cash used in investing activities |
(192) |
(1,072) |
(2,315) |
|
|
Cash flows from financing activities |
||||
|
Purchase of own Shares |
- |
(324) |
(564) |
|
|
Repayment of borrowings |
(1,643) |
(1,643) |
(3,285) |
|
|
Payment of finance lease liabilities |
(7) |
- |
(1) |
|
|
Dividends paid |
(985) |
- |
(985) |
|
|
Net cash absorbed by financing activities |
(2,635) |
(1,967) |
(4,835) |
|
|
Net (decrease)/increase in cash and cash equivalents |
(447) |
1,066 |
(234) |
|
|
Cash and cash equivalents at beginning of period |
(100) |
134 |
134 |
|
|
Cash and cash equivalents at end of period |
(547) |
1,200 |
(100) |
|
Notes to the Accounts
1. Basis of preparation
These interim financial statements represent the condensed consolidated financial information of the company and its subsidiaries (together referred to as "the Group") for the 6 months ended 28 February 2009. It has been prepared in accordance with the Disclosure and Transparency Rules of the UK's Financial Services Authority and the requirements of IAS 34 Interim Financial Reporting as adopted by the EU. The interim financial statements were approved by the Board of Directors on 28 April 2009. The interim financial statement do not constitute financial statements as defined in section 240 of the Companies Act 1985 and do not include all of the information and disclosures required for full annual financial statements. They should be read in conjunction with the Annual Report and Consolidated Financial Statements 07-08 which are available on request from the company's registered office or to download from www.superglass.co.uk.
The comparative figures for the financial year ended 31 August 2008 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.
Comparative amounts in relation to derivative financial instruments and deferred tax have been restated on receipt of further information concerning the designation of certain financial instruments classified as cash flow hedges in the comparative interim period. These items are now treated as for the group's own use and as such fall outside the scope of IAS 39. As a result, they are not able to be used for hedging and the effect of this change has been to reduce the reported balance sheet items at 29 February 2008 as follows: Non current derivative instruments as previously stated amounted to £921,000 and as restated amount to £nil; current derivative instruments as previously stated amounted to £891,000 and as restated amount to £193,000; deferred tax liabilities as previously stated amounted to £6,599,000 and as restated amount to £6,111,000; hedging reserve as previously stated amounted to £1,137,000 and as restated amounts to £nil. The change in treatment has no impact on the income statement or cash flow statement.
The Directors consider, after making appropriate enquiries at the time of approving the interim financial statements and notwithstanding the net current liability position shown by the balance sheet at the year end of £8.9 million that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has access to a £7.5 million undrawn overdraft facility and the Directors have no reason to believe that the Company will be unable to achieve the financial projections which they have prepared to show that they are able to meet all financial obligations as they fall due for the foreseeable future. Accordingly, the Directors believe that it is appropriate for the interim financial statements to be prepared on a going concern basis.
The interim financial statements for the current and comparative periods are unaudited. The auditors have carried out a review of the interim financial statements and their report is set out on page 10.
2. Significant accounting policies
The interim financial statements are prepared on the historical cost basis (except in relation to derivative financial instruments and intangible assets arising on business combinations which are stated at fair value) and are presented in pounds sterling, rounded to the nearest thousand.
The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group as disclosed in its consolidated financial statements as at and for the year ended 31 August 2008.
New IFRS and amendments to IAS
The financial statements for the year ended 31 August 2009 are impacted by a number of new standards and interpretations, none of which are expected to amend accounting, income and net assets of the Group. The Group's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements as at and for the year ended 31 August 2008.
3. Segment information
The group has only one class of business - the manufacturing and sale of insulation materials. Segmental information is presented in respect of the Group's geographical segments by location of customers. The primary format is based on the Group's management and internal reporting structure. Segmental results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The directors are of the opinion that the group has two reportable geographic segments as defined by IAS 14 Segment Reporting.
Geographic segments
|
Revenue £000 |
Segment Result £000 |
Net Financing cost £000 |
Profit/ (Loss) before tax £000 |
Income tax expense £000 |
Profit/ (Loss) for the Period £000 |
|
|
28th February 2009 U.K.& Ireland Other Europe |
||||||
|
19,273 |
670 |
670 |
670 |
|||
|
811 |
146 |
146 |
146 |
|||
|
Unallocated |
(1,061) |
(1,061) |
53 |
(1,008) |
||
|
Consolidated |
20,084 |
816 |
(1,061) |
(245) |
53 |
(192) |
|
31st August 2008 U.K.& Ireland Other Europe |
||||||
|
38,813 |
4,605 |
4,605 |
4,605 |
|||
|
2,325 |
453 |
453 |
|
453 |
||
|
Unallocated |
(2,106) |
(2,106) |
(473) |
(2,579) |
||
|
Consolidated |
41,138 |
5,058 |
(2,106) |
2,952 |
(473) |
2,479 |
|
29th February 2008 U.K.& Ireland Other Europe |
||||||
|
19,142 |
2,071 |
2,071 |
2,071 |
|||
|
1,393 |
305 |
305 |
305 |
|||
|
Unallocated |
(1,276) |
(1,276) |
(328) |
(1,604) |
||
|
Consolidated |
20,535 |
2,376 |
(1,276) |
1,100 |
(328) |
772 |
4. Tax Charge
Corporation tax for the interim period is charged at 32% (February 2008 32%) representing the estimated annual effective tax rate for the full year. The underlying tax rate, after allowing for amortisation of ineligible intangible assets which are not tax deductible, for the six months ended 29 February 2008 was 29% (Year ended 31 August 2008: 30%).
5. Property, plant and equipment
|
6 months |
6 months |
Year |
|
|
Ended |
Ended |
Ended |
|
|
28.02.09 |
29.02.08 |
31.08.08 |
|
|
£000 |
£000 |
£000 |
|
|
At 31 August 2008 |
15,844 |
15,551 |
15,551 |
|
Additions |
190 |
1,072 |
2,353 |
|
Depreciation |
(1,086) |
(1,147) |
(2,060) |
|
At 28 February 2009 |
14,948 |
15,476 |
15,844 |
The closing balance includes £598,000 (29 February 2008: £980,000; 31 August 2008: £604,000) of assets under construction.
6. Intangible assets
|
6 months |
6 months |
Year |
|
|
Ended |
Ended |
Ended |
|
|
28.02.09 |
29.02.08 |
31.08.08 |
|
|
£000 |
£000 |
£000 |
|
|
At 31 August 2008 |
22,989 |
27,378 |
27,378 |
|
Additions |
2 |
4 |
4 |
|
Amortisation |
(2,197) |
(2,196) |
(4,393) |
|
At 28 February 2009 |
20,794 |
25,186 |
22,989 |
7. Retirement benefit obligations
The group operates a defined contribution Group Sponsored Personal Pension Plan, membership of which is voluntary, The assets of the scheme are held separately from those of the company in independently administered funds. Employer contributions to the fund are recognised as an employee benefit expense in profit or loss when they are due, contributions made in the period were £61,000 (29 February 2008: £84,000; 31 August 2008: £170,000).
8. Capital and reserves attributable to equity shareholders
|
Share |
Share |
Retained |
|
|
Capital |
Premium |
Earnings |
|
|
£000 |
£000 |
£000 |
|
|
Balance At 31 August 2007 |
583 |
1,108 |
1,280 |
|
Profit for the period |
- |
- |
772 |
|
Own shares purchased |
- |
- |
(324) |
|
IFRS 2 charge in relation to equity settled share based payments |
- |
- |
48 |
|
Balance At 29 February 2008 |
583 |
1,108 |
1,776 |
|
Profit for the period |
- |
- |
1,707 |
|
Own shares purchased |
- |
- |
(240) |
|
IFRS 2 charge in relation to equity settled share based payments |
- |
- |
62 |
|
Dividend paid |
- |
- |
(985) |
|
Balance at 31 August 2008 |
583 |
1,108 |
2,320 |
|
Loss for the period |
- |
- |
(192) |
|
IFRS 2 charge in relation to equity settled share based payments |
- |
- |
55 |
|
Dividend paid |
- |
- |
(985) |
|
Balance At 28 February 2009 |
583 |
1,108 |
1,198 |
9. Earnings per share
The calculation of basic and diluted earnings per share at 28 February 2009 was based on the (loss)/profit attributable to ordinary shareholders of (£192,000) (six months ended 29 February 2008: £772,000; year ended 31 August 2008 £2,479,000).
|
6 months |
6 months |
Year |
|
|
Ended |
Ended |
Ended |
|
|
28.02.09 |
29.02.08 |
31.08.08 |
|
|
Weighted average number of ordinary shares |
000's |
000's |
000's |
|
At 1 September |
58,333 |
58,333 |
58,333 |
|
Effect of own shares held |
(395) |
(10) |
(191) |
|
Weighted average number of ordinary shares |
57,938 |
58,323 |
58,142 |
|
Effect of share options |
- |
71 |
- |
|
Diluted weighted average number of ordinary shares |
57,938 |
58,394 |
58,142 |
10. Contingencies and commitments
|
As at |
As at |
As at |
|
|
28.02.09 |
29.02.08 |
31.08.08 |
|
|
000's |
000's |
000's |
|
|
Commitments for the acquisition of plant and equipment, for which no provision has been made in the financial statements |
118 |
1,005 |
128 |
11. Post Balance Sheet events
The proposed interim dividend for the year ending 31 August 2009 of 1p (2008: 1.7p) was approved by the board on 28 April 2009. The interim dividend has not been included as a liability as at 28 February 2009. The dividend will be payable on 17 July 2009 to shareholders on the register at the close of business on 12 June 2009.
Statement of Directors Responsibilities
The directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8.
The current directors of Superglass Holdings plc are as listed in the annual report for the year ended 31 August 2008.
By order of the board
John Smellie Tony Kirkbright
CEO CFO
INDEPENDENT REVIEW REPORT TO SUPERGLASS HOLDINGS PLC
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 28 February 2009 which comprises the Condensed consolidated income statement, the Condensed consolidated statement of recognised income and expense, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 28 February 2009 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.
KPMG Audit PlcChartered Accountants
191 West George Street
Glasgow
G2 2LJ
28 April 2009
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