Interim Results

Superglass Holdings Plc

Interim Results for the Six Months ended 28 February 2010

Superglass Holdings Plc ("Superglass" or the "Company"), 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 2010.

FINANCIAL HIGHLIGHTS

·; A resilient performance in challenging market conditions

o Revenue down 16.4% to £16.8m (2009: £20.1m)

o PBTA up 30.5% to £2.6m (2009: £1.9m)

o PBT up to £0.4m (2009: loss £0.2m)

o Adjusted EPS up 20.0% to 4.2p (2009: 3.5p)

·; Business highly cash generative

o Bank debt reduced by £2.2million to £19.5 million (2009: £21.7million)

- Servicing debt comfortably within covenants and facilities which run to 2014

o Cash interest cover 7.6x (2009: 2.4x)

·; Interim Dividend of 0.25p per share (2009: 1.0p)

OPERATIONAL HIGHLIGHTS

·; Strengthened management team

·; Broadened routes to market

·; New customers won

·; Insulation remains a top energy efficiency method, with cross political party support

Tim Ross, Chairman commented:

"Superglass delivered a resilient performance in the six months to 28 February 2010 in exceptionally challenging trading conditions. During the period trading was impacted by a temporary funding shortage in the CERT programme. We expect the next Government to announce the extension to this scheme, to which all the main political parties have given their support, shortly after the General Election and that this will significantly stimulate demand from 2011 onwards. In the short term, however, we expect CERT demand to remain at these lower levels which is likely to have a detrimental effect on trading in the second half, albeit this will be partially offset by the substantial reduction in our costs particularly interest and energy costs, which we expect to remain for the second half of the year.

"The management team under Alex's leadership has made an excellent start to developing a new business strategy which will deliver a wider product range into a broader customer base, whilst continuing to drive cost efficiencies in all areas of its operation. Whilst we remain cautious on the outlook for the market at this stage, we believe that Superglass is putting in place strong foundations for future earnings growth once market conditions improve."

For further information, please contact:

Chief Executive's Report

Introduction

The exceptionally challenging conditions highlighted in my preliminary results announcement prevailed throughout the six month period to 28 February 2010.

I am pleased to report that the Company has delivered a resilient performance with profit before tax and amortisation up to £2.6m, an increase of £0.7m,(30.5%) on the corresponding period last year. Trading was very challenging with revenue down 16.4% to £16.8m, due in large part to a temporary funding shortage in the CERT (Carbon Emissions Reduction Target) scheme. Energy and interest costs have reduced by £1.1m and £0.7m respectively, more than offsetting the decline in trading.

Our balance sheet remains strong. During the period we continued to concentrate on working capital management and cash generation, reducing debt on schedule by a further £2.2m since August 2009 to £19.5m.

Since my appointment in November last year, we have been carrying out a strategic review of the business, identifying areas that require to be refocused and others that must be strengthened over the coming months and years with specific emphasis on those actions that will continue the improvement in margins and broaden Superglass' sources of revenue generation. Specifically there are opportunities to increase the level of value added sales and improve efficiencies which we are aiming to do over the next three years.

Energy efficiency improvement in buildings is a key method for the Government to deliver on carbon reduction targets. The main vehicle for this is the CERT scheme which places targets on energy suppliers to encourage customers to reduce energy consumption. It is estimated that through this current scheme there will be approximately 2.9m cavity wall and 2.7m loft insulation upgrades between 2009 and 2011. The residential carbon reduction sector experienced an extremely challenging period from the summer of 2009. This reflected a temporary reduction in the flow of funding from energy suppliers pending the outcome of government consultations on the extension of the CERT scheme.

New build construction appears to have stabilised however, at historically low levels. We anticipate that the recently announced government measures on stamp duty and emphasis by part owned government banks on new mortgage capital will help to drive new build construction and believe that this will be an area for future growth. As a result, we have appointed a newly created sales team directed specifically at new build markets, with a focus on acoustic and other value added products. This will significantly increase our presence in these areas and leave us well placed to benefit when the anticipated upturn in new housing begins.

Sales

Overall sales revenue fell by 16% over the comparable period in 2009, resulting from a mix of additional new customer sales volumes and declining revenues from residential carbon saving (CERT) activity. Sales prices remained broadly flat from the second half of the previous financial year.

During the period CERT continued to slow and sales volumes into this market fell by 24% over the corresponding period in 2009. Government consultation on a 21 month extension to this scheme with a 20% uplift in targets is at an advanced stage. Confirmation of these targets, which have cross party support, is key to the recovery in this market segment. This is now expected shortly after the forthcoming General Election.

Sales through distributors and builders merchants increased by 10% over the period, the latter of which has seen an improvement in both volume and product mix. The Superdad initiative in conjunction with Scottish and Southern Energy provided considerable impetus, and helped to secure the successful addition of a significant Independent Builders Merchant Buying Group from January 2010. This confirms Superglass as the 'insulation supplier of choice' for the vast majority of UK independent merchants, covering over 600 branches nationally. It is an area that has been identified through the strategic review as having substantial potential for future growth. Marketing resource has been strengthened and specifically allocated to leverage the success of Superdad and deliver greater results through this unique route to market.

Superglass has a reputation for production flexibility and this again allowed us to take advantage of a specific 'one off' volume opportunity in export markets. Although exchange rates remained favourable, demand in our historic export markets remains depressed and margins are consequently low.

Operations

We are targeting further efficiencies from our production activities and have appointed a highly experienced Operations Director to strengthen the operations team. Our key focus will be the introduction of the latest tools and techniques to drive manufacturing efficiency. At this stage there are no plans for significant capital expenditure. In the current trading environment any investment would require relatively short pay-back.

Costs were reduced during the period, primarily as a result of improved energy purchasing costs. Revised hedging policies have been implemented which will reduce the near term risk of increased energy prices whilst allowing upside benefit further out. Initiatives to reduce waste and engineering consumable costs have begun to show success and will accelerate into the second half.

Administration expenses rose during the period as a result of increased credit insurance rates together with an extension on the value of cover provided, Board level changes implemented last year and investment in specific employee expertise in production and sales. I believe that this type of investment is imperative if we are to maximise the potential within Superglass.

Safety is one of our core values and I'm pleased to report that Superglass has recently achieved a milestone of 'zero lost time accidents' for the previous 12 months.

Finance

Interest costs saw a significant drop as the Company benefited from reduced debt levels and interest rates. As a result cash interest cover increased to 7.6 times (2009:2.4 times). Debt terms remain beneficial to currently available rates.

Management is highly focused on minimising working capital and maximising returns on capital expenditure. Uninsured bad debt losses were less than 0.18% of sales in the period and stock days reduced from 49 to 45 against the comparative half year. Bank debt has been reduced by £2.2m over the period (2009:£1.1m) from £21.7m down to £19.5m over the period.

In addition the Company has continued its policy of amortisation of intangibles, charging £4.4m annually and £2.2m in the period through the profit and loss.

The Company operates a defined contribution Personal Pension Plan, which is administered by an independent pension company. It therefore has no current or future liability for pension shortfalls.

The Company maintains a high level of cash generation which allows it to operate comfortably within existing overdraft facilities and banking covenants.

The Board understand the importance of a dividend to many shareholders. The dividend was rebased in the final results announcement in November 2009 aligned to trading and profitability levels. As a result, I am pleased to announce an interim dividend of 0.25p. I intend to continue this policy and increase the level of dividend with earnings growth.

Strategy

The main focus will be to drive earnings growth, particularly through the addition of value added products. The initial strategic review of the business has identified a number of opportunities for future growth and development. The management team have already developed a strong, flexible business capable of reacting well to changes in market circumstances and this will form a strong foundation to develop the business. The opportunities we have identified are:

·; Traditionally Superglass has focussed on a narrow range of products and customers which I intend to address by broadening our appeal to a wider customer base. There are significant opportunities to increase our presence in housing and acoustic markets and we have both extended our product range and increased our sales and marketing resource to target these opportunities.

·; Innovation will be key to capitalising on new opportunities. We have created a new team from within the organisation to focus specifically on developing new and existing products. This initiative is supported by a new innovation process which has been launched to provide focus and drive progress . Whilst it is early days, there are some interesting ideas being developed.

·; Through recent activity, Superglass, now provides products and services to most of the independent builders merchant outlets in the UK. Sales through our unique CERT funded scheme, Superdad, were modest and, from a slow start, have grown very quickly. It has without question helped to retain existing and win new business in the independent builders merchant sector. We will re-launch this scheme in the autumn of this year with an internet-based approach to support our builders merchant customer base.

·; Improved plant efficiency through refinement of our technology and using the expertise of a strengthened operations team. A number of operating efficiencies have already been identified which include a further reduction in waste levels.

To achieve these goals, improvements in some of the foundations of the business are required. I have strengthened the management team and will increase focus on improving skills and working practices within the Company to achieve our objectives.

Outlook

We expect details of the extension to the CERT programme, which has cross party support, to be announced by the Government shortly after the General Election and anticipate this will significantly drive demand from 2011 onwards.

We have a cautious outlook for the remainder of the year, the fundamentals of the economic recovery remain uncertain and the temporary reduction in CERT funding is expected to continue through to the second half of 2010.

Superglass is targeting expansion into the new build housing market for the first time. There are initial signs of improvement in this sector. This, coupled with a change to building regulations which is expected to come into effect in the final quarter of 2010, will provide additional opportunities for growth.

*adjusted for the impact of amortisation of intangibles

Condensed consolidated statement

of comprehensive income

for the six months ended 28 February 2010

Notes to the accounts

for the six months ended 28 February 2010

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 six months ended 28 February 2010. They have 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 2010. The interim financial statements do not constitute financial statements as defined in section 435 of the Companies Act 2006 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 2009 which are prepared in accordance with IFRS as adopted by the EU 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 2009 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 Independent Auditors' Report 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 498 (2) or (3) of the Companies Act 2006

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 period end of £8.4 million, that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group's bankers have confirmed that they expect to renew the group's £6 million overdraft facility (of which at the period end only £0.3 million was drawn) for a further period of 12 months when the existing facility expires.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 are unaudited, however, the auditors have carried out a review and their report is set out on the inside back cover.

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 2009, except in relation

to the items noted below:

 New IFRS and amendments to IAS

The financial statements for the year ending 31 August 2010 are impacted by a number of new standards and interpretations, none of which amend income and net assets of the Group. The key new standards/amendments adopted are as follows:

IAS 1(revised) 'Presentation of Financial Statements'  

The revised standard has resulted in a number of changes in presentation and disclosure, most significantly changing the title of the Condensed Consolidated Statement of Recognised Income and Expense to Condensed Consolidated Statement of Comprehensive Income and the introduction of the Condensed Statement of Changes in Equity as a primary statement. It has had no impact on the reported results or financial position of the group.

Amendment to IAS 23 'Borrowing Costs'

The amendment removes the previously available option to expense all borrowing costs incurred on production of qualifying assets. It has had no impact on the reported results or financial position of the group.

Amendment to IFRS 2 'Share Based Payments - Vesting Conditions And Cancellations'

The amendment clarifies the definition of vesting conditions in relation to share based payments, amongst other matters. It has had no impact on the reported results or financial position of the group.

IFRS 8 'Operating Segments'

The adoption of IFRS 8 has led to a change in the segmental information disclosed. See note 3.

The preparation of the interim statements requires the directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. There has been no material change in the estimates and judgements applied in the 08-09 Annual Report.

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 2009.

3 Segment information

The Group has adopted IFRS 8 'Operating Segments' with effect from 1 September 2009. IFRS 8 requires operating segments to be identified based on the structure of reporting which is regularly reviewed by the entity's chief operating decision maker (defined for Superglass as the board) in order to allocate resources and assess performance. The measure of segment result used by the board is gross profit.  The preceeding standard, IAS 14, required an entity to identify two sets of segments (business and geographical) using a risk and rewards based approach.

After undertaking an exercise to assess the impact of the new standard, the Group has concluded that there is one reportable segment; that of the manufacture and sale of insulation materials.

4 Tax charge

Corporation tax for the interim period is charged at 28% (six months ended 28 February 2009: 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 28 February 2009 was 28% (year ended 31 August 2009: 30%).

The closing balance includes £95,000 (28 February 2009: £598,000; 31 August 2009: £511,000) of assets under construction.

6 Intangible assets

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 £70,000 (six months ended 28 February 2009: £61,000; year ended 31 August 2009: £145,000).

8 Earnings per share

The calculation of basic and diluted earnings per share at 28 February 2010 was based on the profit attributable to ordinary shareholders of £260,000 (six months ended 28 February 2009: loss of £192,000; year ended 31 August 2009: profit of £442,000).

Adjusted earnings amount to £2,455,000 after adding back amortisation of intangible assets, no adjustment has been made for deferred tax.

Weighted average number of ordinary shares

9 Contingencies and commitments

10 Related Party Disclosures

The Group has a related party relationship with the defined contribution pension fund by virtue of some of the Directors being trustees and with its Executive and Non-executive Directors. There is no change in the position disclosed in the Superglass Holdings annual report for the year ended 31 August 2009.

11 Post balance sheet events

The proposed interim dividend for the year ending 31 August 2010 of 0.25p pence (2009: 1.0 pence) was approved by the Board on 28 April 2010. The interim dividend has not been included as a liability at 28 February 2010. The dividend will be payable on 16 July 2010 to shareholders on the register at the close of business on 11 June 2010.

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 4.2.7R and DTR 4.2.8R.

The Interim Report, including the responsibility statement in the preceding paragraph which is made in accordance with DTR 4.2.10(1) was approved by the board on 28 April 2010.

The Directors confirm that they have a reasonable expectation that the Company has adequate resources in existence for the foreseeable future. Accordingly the Directors continue to adopt the going concern basis in the preparation of the Interim Report.

The current directors of Superglass Holdings plc. are as listed in the annual report for the year ended 31st August 2009 and on the Superglass Holdings plc website www.superglass.co.uk

By order of the board

Alex McLeod Tony Kirkbright

CEO CFO

Independent review report

to the members of superglass holdings plc

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 2010 set out on page 5 to 12 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, 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 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 European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

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 United Kingdom. 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 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the EU and the DTR of the UK FSA.